MTA discovers $200M shortfall in revenue from new payroll tax

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The MTA’s from-bad-to-worse financial straits are once again worse with the possible specter of cuts in bus and subway service on the horizon.

Metropolitan Transportation Authority Chief Financial Officer Gary Dellaverson has notified MTA board members via e-mail about what he called “a shocking development” —a $343 million shortfall caused by $200 million less than anticipated from a 12-county payroll tax for the MTA.

That, along with a $143 million cutback in MTA money from Albany under the budget agreement reached last week, has left the transit agency down $343 million.

The MTA’s new chairman, Jay Walder, has said there will be no fare increase this year, although a hike is planned for 2010. Transit sources said it could mean cuts in bus and subway service.

“This is a shocking development both because of the magnitude of the under run (shortfall) and the late date of its discovery,” Dellaverson said.

Delaverson advised the board members that when they next meet Dec. 16 to approve a final budget for 2010, the board will face “very difficult choices.”

The payroll tax in the 12 counties served by the MTA was an integral part of the recommendations of the Ravitch Commission, appointed by Gov. David Paterson to come to the aid of the cash-strapped transportation agency.

The payroll tax was approved by the state Legislature, but a proposal for tolls on East and Harlem River bridges was dropped in face of heavy sentiment against them.

The MTA’s financial status has declined precipitously in the economic recession with a dive in tax receipts, particularly those from real estate transactions.

More than year ago, the MTA drew up a 200-page list of cuts in transit services that included a shutdown of many bus routes, the elimination of two entire subway lines and longer waits for subways, although it never came about.

It remains to be seen whether the MTA might again turn to service cuts in the face of its worsening financial situation.

Reach contributing writer Philip Newman by e-mail at or phone at 718-229-0300, Ext. 136.

Posted 6:28 pm, October 10, 2011
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