Letter to Governor and Legislature: Please, No Raids on MTA Dedicated Taxes in May Budget “Adjustment”

Ahead of the first state budget “adjustment” expected in May, eleven transit and government watchdog groups called on Governor Cuomo, Senate Majority Leader Stewart-Cousins and Assembly Speaker Heastie to respect taxes dedicated to the Metropolitan Transportation Authority (MTA) by not diverting them to the state general fund, effectively “raiding” them.

The State Division of the Budget will propose budget adjustments in May, and said in a financial plan released this week that “The aid-to-localities reductions that will need to be taken in this Financial Plan may materially and adversely affect the financial position of the MTA, the City of New York, and other localities.”

In response, the groups reminded the state’s political leaders that taxes created specifically for the MTA should go to the MTA, which has had its finances devastated by the COVID-19 emergency. A functional MTA is absolutely crucial to the future recovery of the metropolitan region’s economy, which provides the bulk of the state’s revenue and jobs. A crippled and debt-burdened MTA will delay the return of normal life in the New York City region.

Dedicated taxes like the Metropolitan Mass Transportation Operating Assistance (MMTOA) Fund, which alone brought in $1.8B in 2019 for the MTA, were created to provide “a stable and reliable dedicated funding source” for subway, bus and commuter rail and transit capital projects. Therefore, the groups asked that the MTA keep every dollar of dedicated tax revenue that comes in, with no MTA funds used to prop up the state’s general fund deficit.

The MTA has received $3.8B in federal CARES Act funds, and is asking for an additional $3.9B in emergency funding from Congress. This federal rescue aid is intended to make up for plummeting revenue due to the COVID-19 emergency, not to provide the state with a backdoor opportunity to transfer dedicated transit taxes to its general fund. Using MTA funds for general purposes also diminishes the MTA’s argument that it needs additional funding in order to be able to provide service and balance its books for the year.

The 11 groups signing the letter include Reinvent Albany, Riders Alliance, Permanent Citizens Advisory Committee to the MTA, Environmental Advocates of New York, Tri-State Transportation Campaign, Common Cause NY, League of Women Voters NYS, New York League of Conservation Voters, NYPIRG Straphangers Campaign, StreetsPAC, and Transportation Alternatives.

The letter is in full below, and available in PDF here.

Via email

Governor Andrew Cuomo
Senate Majority Leader Andrea-Stewart Cousins
Assembly Speaker Carl Heastie

Re: Please Do Not Raid MTA Dedicated Funds in Upcoming Budget Adjustments

Dear Governor Cuomo, Majority Leader Stewart-Cousins and Speaker Heastie:

You will soon have the unenviable task of needing to make tough choices about the state’s budget because of huge revenue losses from the COVID-19 emergency. During this difficult time, we ask you to respect that the Metropolitan Transportation Authority’s dedicated taxes were explicitly created to provide “a stable and reliable dedicated funding source” for subway, bus and commuter rail and transit capital projects.

The COVID-19 emergency has destroyed the MTA’s finances. We believe the MTA is currently spending roughly $350m to $400m a week more than it is bringing in. A functional MTA is absolutely crucial to the future recovery of the metropolitan region’s economy, which provides the bulk of the state’s revenue and jobs. A crippled and debt-burdened MTA will delay, not spur, the return of normal life in New York.

We ask you to ensure that the MTA keeps every dollar of dedicated tax revenue that comes in, with no MTA funds used to prop up the state’s general fund shortfall during the upcoming adjustments of the state budget.

From what we understand, there are three “adjustment periods” during which changes to the MTA’s funds could be made, which will look at receipts from the following intervals this year: April 1 to April 30th; May 1 to June 30; and July 1 to December 31.Therefore, the first adjustments will be made as soon as May 2020, after the Office of the State Comptroller releases its “Cash Basis” report for April 2020 on May 15, 2020.

The MTA has received $3.8B in federal CARES Act funds, and is asking for an additional $3.9B in emergency funding from Congress. This federal rescue aid is intended to make up for plummeting revenue due to the COVID-19 emergency, not provide the state with a backdoor opportunity to transfer dedicated transit taxes to its general fund, creating an even greater deficit for the MTA. Using MTA funds for general purposes also diminishes the MTA’s argument that it needs additional funding in order to be able to provide service and balance its books for the year.

As you know, the MTA is highly reliant on state mandated dedicated taxes, or special revenue funds. Because of the COVID-19 emergency, experts believe the MTA will see large declines in its dedicated funds like Metropolitan Mass Transportation Operating Assistance, which brought in $1.8B in 2019. MMTOA is made up of taxes sensitive to the effects of the Governor’s PAUSE order, like sales, petroleum and corporate franchise taxes, and other fees. Additionally, real estate revenue from the Urban and Mortgage Recording taxes are likely to see similar decreases due to the PAUSE order and the impending economic recession.

While some MTA dedicated funds are transferred directly to the authority without appropriation, such as the Payroll Mobility Tax and For-Hire Vehicle fee, many of the MTA’s special revenue funds like MMTOA are subject to appropriation through the budget process. This means that under the recently adopted budget modification process, they could be reduced should the state’s general fund be found to be “imbalanced.” The new process allows for either “across-the-board” cuts, or cuts to specific appropriations, and does not require funds to be reduced in proportion to their own revenue losses. This means that these crucial MTA funds could be reduced by more than their tax receipt losses, to essentially subsidize general fund reductions; this could occur through transfers to the state general fund, or temporary borrowing.

The MTA simply cannot afford to have its dedicated funds raided to make up for the state’s general shortfalls. We ask that every dollar of tax receipts coming in for the MTA’s dedicated funds be given to the MTA.

We thank you for your attention to this matter.

Sincerely,

John Kaehny
Executive Director
Reinvent Albany

Susan Lerner
Executive Director
Common Cause NY

Peter Iwanowicz
Executive Director
Environmental Advocates of New York

Laura Ladd Bierman
Executive Director
League of Women Voters of NYS

Julie Tighe
President
New York League of Conservation Voters

Jaqi Cohen
Campaign Director
NYPIRG Straphangers Campaign
Lisa Daglian
Executive Director
Permanent Citizens Advisory Committee to the MTA

Betsy Plum
Executive Director
Riders Alliance

Eric McClure
Executive Director
StreetsPAC

Danny Harris
Executive Director
Transportation Alternatives

Nick Sifuentes
Executive Director
Tri-State Transportation Campaign

Cc. Comptroller Tom DiNapoli
MTA Chairman/CEO Pat Foye
MTA Board of Directors
Senator Liz Krueger
Senator Leroy Comrie
Senator Tim Kennedy
Assemblymember Helene Weinstein
Assemblymember Amy Paulin