Gotham Gazette

The Place for New York Policy and politics



Bringing Back The Commuter Tax

There are three good arguments for the restoration of New York City's commuter tax: history, budget stability, and basic fairness.

From 1966 to 1999, commuters shared in the city's tax burdens, at least partially. For the suburbanite with an annual salary of $100,000, the commuter tax, which was set at a mere .45 percent of wages, totaled just $450 a year.

But if the city had the tax today, it would benefit by as much as $500 million. Or, to put another way, a commuter tax would pay for all of the city's youth, senior citizen, and parks services.

It is unfair for commuters to have a virtual free ride on the essential services they use. (Some commuters pay a different tax, the unincorporated business tax.) Police, fire, sanitation, and transportation services are among the most obvious.

New York City is the economic engine of the entire metropolitan region, and it seems reasonable for the beneficiaries of the engine to pay for some of the fuel.


When it comes to taxes, New York City is at the mercy of the State Legislature and the governor. With the exception of its real property tax, the state must approve any city tax change.

The impetus for eliminating the commuter tax in 1999 came from both Democratic and Republican leaders in Albany who wanted the upper hand in a special election. Both sides saw the repeal as a way to woo suburban voters. Albany rolled over New York City and raw politics triumphed over sound fiscal policy. Democratic Speaker of the Assembly Sheldon Silver who represents lower Manhattan played a shortsighted political game and voted to repeal the commuter tax, an act that benefited only upstate voters.

What makes the repeal especially galling to many New Yorkers is that it underscores the state government's general disregard for the city.

New York City already carries a unique burden in paying for Medicaid and public assistance costs, which now exceed more than $3.5 billion a year. In much of the rest of the nation, the state government funds these items almost exclusively. Similarly, state education aid has historically denied the city its fair share based on the number of children enrolled in schools. Another recent blow to the city budget was last year's repeal of a $114 million state payment that over more than two decades had made up for revenues lost when the city's stock transfer tax was eliminated.

It is no wonder that this anti-city, nonpartisan heavy handedness in Albany has finally prompted a political response in New York City.


Beyond the historical and political arguments for restoration of the commuter tax is the argument that the fiscal costs to New York City of providing services to commuters ought to paid for, at least in part, by commuters themselves.

A recent report by two Hunter College economists Howard Chernick and Oleysa Tkacheva estimates that commuters cost the city between 2.2 and 3.8 percent of the city budget, or between $1.2 and $1.9 billion a year. The annual cost to the police force alone is an additional $185 million. The same report found that on average commuters earned 37 percent more than residents. The authors concluded that "the elimination of the commuter tax imposed a significant, and in our view, unfair fiscal burden on the City of New York."

With the New York State Financial Control Board, the agency that oversees the city's fiscal plans, projecting a possible budget deficit of $6 billion in 2006, the restoration of the $500 million commuter makes political and fiscal sense.

In fact, little more than a doubling of the tax to one percent would raise over $1 billion. Commuters would still be paying less than a third of the top personal income rate for residents, and they would be helping stabilize the city's budget that funds the services they use.

Glenn Pasanen, former associate director of City Project, teaches political science at Lehman College of the City University.


For the opposite view, see "The Tax Whose Time Has Gone," by E.J. McMahon


The (Proposed) Trains To The Planes

New York City is one of the few premier international cities without direct rail access to its airports. Mayor Bloomberg wants to fix that. A centerpiece of the mayor's vision for the revival of Lower Manhattan is to build rail connections between Lower Manhattan and John F. Kennedy and Newark Liberty International airports. Bloomberg believes that direct rail access is pivotal to making downtown Manhattan a global center that can compete with the likes of London, Berlin and Hong Kong.

Under Bloomberg's "Vision for Lower Manhattan" the AirTrain elevated guideway system, currently under construction by the Port Authority, would be extended from Jamaica, Queens through a new tunnel to Lower Manhattan. Under current plans, AirTrain will connect JFK terminals with each other, airport parking lots, the Howard Beach subway station and subway and Long Island Rail Road train lines in Jamaica, Queens. AirTrain's opening, scheduled for this year, has been delayed by an accident last summer that killed one worker. Extending AirTrain from Jamaica to lower Manhattan would provide air travelers with a one-seat ride (i.e., no need to transfer) from the airport to downtown, and would also connect Lower Manhattan to LIRR trains in Jamaica.

Bloomberg also proposes to extend the PATH train from Newark's Penn Station to Newark Liberty airport. This extension would provide direct rail service from Newark to a new PATH station at the World Trade Center site as well as PATH stations as far uptown as 33 Street.

Bloomberg estimates that the AirTrain extension would cost $3.7 billion and take nine years to complete. The Newark PATH extension would cost $775 million and presumably could be built more quickly than the AirTrain tunnel.

Bloomberg says that a one-seat ride between JFK and Lower Manhattan "is key to our success." The concept of a one-seat ride is attractive for many reasons. It offers faster and more reliable travel times by eliminating transfers between trains. It also offers greater convenience, especially for air travelers lugging bags. The simplicity of direct rail service also contributes to the image of a city as an easy place to visit and do business.

On the other hand, spending nearly $4 billion for a one-seat ride from JFK to Lower Manhattan offers few benefits to the much larger number of travelers originating in or bound for other parts of New York City. Air travelers using JFK come from locations throughout the metropolitan area. Although it requires the transfer in Jamaica or Howard Beach, AirTrain will let travelers reach JFK by rail from throughout the city via the subway connections and from throughout the LIRR service territory via the Jamaica LIRR connection.

In his Lower Manhattan speech, Bloomberg cited Heathrow airport's 30 minute transit access to Paddington Station in London's West End, alluding to the high-speed Heathrow Express service. What he did not point out, however, is that ridership is higher on the Piccadilly Underground line from Heathrow than on the faster Heathrow Express service, according to the 2000 Transit Cooperative Research Report, Improving Public Transportation Access to Large Airports. The Piccadilly line is slower but it serves a larger geographic area. It is also cheaper,another advantage that is particularly important to airport employees, who far outnumber air travelers at major airports such as JFK.

In comparing New York with other international cities, the mayor also raises the question of whether as many travelers can be attracted to public transportation at American airports as at airports in Europe and Asia. Rail serves 25 percent of air travelers using Heathrow Airport in London, 35 percent of travelers at Tokyo's Narita Airport, 25 percent in Hong Kong and 20 percent in Paris (DeGaulle). A substantial additional fraction of travelers take buses to the airport, ­ 15 percent in the case of Heathrow.

American cities with direct rail access have attracted much lower levels of transit ridership. The best case is Reagan National airport outside Washington, DC, where 15 percent of air travelers use the excellent Washington Metro trains. Virtually all of these travelers are domestic travelers, many of them traveling on business and going to offices or hotels close to a Metro station. The walk from the terminal to Metro is very short, Metro service is frequent and the fare is relatively cheap.

Rail's share of airport travel is much lower in other U.S. cities. Direct subway service between downtown business districts and the airport draws 12 percent of air travelers for Boston's Logan airport, eight percent for Atlanta's Hartsfield airport, eight percent for Chicago's Midway airport and four percent for O'Hare.

According to an update (in pdf format) to the Improving Public Transportation Access to Large Airports report, about four percent of air travelers from JFK use the bus to A train connection. International leisure travelers are most likely to use the A train and are easily spotted with backpacks by anyone who has traveled through Howard Beach. Despite this low ridership level, the A train carries a substantial and growing JFK ridership. About 900,000 people used the Howard Beach station entrance that connects to shuttle buses in 2001, a 125 percent increase from a decade earlier. Many of these riders are airport employees.

In many ways more promising than the expensive JFK direct rail link is the mayor's proposal to connect PATH to Newark airport. It is not clear from the mayor's speech whether he has in mind connecting PATH to Newark's AirTrain system or extending PATH trains directly to airport terminals. The Port Authority has been looking at the first option, however, which seems the more likely option although here again, it would require travelers to make a transfer between AirTrain and PATH.

Will New Yorkers ever enjoy truly direct rail access from Manhattan to any of the region's three major airports? The coming of AirTrain at JFK and possible extension of PATH to connect with the Newark airport's AirTrain would offer two-seat rail access to travelers who originate or are destined for many locations throughout the metro area. A one-seat ride is a more distant goal. But it may not be a bad thing that it is distant. The two-seat rides take advantage of the region's extensive rail infrastructure which offers access to numerous destinations with frequent and reasonably reliable service. It is not hard to argue that a two-seat ride to where you want to go is better than a one-seat ride to select locations, such as Lower Manhattan, that will serve only a thin slice of the flying public.

Bruce Schaller is Principal of Schaller Consulting, which provides research and analysis to government, business and non-profit groups seeking to identify and meet customer needs in the transportation sector. He is also a Visiting Scholar at the Center for Transportation Policy and Management at New York University.

Debating Transportation Priorities For Lower Manhattan

Recent stories in the Times and Daily News have highlighted the increasingly fractious debate over allocating $4.55 billion in 9/11-related federal aid for transportation projects.

Some projects have won a broad consensus, including a Transit Center on Fulton Street, a block east of the Trade Center site and connected by an underground concourse to a new PATH station to replace the station destroyed with the Trade Center.

Far more contentious is a proposed "Super Shuttle" train between Jamaica, Queens and this new transit hub. The new rail link would run on Long Island Rail Road tracks from the Long Island Railroad's Jamaica Station in eastern Queens to downtown Brooklyn, then through a new tunnel to connect with subway lines into Fulton Street in downtown Manhattan.

The Super Shuttle rail link is pushed by Brookfield Properties, which has extensive downtown real estate holdings and strongly desires direct commuter rail access from the suburbs to downtown offices. The proposed Super Shuttle is a bit less than a super shuttle -- Long Island Rail Road riders would still need to transfer in Jamaica, and many would have a considerable walk from Fulton Street to offices at the southern tip of Manhattan. Travelers headed for Kennedy Airport would transfer in Jamaica to the AirTrain monorail now under construction.

The Super Shuttle would not improve access from Westchester, Connecticut or New Jersey at all. At a price tag of $1.9 to $5 billion, the New York Times notes that many transit officials consider the link to offer poor bang for the buck. Also important is that the new train would displace the C subway line, forcing downtown-bound C riders to transfer in Brooklyn.

The debate over the Super Shuttle exposes developing fault lines in how the different parties to the debate view lower Manhattan's needs and its future. Five main fault lines can be identified:

  • How fast is fast enough? Everyone agrees on the importance of moving quickly to revive lower Manhattan. But what is "quick"? One definition is tied to expiration dates of leases for downtown office space. The lease of one of Brookfield Properties' major tenants, Merrill Lynch, expires in 2008. So under this definition, lower Manhattan should have better suburban rail access within six years. Others suggest that the solution is the Second Avenue Subway, which would relieve severe overcrowding between Grand Central Terminal and lower Manhattan. The timeframe for that project extends well beyond 2008, however, under even the most optimistic scenarios for its funding and construction.
  • What is a "lower Manhattan" project? Carl Weisbrod of the Downtown Alliance argues that the $4.55 billion in federal aid allocated to transportation should be spent exclusively for projects directly tied to the Trade Center attacks. Replacing the PATH station unequivocally qualifies since it was destroyed by the attacks. By general consensus, the transit hub also qualifies because it ties into PATH and would clearly make traveling to the trade center area a more attractive experience. The relationship between 9/11 and other projects is in the eye of the beholder. Proponents of rebuilding the South Ferry station point to its integral role in connecting the Staten Island ferry to lower Manhattan. Yet Senator Charles Schumer and Weisbrod have questioned its relevance to revitalizing lower Manhattan. Proponents of the Super Shuttle argue that the Second Avenue Subway is not a lower Manhattan project. Yet building a tunnel in Brooklyn, part of the Super Shuttle project, is no more obviously related to lower Manhattan than building a tunnel on Manhattan's East Side.
  • Who most needs improved access to lower Manhattan? Downtown property interests emphasize direct suburban commuter access to downtown. Yet most of the people who work downtown live in the five boroughs. Even among the upper echelons that decide whether a company should move to Midtown, many live on Manhattan's East and West Sides and would be helped by improved subway service, not a direct LIRR connection. How closely are the fortunes of lower Manhattan tied to suburban access versus access from other parts of the city? If lower Manhattan's future is as a 24/7 commercial and entertainment center, would not access from other parts of Manhattan, Brooklyn and parts of New Jersey just across the Hudson be more important than from more distant suburbs?
  • What projects increase access to lower Manhattan? A new rail line from A to B would seem to clearly improve access to those locations. Yet analyses of the Super Shuttle suggest that the time savings for Long Island commuters would be negligible compared with their current routes -- traveling via Penn Station or the LIRR's Flatbush Avenue station in Brooklyn. At a recent forum on downtown transportation issues, Madelyn Wils of Community Board 1 argued that the transit hub and connectors are service improvements, not new transit services. Yet there is less of a difference than the distinction implies. Dingy stations and difficult transfers can be as much of a barrier as simple lack of service between two points.
  • What modes really count? An unspoken assumption is that real business districts have commuter rail service. There has been little discussion of bus service, aside from accommodating tour buses that will descend on the planned memorial for victims. Ferry service, which now carries twice as many riders as pre-9/11, is mentioned more often. But advocates of suburban rail access feel that ferries are not a substitute to rail. Yet new ferry routes could be put in place far more quickly than new rail lines and could serve a wider variety of suburban locations. They might require a public subsidy, however, which raises a host of different institutional, political and financial issues.

Even with differing views on these questions, there is a consensus that lower Manhattan needs better suburban transit access. What would bring about that access, and quickly enough to make a difference?

First, it is critical to think about a package that utilizes various modes that may include rail, bus and ferry. The Super Shuttle proposal puts a huge amount of available funding into rail. A multi-modal approach that includes buses and ferries could be cheaper and quicker and win broader support.

Second, it is critical to think beyond concrete. Why do LIRR riders who work downtown mostly use Penn Station instead of going through Brooklyn? One reason is that Penn Station offers more frequent departures. Also, riders departing from Penn are less likely to have to transfer to another LIRR train in Jamaica. Improving access is not just a matter of pouring concrete. It's also a matter of how the service is configured, the frequency of service and cost. Transfers illustrate the point. While no one likes to transfer, a transfer between trains serving the same platform and offering frequent service is far different than a transfer that requires climbing stairs and long waits for the next train.

Finally, vision and political leadership are needed. Vision of what lower Manhattan will be in five, 10 or 20 years. Will it continue to be primarily an office and financial center? Will it be a 24/7 community with residential, shopping and entertainment? The vision will help define transportation needs.

Political leadership is also critical to define and articulate that vision and move diverse and often fractious interests toward a consensus. Post-election news reports that Governor Pataki intends to take a more direct role in the process, while also involving the city administration more integrally, is a welcome development.

Bruce Schaller is Principal of Schaller Consulting, which provides research and analysis to government, business and non-profit groups seeking to identify and meet customer needs in the transportation sector. He is also a Visiting Scholar at the Center for Transportation Policy and Management at New York University.

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