Paterson's ‘Secret' MTA Bailout Revises Payroll Tax

A state bailout is needed to avoid an average MTA fare hike of 23 percent

Gov. David Paterson's secret plan to help the budget strapped MTA "focuses on a payroll tax that would exempt schools," a source close to the three party talks in Albany said.

Recalcitrant Demoratic State Senators are concerned that an increase in school payroll taxes would have the unintended consequence of causing property taxes to rise, the source said.

The source also said that tolls on East River bridges "are a dead idea." 

Gov. Paterson has supported new tolls on the East River, but he has evidently conceded the votes don't exist in the senate to approve them.

Yesterday, Paterson said he had "a new idea" - which he refused to disclose - to resolve the deadlock over how to bail out the Metropolitan Transportation Authority, which is due to invoke its "doomsday budget" at the end of May.

A state bailout is needed to avoid an average fare increase of 23 percent that the MTA board already voted to take effect May 31. The MTA board voted to increase the base fare on subways and buses from $2 to $2.50, eliminate two subway lines and 35 bus routes, and curtail service on other lines. Fares will rise on commuter rail lines, and bridge and tunnel tolls already in place will increase.

The measures are to address a $1.2 billion budget deficit that the MTA blames largely on the recession. This week, MTA officials said the deficit has worsened by another $600 million, which would require deeper cuts or a bigger bailout.

As the governor, Senate Majoriy Leader Malcolm Smith and Assembly Speaker Sheldon Silver continue to debate a possible bailout, straphangers learned that they could face a possible second fare hike by the end of the year. 

The MTA's CEO, Elliot Sander, said the authority hasn't decided on the timing of further fare hikes.

The authority "is not in a position to wait until December to take the steps necessary" to close ballooning budget gaps, the document states.

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