MTA bailout deal has businesses outraged

May 7, 2009

Outrage from all quarters greeted a controversial Metropolitan Transportation Authority bailout plan that has a host of fees and taxes, including a payroll tax that will cost Dutchess County businesses, nonprofits and governments millions of dollars each year.

The bill passed the state Legislature late Wednesday night. No local legislators supported the bailout.

The MTA, which serves New York City and seven surrounding counties, is $1.8 billion in debt and would have needed to implement fare hikes of 25 percent or more and major service cuts if the state didn’t come to its rescue. Gov. David Paterson and the leaders of the Senate and Assembly, all Democrats, announced Tuesday they had agreed on a $2.26 billion deal for the transit agency to close the budget gap and provide some capital funding as well.

The plan was approved late Wednesday night.

About $1.5 billion will be raised by a payroll tax – 34 cents for every $100 of payroll in the 12-county MTA region.

The bailout will also be funded by a 10 percent fare hike this year (up from the original proposal of 8 percent), followed by 7.5 percent hikes in 2011 and 2013. Other ways residents of the 12 counties would pay for the MTA bailout include a 5 percent increase in the auto-rental tax; an extra $25 fee on motor vehicle registration; a 25 percent increase in the fee for a driver’s license; and a 50-cent surcharge for taxi rides.

Legislative leaders and the governor agreed to reimburse school districts for their share of the payroll tax.

Local business owners, nonprofits and elected officials were angry over the plan and wondered how they will deal with the deep impact of the taxes and fees during an economic recession.

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