Is Cuomo’s Spending Cap the Real Threat to Transit Funding?

Would Cuomos proposed spending cap lock MTA funding in at the bottom of the recession-spurred trough? Image: Tom DiNapoli.
Would Andrew Cuomo's proposed spending cap prevent MTA funding from bouncing back from the bottom of the recession-spurred trough? Image: ##http://www.streetsblog.org/2010/09/29/dinapolis-press-release-obscures-biggest-source-of-mta-budget-woes/##Office of Comptroller DiNapoli##

With the threat of future raids on the MTA’s dedicated funds looming on the horizon, I spoke with Fiscal Policy Institute executive director Frank Mauro to continue our investigation of how to keep transit funding secure.

Mauro agreed with Gene Russianoff of the Straphangers Campaign that there’s no good way to systematically prevent sweeps of dedicated funds. Then he went a step further, arguing that there shouldn’t be any such mechanism. Instead, Mauro advised transit advocates to keep their eyes on Cuomo’s proposal for a state spending cap [PDF], which he said could lock in budget cuts over the long-run.

“One legislature can’t bind a future legislature in a democracy,” said Mauro. If the state wanted to dedicate all of a particular revenue stream to one purpose, but now wants some of that revenue stream to be spent elsewhere, it has that power. For transit advocates worried about budget raids weakening the MTA and exacting a toll on straphangers, Mauro said the only solution is to organize and raise the political cost of those raids. “There just has to be a greater sense that the transit system is essential to the functioning of the economy.”

Moreover, Mauro argued that a general policy against budget sweeps would be misguided. Rather than force the state to concentrate all budget cuts on those programs that were traditionally funded through general revenue rather than dedicated streams, Mauro said it’s preferable to make spending decisions based on the merits of the programs and on public preferences. “It’s a democracy. There’s competing priorities and government officials and advocates have to make the case for the services that are essential to the economy and quality of life.”

He pointed to the example of a registration fee that was levied on snowmobiles, the proceeds of which were intended to build snowmobile trails. Like so many revenue streams, that fund has been swept too, enraging snowmobilers across New York State. “People see different things as important,” argued Mauro.

If transit advocates are looking for structural ways to help boost transit funding, Mauro has a different suggestion. Cuomo campaigned on a state spending cap, which Mauro said would lock the MTA’s recession-battered budget into place. “The percentage cap is from where you are now, from a period of retrenchment,” he explained.

Mauro suggested that if Cuomo’s spending cap proposal gains steam, transit advocates should fight for an exemption from the cap. That wouldn’t just be a sweetheart carveout for a favored program, he said, but consistent with Cuomo’s thinking.

“The logic [behind the spending cap] is that we spend more per capita than other states,” he said. That logic, he argued, doesn’t apply when it comes to transit “because transit reduces expenditures you have to make as an individual.” Even if New York spends more than other states on transportation, that cost is more than made up for with the private savings that come from not owning a car. For example, in the New York metropolitan region, the average household spends $8,500 a year on transportation while in the more car-dependent and slightly lower-income Houston metro area, transportation costs add up to $10,800, according to the Bureau of Labor Statistics.

In the short term, said Mauro, transit advocates should try and convince Albany that cutting transit would be more harmful than finding savings elsewhere in the budget. But for those thinking about a healthy transit system in the long run, he thinks the spending cap is the major threat to be concerned about.

  • Larry Littlefield

    If the MTA tax were collected statewide it would be one thing. But it is only collected downstate. How is it “democracy” to collect special taxes only in one part of the state and spend them elsewhere?

    Imagine a special tax collected only in a special taxing district in Upstate New York, and used to fund statewide needs. How would that play? Would the Fiscal Policy Institute have a problem with that?

    There is a difference between “democracy” and the interest group politics up in Albany. It’s oligarcy.

  • JK

    Frank, could you possibly be more disingenuous? These dedicated taxes and fees were justified to the public by being solely for the purpose of transit, or snow mobile trails, or whatever. Does anyone think the Payroll Mobility Tax could have passed if the public knew it was going to be siphoned off for other things? Of course not. Could they have passed a 911 surcharge on your phone bill if people knew it was going to go the General Fund? etc. etc. Frank’s logic is the logic of Albany dysfunction. ” Hey, it’s a democracy, if you don’t like it vote for someone else.” In California, they passed a popular referendum locking transit funding. We cannot do that in NYS.

  • Does the chart of MTA revenue account for Albany’s theft, or does it assume no funds will be stolen in the future?

  • JK

    Alon, it assumes no theft (as I’m sure you know.) Larry, the only thing Frank would have a problem with would be the diversion of Medicaid funds to transit. That would draw his wrath in an instant.

    Actually, MTA funds have come through relatively unscathed compared to the gas tax supported Highway and Bridge Fund. That’s been raided so often there’s barely anything left. Though, not to worry, they are making up some of the difference with income tax paid for by people who don’t have a car.

    It’s a shell game, and Di Napoli does a nice job of laying it out here
    http://www.osc.state.ny.us/press/releases/apr10/040510.htm

  • JK

    Oh, yeah forgot. HELLO FRANK, in our democracy, legislature’s can and do bind future legislatures, and do it all the time in a very big, multi-billion dollar, way. They do it by agreeing to constitutionally protected pension deals, and hard to escape debt issuance.

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