SENATOR CARL KRUGER SPEAKS ON THE MTA BAILOUT LEGISLATION

SENATOR KRUGER CALLS MTA BAILOUT APPROVED BY SENATE
‘A VICTORY FOR ALL NEW YORKERS’
 

            Senator Carl Kruger (D-Brooklyn), Chair of the Finance Committee, called the MTA bailout approved by the Senate today “a victory for all New Yorkers” that averts steep fare hikes and service cuts, implements greater accountability at the MTA and – as a direct result of Sen. Kruger’s vocal and persistent opposition -- avoids the “dreaded possibility” of tolls on the East and Harlem River crossings that he said would have annexed the city.

            “It’s been a long road, with plenty of twists and pauses, but at the end of the day, New Yorkers have a great deal to celebrate,” Sen. Kruger said at a press conference with Senate Majority Leader Malcolm Smith following the vote.

            “We avoided the 20 to 30 percent fare hikes and service cuts that were feared,” he said. “We devised a revenue-generating mechanism that will provide financing for the MTA’s 2010-2014 capital plan and keep the mass transit system in good working order with needed maintenance and modernizations.”

“We successfully implemented the fiscal audit requirement that will assure a new level of accountability within the MTA and raise public trust. Finally, even though so many groups said it couldn’t be done, we successfully avoided tolls on our free bridges from ever becoming a part of this bailout plan and from ever annexing our great city,” Sen. Kruger said.

            Sen. Kruger and his colleagues, Sen. Pedro Espada, Jr. and Sen. Ruben Diaz, Sr., were early and vocal opponents of the original MTA rescue plan introduced by Richard Ravitch that sought to impose tolls on the East and Harlem River crossings. Their opposition effectively scuttled the toll idea. Sen. Kruger also advocated from the beginning that the public authority should be mandated to undergo an independent forensic audit “rather than continuing to operate in a fiscally irresponsible manner and under the cloak of mystery.”

            Under the agreement, the base fare for a single bus or subway ride would rise to $2.25 from $2. The plan calls for a payroll tax, of 34 cents for every $100 of payroll, paid for by employers in the 12-county region served by the MTA (the state will reimburse school districts for the cost of the new tax), along with a 50-cent surcharge on taxi rides, a $25 increase in vehicle-registration fees; a supplemental fee of $2 per year for drivers’ licenses and learners’ permits; and an increase in the auto-rental tax from 6 to 11 percent.  The proposal calls for fares and tolls to rise again in 2011 and 2013, each time by enough to increase revenues from those sources by 7.5 percent.

Sen. Kruger noted that about $400 million will be set aside each year from the proceeds of the payroll tax for capital needs. That will pay the cost of borrowing about $6.8 billion through bonds, enough to get a start on financing the MTA capital plan, he said. The fare and toll increases will bring in about $500 million a year, he noted. The payroll tax is expected to raise $1.53 billion a year. The taxi surcharge is expected to generate $85 million annually; the drivers’ licensing fee, $27 million; the registration increase, $140 million; and the car rental tax increase, $35 million.

In total, all of the new funding sources are expected to provide the MTA with $2.317 billion in additional revenues for both operating and capital spending, Sen. Kruger said. In addition, it is projected that the new revenue streams will support about $9 billion in bonding for existing approved capital plans over the next five years. 

As part of the reform package, the Legislature will commission its own forensic by an independent accounting firm of MTA finances and operations. It may do so every two years. 

“With this package in place, we’re confident that New Yorkers won’t have to worry about the MTA pulling the rug out from under them again. The reforms we have instituted regarding MTA oversight will mean that the authority shouldn’t ever again have to come to New Yorkers with its pockets turned inside out,” Sen. Kruger said.