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November 27, 2008

Taxes and Tolls Sought in Plan to Save M.T.A.


A state commission appointed by Gov. David A. Paterson is expected next week to propose a rescue package for the financially imperiled Metropolitan Transportation Authority that includes a new tax on corporate payrolls and tolls on the East River and Harlem River bridges, several people informed of the plan said on Wednesday.

The commission, led by Richard Ravitch, a former chairman of the authority, will also recommend an increase next year in fares on subways, buses and commuter railroads, as well as in tolls on the bridges and tunnels it currently controls. But those increases would be much smaller than the ones the authority recently outlined in its proposed budget for next year.

The commission is also expected to call for minimal cuts, if any, in transit service. The plan, which is due to be released by Dec. 5, will contain recommendations to the governor, subject to passage by the Legislature.

The authority is facing a $1.2 billion shortfall next year and even larger deficits in the future because of the economic downturn and an ever-growing debt load. The authority relies heavily on revenue from taxes on real estate transactions, which have plummeted as the real estate boom has fizzled.

In a budget proposal that the authority’s board will vote on next month, the authority has called for raising revenues from fares and tolls by 23 percent next year — which could mean a base subway and bus fare of $2.50 or higher, up from $2. It also lays out a wide range of service reductions that include deep cuts in the frequency of bus and subway service, the elimination of the W and Z subway lines and the elimination of 2,800 jobs, many through layoffs.

The authority is hoping the commission’s recommendations will allow the state to find more revenue and allow the authority to avoid carrying out its austerity plan. If the Legislature approves the recommendations, the authority could end up with a budget that contains less severe cuts in service and smaller increases in fares.

The people familiar with the rescue plan cautioned that it is still being refined and may change as Mr. Ravitch tries to win the support of elected officials like Mr. Paterson and state legislative leaders. Mr. Ravitch is expected to meet with the governor in the coming days to present a final version of the plan.

Opposition to some of the plan’s central elements is sure to be strong. Despite the growing problems at the authority, most elected officials have remained publicly uncommitted about how to help it, saying only that they were awaiting the commission’s report.

So far the strongest show of support has come from Assembly Speaker Sheldon Silver, a Manhattan Democrat, who said last week that he was open to raising taxes or creating a new tax to support the authority.

It was not clear, however, whether Mr. Silver or other legislators would support instituting tolls for the bridges. Bridge tolls are seen by many as similar to Mayor Michael R. Bloomberg’s congestion pricing plan to charge drivers for entering Manhattan on its busiest streets; that plan died in the Legislature this year, largely because of opposition from Assembly Democrats.

The idea of collecting tolls on the bridges over the East and Harlem Rivers has enticed and tormented mayors for decades. It has repeatedly been proposed and then shot down, with especially strong opposition coming from elected officials in Brooklyn and Queens and on Long Island, whose constituents account for much of the traffic on the free bridges.

Details of Mr. Ravitch’s proposals were sketched out this week by several people involved in discussions of the plan, including two members of the state commission. All spoke on condition of anonymity because they were not authorized to speak for the commission. Mr. Ravitch refused to discuss the proposals.

The tax on payrolls, expected to be less than one half of 1 percent, would apply to businesses in the 12-county area served by the authority. It would be paid by businesses, not employees. The tax would be designed to raise $1 billion a year or more.

It would be coupled with the new bridge tolls, which would generate about $600 million a year, after the cost of maintaining the bridges and collecting the tolls is accounted for. Drivers would pay a higher rate on the East River bridges than on the Harlem River bridges under the plan.

There would be no toll plazas: Most tolls would be collected through a system of E-ZPass readers. Drivers without E-ZPass would be identified and could be billed using digital cameras that snap a picture of each vehicle’s license plate.

Control of those bridges, which are owned by the city, would be transferred to the authority under the plan, although it was not clear how that would be achieved.

The third main element of the proposal is a more modest increase for next year in fares and existing tolls on the bridges and tunnels already controlled by the authority.

That increase would allow Mr. Ravitch and his supporters to argue that the cost of running the system was being shared by all those who benefit from it.

The commission has also discussed including sweeteners that would reduce costs to the city and other local governments.

Under one such proposal, the city would stop making payments to the authority to subsidize the operations of a group of private bus lines that the authority took over at the city’s request. The projected city subsidy next year is $280 million.

And if the authority takes over the city’s bridges it would also assume maintenance costs, which for the East River bridges alone total about $10 million a year.

The four East River Bridges are the Brooklyn, Manhattan, Williamsburg and 59th Street Bridges. The city-controlled Harlem River bridges include the Willis Avenue, Macombs Dam, Third Avenue, Madison Avenue, 145th Street, University Heights, Washington, Broadway and Wards Island bridges.

Mr. Ravitch has a monumental task in seeking to build a consensus for his plan at a time when the economy is sinking and the city and, in particular, the state both face huge budget problems.

There will be many demands on the state budget next year, and officials at the authority said they hoped that elected officials were willing to address their needs first. They have said that if the state does not enact a new revenue source by March, they will have to proceed with the austerity budget.

Mr. Ravitch is widely credited with helping the authority recover in the early 1980s when the system was plagued by widespread mechanical failures. At that time, he showed a deft hand and sharp political acumen as he fashioned bipartisan support for the authority’s first capital plan, which began the rebuilding of the transit system. He benefited from longstanding relationships with Gov. Hugh L. Carey and top legislators, but those players have long since left the stage in Albany.

Mr. Ravitch now must win the support of a governor attempting to pass his first budget in a time of crisis. His task is further complicated by the confusion in the State Senate. This month, Democrats won a majority there for the first time in decades, but are facing a fight over who will become the new majority leader, one of the three most powerful positions in Albany.

The full-fledged support of the governor will be needed to bring Albany’s many competing factions — business and labor, upstate and downstate, city and suburban — in line behind the plan. One important ally may be the governor’s new senior adviser, Marc V. Shaw, a former executive director of the authority who led a state panel looking into congestion pricing; he has been an outspoken proponent of charging tolls on the East River bridges.

Risa B. Heller, a spokeswoman for Mr. Paterson, said in a statement, “The commission is still deliberating, but we look forward to receiving their final report and working with all stakeholders to ensure the fiscal integrity of the M.T.A.”

Charles V. Bagli and Sam Roberts contributed reporting.