Swap the Suburban Payroll Tax for East River Bridge Tolls — Deal or No Deal?

Republican Senator John Bonacic would allow New York City to institute East River bridge tolls... for a price. Photo: ##http://www.nysenate.gov/senator/john-j-bonacic/##nysenate.gov##

Five Senate Republicans, led by Sen. John Bonacic, are making transit advocates an offer they can probably refuse. The payoff is appealing: state authorization for bridge tolls on the East River bridges. But the price they are demanding in return, the total repeal of the payroll mobility tax outside New York City, is too high to pay.

The basic contours of a road pricing-for-reduced payroll tax swap could potentially turn into a big win for transit riders — the right deal would reduce traffic, improve bus speeds and reliability, and raise a substantial amount to plug the gap in the MTA capital program.

Bonacic’s bill, however, is not the deal transit advocates want to aim for. It would only authorize the New York City Council to institute tolls over the East River bridges, not the Harlem River bridges (a fact which may be related to the fact that four of the five sponsors represent the Hudson Valley, not Long Island). And it seems that the rate to charge motorists would be left up to the city. So right off the bat there’s a lot of uncertainty about whether the City Council would act and what level of tolling they would consent to.

If the city charged $2 tolls in each direction, as was proposed by Assembly Speaker Sheldon Silver and endorsed by Public Advocate Bill de Blasio in a 2009 plan, East River-only tolls would likely raise around $240 million, according to an analysis by road pricing expert Charles Komanoff. (UPDATE: Due to revisions in his model, Komanoff now estimates that $2 tolls would bring in $300 million.)

In comparison, the seven suburban counties in the MTA region contributed roughly 30 percent of total payroll tax revenues. In 2010, the payroll tax brought in just under $1.35 billion. Without the suburban counties, that would have dropped by $405 million.

In other words, swapping the suburban payroll tax for $2 East River bridge tolls would end up costing the MTA roughly $165 million each year.

The Bonacic bill does not appear to have an Assembly equivalent yet, suggesting that it isn’t going anywhere right now. It does, however, mark the first attempt to legislate an often-suggested swap: a lower suburban payroll tax in exchange for bridge tolls or congestion pricing. A differently structured deal, one which partially reduces the suburban payroll tax while guaranteeing a more robust road pricing system, could be much more attractive, especially given that raising revenues through bridge tolls has the added benefit of cutting congestion and speeding up buses.

It’s possible, of course, that the city would decide to charge more than $2 each way under Bonacic’s plan. Even if the new bridge tolls were as high as the currently-tolled MTA bridges and tunnels, however, that would barely make up for the lost payroll tax revenue. Using the Independent Budget Office’s recent calculation of bridge toll revenue and holding constant the share of Komanoff’s East River bridge estimate to the total Silver plan revenue, even tolls that high would only raise around $517 million. That would net the MTA a small profit (but unless the tolls steadily increase over time, it could be an ever-shrinking profit — by 2014, the suburban share of estimated payroll tax revenue is projected to reach $485 million).

More importantly, once you’ve traded away suburban payroll tax revenue, you can’t get it back. There’s only one chance to get this deal right, and if you institute tolls just to offset a suburban tax break, you can’t use the revenue to pay for system repairs. To close the MTA’s potentially disastrous $10 billion capital plan deficit, both the payroll tax and bridge tolls will be necessary.

While the congestion-busting effects of East River bridge tolls are tempting, transit riders can’t afford to give up one source of funding without getting a bigger revenue source in return. Otherwise New York is still on track for a combination of rising fares and deteriorating transit service. The verdict on this version of the payroll tax-for-bridge tolls swap should be clear: No deal.

  • Bolwerk

    A better deal in exchange for the payroll tax being repealed: devolve to New York City all local government functions. For those cases where a home rule request is still needed, have Albany be required to act on it with an up or down vote within a reasonable time from or it will become law by default. This way, we can have progress without Shelly Silver ever having to grow a pair. If that existed a few years ago, we’d have congestion pricing.

  • car free nation

    I’d argue we should increase the tolls to the point that we can wipe out all the payroll tax, including in the city. I run a small business in Manhattan, and the payroll tax is a significant amount of money that I could invest in other things. I’d much rather have the money come out of people who are selfish enough to drive into the city. Make the tolls $20 on all the bridges, and drop the payroll tax and cut the fares.

  • Komanoff

    Please make my estimate of net revenues from a 24-7 $2 toll on East River bridges “around $300 million” ($340 million gross, less $30 million in admin costs, and rounded). My year-ago estimate of “around $240 million” was a back-of-the-envelope figure. Thanks.

  • Jutt

    Good luck paying for all the extra delivery fees you’d be getting billed for then.

  • Tom

    24/7 tolling? Goodbye Broadway. Goodbye nightlife.

    Congestion pricing would only be business hours and business days.

  • Anonymous

    $65 for a Broadway ticket (x2, probably) dinner, $35 parking, $10 drinks at intermission, $4.xx/gallon gas, maybe a $3.50 Starbucks for the ride home–I don’t think a $2 bridge toll is the straw that breaks the camel’s back.

  • Gallbaro

    There are what, 1.5 million people on Manhattan Island? Would an extra few dollars expense added to driving into the city destroy night life?

  • Tom

    I see I can always count on my compadres here to understand the needs of the middle class and not-so-middle-class.

    My point was that the Mayor recognized the economic risk of creating a Manhattan gated-community. This was different from the idea of adding a cost for motor vehicle access to the CBD (6AM to 6PM on business days only) for the purposes of earning money. He did not want to interfere with the spending of it; therefore, all other hours access was not monetarily impeded.

    Some of you don’t see the difference. If a 24/7 charge surfaces, watch for the entertainment/restaurant/culture industry to react with threats of layoffs and closings costing far and above the total sum of the revenue to be collected from tolls. Listen for the talk of an effective dissolution of of the Greater City of New York(which is only a century old) from the great majority of the people of the outer boroughs. Then duck.

  • Gallbaro

    Wouldn’t the best method to fund all transportation in the state be to do it at cost? Let the MTA and highways charge cost to users via tolls and metrocards, letting the state, counties, cities, businesses issue however many subsidies they want via whatever means they want? As in subsidized metrocards and EZ Passes, tax refund or just a lower overal tax burden. It would once and for all remove the MTA from political crises.

    But I do not think Albany as relinquished power since Vanderbilt and the fight over state issued monopolies.

  • J:Lai

    that would be the best method from a purely economic standpoint, not the best method at all from a political standpoint. But I think you already know that.

  • J:Lai

    That’s exactly the kind of fear-mongering that certain outer-borough and suburban representative have used against tolling and/or congestion pricing for decades. It’s a classic case of wanting all the benefits but not being willing to bear any of the costs.

    The reality is that there are excellent transit options to get into the Manhattan CBD from almost anywhere in the metropolitan NYC area, including most of the major suburbs. Choosing to drive into this area in a private vehicle is a luxury, and one that imposes significant costs on everyone else, so the only reason to oppose it is purely selfish – not wanting to pay your fair share.

    And those transit options would be even better if they had another source of revenue, such as the tolls paid by people who choose to drive into Manhattan.

  • Joe R.

    Why should NYC need the state’s permission to toll its own bridges (or implement a congestion tax) in the first place? That is what should be swapped in exchange for the payroll tax-the state gives up forever the right to tell NYC what to do on any road within NYC limits. If NYC wants to charge a $100 per vehicle entry fee at city limits, then they’ll have that right. I can think of all kinds of creative ways to raise revenue and reduce congestion at the same time if we had a clean slate. Tolling east River bridges might be a start, but I’d probably seriously consider some sort of “entry fee” into city limits during business hours. Like J:Lai said, anyone commuting into Manhattan has excellent non-auto options. Choosing to drive is in most cases simply selfish. I would of course allow exceptions for vehicles with a legitimate business purpose, like delivery trucks or paratransit.

  • Gallbaro

    I think you could sell it politically…
    …In the suburbs and upstate: Lower taxes, competition between modes, no more of YOUR taxes funding those marxists and black people in the city! No more Gas tax! Pay for what you use and nothing more!
    …In the city: Would probably, prevent another rate hike and that might just overcome union opposition, who would absolutely hate it because their overpaid selves would no longer be able to garner political favors in pensions and what not.

  • Guest

    Is there any evidence that higher Port Authority tolls have affected NJ tourists driving to Manhattan? You sure couldn’t tell if you visited Soho the last couple of weekends. It doesn’t make much sense that someone seeing a $100 a seat Broadway show, or traveling a long way to eat at a Manhattan restaurant would change their plans because they had to pay a charge of $6-$8 dollars. You should be able to find some data on NJ tourist visits to Manhattan over the last couple of decades. A good guess is the general state of the economy is far, far more important than Hudson tolls or NJT fares.

  • Mook

    24/7 tolling means that the doorman working the 4-12 shift now takes the subway from Queens, opening up room on the bridge for the rich couple from Long Island who would love to eat in the city but don’t want to deal with the traffic.

  • Andrew

    Gated community? Most people traveling to Manhattan take the subway, which already charges a fare.

    The ones who choose to drive are already, on average, far wealthier. Most New Yorkers don’t even have cars; those who do generally prefer not to pay to park in Manhattan.

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