A potential tax hike on large New York businesses served by the MTA’s network of trains and buses is holding up the state’s budget.
Gov. Kathy Hochul and state lawmakers are waiting on analysis from the state of how new Trump administration tariffs may impact employers in the metro region before settling on a specific increase to the current 0.60% so-called payroll mobility tax, which raises cash for the MTA’s coffers, according to two people familiar with the deliberations who are not authorized to speak publicly on the matter.
Raising the tax would pay for MTA investments in the region’s subway, bus and commuter rail. Such efforts include new railcars to replace dilapidated 1980s models, elevators at dozens more stations and bringing service to more riders by financing the Interborough Express, a light rail project that would link Brooklyn and Queens along mostly existing freight tracks.
Hochul’s office declined to comment on a specific percentage uptick that the governor is considering, or whether such an increase would be limited to businesses within the five boroughs or extend to the MTA’s entire service region.
Some business groups, such as The Business Council of New York State, the Long Island Association and the Westchester Business Council, oppose such an increase and argue that even a minimal rate hike would burden businesses during this economically uncertain time.
They also say that they’re fed up with Hochul frequently turning to the business community to plug the MTA’s budget gaps.
Hochul’s current bid for an increase comes nearly a year after the governor unsuccessfully floated the idea of raising the tax to replace revenue expected from congestion pricing, after Hochul temporarily paused the toll before reviving it with a Jan. 5 launch.
Lawmakers raised the levy in the state budget two years ago by less than 1%, but only on major employers within the five boroughs. The tax generally applies to businesses whose payroll expenses exceed $312,500 in a calendar quarter and are required to withhold state income tax for wages. Fiscal watchdogs at the Citizens Budget Commission continue to urge Hochul and state lawmakers to raise the tax across the region, and explore new taxes and fees.
“We do have some concern that the proposal is going back to a well we tapped two years ago, and only that well,” said Ana Champeny, vice president of research at CBC, referring to the region’s businesses, “rather than diversifying the revenue streams in a fair way.”
