Dedicated MTA Funding

The MTA depends heavily on subsidy from various governments to fund its operating and capital budgets, and we frequently hear about the consequences of reductions in those levels of subsidy whenever a political body attempts to cut back on how much they contribute to the MTA.  Advocates frequently call for additional “dedicated funding” to the MTA, funding that conceivably is not subject to discretionary whims of the contributing entity; or a “consistent funding source” that will deliver reliable sums of money for the rest of time.  However, we should not look past the significant levels of dedicated funding the MTA already takes advantage of, including a litany of taxes and fees added over the years (including three major bailouts).  The items below enumerate some of the way your money winds up in the MTA’s coffers, whether it’s at the farebox, the gas pump, or the grocery store:

Fares: $6.2 billion
One of the MTA’s biggest sources of income is from fares paid by riders to use its services.

Toll Revenue: $1.9 billion (excess toll revenue transfer: $560 million)
The MTA currently significantly overcharges bridge and tunnel users (by about a factor of four), and transfers the excess revenue to New York City Transit.  This arrangement was created with the merger of the Triborough Bridge and Tunnel Authority into the MTA, and was the first bailout of the MTA we know today.

Metropolitan Mass Transportation Operating Assistance Fund: $1.7 billion

• Petroleum business tax
• MTA 0.375% sales tax
• MTA Corporate Tax Surcharge

The MMTOA (Metropolitan Mass Transportation Operating Assistance Fund) was created in 1976 as the second bailout for the MTA's financial issues.  It is a pot of tax money collected for downstate transit, of which roughly 72% goes to the MTA.  Funds are generated by taking a portion of the Petroleum Business Tax (PBT, see below); the MTA Corporate Tax Surcharge (corporate franchise taxes and fees both statewide and in the MTA region); a 0.375% sales tax surcharge in the 12 counties in the MTA region, and the Long Lines Tax.

Petroleum business tax: $616 million
The petroleum business tax is imposed on the privilege of operating a petroleum business in New York, and is a cents-per-gallon tax on most petroleum products sold or used in the state assessed at different points.  The tax amount is linked to the 12-month average producer price index for refined petroleum products, and annual increases or decreases in the tax rate are further limited by law to 5 percent.  The tax excise tax presently stands at about 16.9 cents per gallon tax.

Motor fuel tax:
Roughly a third of all funds generated off of gasoline and diesel sales statewide go to the MTA.  The current state gas tax is 27.36 cents per gallon for gasoline and 18.28 cents per gallon for diesel fuel (so, of that, 8.208 cents per gallon for gasoline and 5.484 cents per gallon of diesel fuel goes to the MTA).  Gasoline sales are also subject to state (capped at $0.08 per gallon) and local (not capped) sales taxes, including the MTA 0.375% sales tax in the MTA region.  Presently roughly 63% of the total funds generated from the MFT and PBT go to road projects, 33% goes to the MTA, and 4% goes to other transportation agencies outside NYC.

Mortgage recording tax: $473 million
The mortgage recording tax is one the state imposes on the privilege of recording a mortgage on real property located within the state.  While this tax is imposed statewide, there is a special surcharge in the 12-county MTA region.  The formula currently dictates that for every $100 of mortgage debt or obligation secured in the 12-county MTA region, 75 cents goes to the state, 30 cents goes to the MTA, and an additional 25 to 50 cents goes to the city or county, depending on the area.  Mortgage recording taxes consist of two separate taxes on mortgages recorded in the 12-county MTA region: MRT-1 is a tax on all mortgages, while MRT-2 is also imposed on residential real estate structures containing up to six dwelling units.

Urban tax: $529 million
Similar to the mortgage recording tax, the urban tax is imposed on commercial property and apartment building transactions and mortgage recordings in New York City.  For New York City, the MRT component is imposed on mortgages exceeding $500,000, and the Real Property Transfer Tax component is imposed on transfers exceeding $500,000.  90% of the proceeds from this tax are dedicated to New York City Transit.

Payroll mobility tax: $1.5 billion
The payroll mobility tax was created in 2009 as the third bailout for the MTA’s financial issues during and after the recession.  Also referred to as the metropolitan commuter transportation mobility tax, or MCTMT, the tax is imposed on employers with payroll expenses exceeding $312,500 in any calendar quarter.  Few were spared with this tax, as the exemption list is atypically short.  Local municipal governments are not exempt from the tax, except for school and library districts.  The tax is imposed uniformly on payroll expenses for all covered employees, who work in the 12-county MTA region.  For quarterly payrolls between $312,000 and $375,000, the tax is 0.11%; between $375,000 and $437,500, the tax is 0.23%; for most employers whose quarterly payrolls are over $437,500, the tax is 0.34%.

Payroll mobility tax replacement funds: $244 million
When the politically unpopular payroll mobility tax was reduced in 2011, the state dedicated a separate line item of funding out of the general budget to make up the difference (however, $65 million from this reimbursement was cut last year).

Telecom surcharge:
The MTA telecom tax surcharge recovers telephone company expenses associated with mandated New York State temporary metropolitan transportation business tax surcharge, and applies to customers located in the 12-county MTA region.  The Public Service Commission establishes maximum rates for this surcharge, which vary according to the type of service provided and whether or not the carrier is principally engaged in local telephone business. For telephone corporations, including resellers, principally engaged in local telephone business, the PSC currently has the maximum rates set as 0.1277% for services provided for resale, 0.6890% for IntraLATA toll and regional calling, and 0.73% for all other services.  Telecom sales are also subject to state (not capped) and local (capped at 3%) sales taxes, plus the MTA 0.375% sales tax in the MTA region.  (see NYS Tax Law § 184(a))

Taxi flag drop surcharge:
The taxicab and hail vehicle trip tax is a $0.50 cent per trip flat surcharge for all taxi trips that start in New York City and end in the 12-county MTA region.  The charge applies to meter fares, pre-negotiated fares, and flat fares to places like JFK airport.  The term hail vehicles includes boro taxis/green cabs, and street hail livery bases licensed by the TLC that is affiliated with hail license holders, but not companies like Uber and Lyft who are subject to the TNC assessment, which goes to the state general fund.

Vehicle registration surcharge:
This $50 surcharge applied to vehicle registrations in the 12-county MTA region (every two years for most vehicles in New York State) was added as part of the MTA's third bailout package in 2009, along with the payroll mobility tax.  This was done as part of a 25% statewide increase in DMV fees dedicated to the state general fund, and the MTA region surcharge came about in response to a scheme to toll the four free East River Bridges falling through.  The amount is sometimes lumped into/reported with PBT funds.

Drivers license surcharge:
Similar to the vehicle registration surcharge, the DMV assesses an additional $16 fee on driver licenses in the 12-county MTA region.  The surcharge is $1 for every six months the license will be in effect (licenses are typically issued for 8 years, but the fee is prorated for documents with shorter validity periods).  The amount is sometimes lumped into/reported with PBT funds.

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