Negotiations on a financial rescue for the MTA got knocked off track by a small group of Democrats opposed to a regional tax on payrolls, according to several published reports.
Legislative leaders in Albany failed to finalize a plan to help stave off the MTA's so-called "doomsday" budget, according to a published report.
Gov. David Paterson and Senate Majority Leader Malcolm Smith were hoping to get a deal done Tuesday night, but some suburban Democrats balked at the proposed payroll taxes, according to The New York Daily News.
"It's falling apart at the seams," a source told The News.
The payroll tax would be paid by employers in the12 counties that serve the MTA and could raise as much as $1.5 billion a year, The New York Times reported.
Tuesday marked the second time the legislation designed to stave off the so-called "doomsday" budget was derailed by mutiny within the slim Democratic Senate majority.
Because of heavy Republican opposition, Gov. Paterson needs every Democratic Senator to be on board for the MTA legislation to pass. Democrats hold a narrow 32-30 majority in the State Senate and the bailout plan will fail if even just one Senator moves across the aisle to vote with the Republicans.
The plan originally called for tolls to be put on the east side bridges in Manhattan, but that provision was kicked to the curb because of opposition by legislators in Brooklyn, Queens, Staten Island and the Bronx.
Instead, a big piece of the bailout money will come from of a taxicab surcharge, sources said.
Lawmakers are discussing a 50-cent, per-ride surcharge that likely would be passed on to taxi passengers.
In addition, motorists would pay higher registration fees.
State leaders are looking for $200 million in revenue to help the MTA close its budget gap and roll back last week's fare increase that boosts a single ride from $2 to $2.50.
Under the bailout plan, a single ride would increase to about $2.15 or $2.25. The proposed fare increase is set to go into effect on June 1.
The MTA bailout plan wasn't the only item that failed to pass on an eventful night in Albany.
Lawmakers failed to pass the state budget on time for the third straight year.
The spending plan includes a near-record 8.7 percent increase in spending and $7 billion in new or higher taxes and fees.
Delaying passage was the budget deal itself, struck behind closed doors late Saturday night, too late to get all the bills printed in time to meet a required "aging process'' intended to give the public and lawmakers time to review the plan.
On Tuesday, the process was further undone by an illness of a senator in the Democrats' narrow majority.