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Pataki's Budget

by Bruce Schaller, Jan 20, 2005
 Â “Pataki’s Budget Leaves Transit Projects In Doubt” read the headline in the New York Times online. (In the newspaper itself, the article, with a slightly different headline, was the lead story of the day).

Of course, many of these projects have long been in doubt, even as more and more people become convinced of their importance. A report released recently by the Rudin Center at NYU on commuter rail and subway expansion needs (in pdf format) concluded that, “Expanded transportation capacity is of vital importance to enable future economic and employment growth in the Manhattan central business district.”

It has been clear that one of the two major issues for transportation in 2005 will be financing the operation and expansion of the transit system. (The other is doing the same for the highway system.) The question has been: Where is the money going to come from?

As summarized here two months ago, the city’s Independent Budget Office and a respected civic group, the Regional Plan Association, discussed a range of ways to raise the money.

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Last month, Peter Kalikow, the chairman of the Metropolitan Transportation Authority, called on Governor George Pataki to support increased taxes and fees on businesses, gas and mortgages that would keep the transit system in good working order and also fund such expansion projects as the Second Avenue Subway and the connection between the Long Island Rail Road and Grand Central Terminal. Stepping forth in more of a public leadership role than any MTA head during Pataki’s tenure in Albany, Kalikow warned that failure to fund at least the $17 billion core program would begin the transit system’s “descent” toward deterioration and financial crisis.

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When the governor released his budget on January 18th, he proposed adopting two of Kalikow’s specific recommendations: an increase in the mortgage recording tax and increased motor vehicle fees. Pataki also asked for legislation to authorize innovative financing opportunities. He cited three examples from other states. Two involve the sale or construction of toll roads (in Chicago and Virginia), and thus are financed by motorist tolls. The third involves private investment in the Las Vegas monorail.

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Overall, however, the governor’s budget came up well short of the MTA’s needs. The governor proposed to cover $15 billion of the $17 billion that transit officials consider essential.

Some transit advocates were cheered that Pataki proposed new fees to pay for transit improvements, while others criticized him for inadequate funding. The budget, which is subject to revision after a public hearing, is perhaps best viewed as the opening gambit in Albany’s long budget game, plagued for years by late budgets. Anyone keeping a scorecard on the progress of budget discussions might look for the following:

  • When will the governor become more specific about additional revenue sources needed to plug the gap he left, and even to increase total spending from his proposed levels?
  • Do revenue sources (fees, taxes or otherwise) provide new money and a long-term solution, unlike the crushing debt burdens that financed the transportation authority’s previous capital program?
  • Do revenue sources require the governor and legislative leaders to gain broad political support, as a broad-based tax would, or is there continued effort to hide the pain through fees and taxes that most people do not pay (like the mortgage recording and business taxes)?

As New York struggles with how to pay for its transportation needs, a number of other cities around the country moved forward on major transportation expansion projects. In the November elections, voters approved new taxes to pay for system expansions, meaning that new, “real” money will be available for real projects. The Center for Transportation Excellence, a non-partisan policy research center in Washington DC, reports that:

  • Phoenix area voters approved a 1/2 cent sales tax extension and a $16 billion regional transportation plan that will fund 30 additional miles for the region’s light rail system and expanded and improved bus services.
  • Denver voters approved a 4/10 cent sales tax increase to construct 119 miles of new light rail and commuter rail lines; 18 miles of Bus Rapid Transit service, new parking at transit stations and expanded bus services.
  • San Francisco East Bay area voters approved a “parcel tax” of $2 per parcel per month to underwrite continued bus services.
  • San Diego voters adopted an extension to the 1/2 cent sales tax through 2028 to raise $14 billion for transportation improvements.

Each of these metro areas suffers from high levels of traffic congestion and are turning to transit expansions to help alleviate gridlock on their highways. Perhaps New York, blessed with the most extensive transit system in the country, can take inspiration from voter approval of higher taxes in other regions. New York can not only maintain the existing system but also fund forward-looking system expansions.

Bruce Schaller is head of Schaller Consulting, which provides research and analysis about transportation, and is also a Visiting Scholar at the Center for Transportation Policy and Management at New York University.


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