ALBANY - Governor David Paterson announced that he will put forward proposed improvements to the MTA mobility tax in his 21-day amendments to the 2010-11 Executive Budget that will help preserve that transit system as the economic lifeblood of the metropolitan region. This revised proposal would ensure that the MTA will receive previously projected mobility tax revenues in 2010 and in future years in order to help mitigate the impact of the authority's budget difficulties on straphangers; improve regional equity by introducing a two-tiered tax rate that brings tax collections more in line with local ridership; and deliver substantial additional tax relief for small businesses during the current economic downturn.

"The new proposal I am putting forward will provide relief to straphangers, as the MTA makes the difficult decisions necessary to balance its budget during an historic fiscal crisis that is significantly impacting all levels of government," Governor Paterson said. "In addition, it also makes key improvements to the current tax structure, promoting regional equity and delivering relief to small businesses."

The governor’s proposal needs the okay of both houses of the state legislature.

One Hudson Valley state senator, whose district would see the tax cut in half, says there is no way that will happen

“First of all, the Assembly won’t pass that,” said Senator William Larkin (R-C, Cornwall-on-Hudson).  “[Assembly speaker] Shelly Silver won’t pass that at all because he is not going to double the cost to the people who reside in the city.”

The MTA issued its own unattributed statement, issued by the press office:

"The MTA is grateful to Governor Paterson for his continued focus on funding the MTA and the critical service we provide to 8.5 million New Yorkers every day. The MTA's revenues have taken two significant hits since December: a nearly $400 million deficit was closed in December with administrative reductions and service cuts; and just last week we learned of a new approximately $400 million shortfall due primarily to reduced State projections of the payroll mobility tax. Based on the estimates provided by the Governor's office, the changes to the payroll mobility tax proposed today would provide $230 million to recover much of the latest $400 million in deterioration and could lessen the need for additional cuts on top of those passed in December. It would not eliminate the need for the service cuts and administrative reductions included in the MTA Budget passed in December. The proposal also changes the structure of the payroll mobility tax, which is a decision to be made by the Governor and the Legislature. Even if this restructuring is enacted, the MTA will remain focused on overhauling how it does business to reduce costs and operate within the funding provided."

The amended proposal eliminates the current flat Mobility Tax structure (0.34 percent of payroll for all MCTD counties). It increases the tax rate for New York City businesses to 0.54 percent of payroll. It also cuts the tax rate in half for businesses outside of New York City in the Metropolitan Commuter Transportation District (MCTD) to 0.17 percent. Under the new proposal, New York City businesses would now contribute 88 percent of all mobility tax revenues, up from 70 percent. This will ensure a more equitable distribution of tax liability in line with the fact that New York City is the destination for over 90 percent of weekday ridership.

The new structure will restore 2010 MTA mobility tax revenues to $1.54 billion, which is equal to original projections (net additional revenue of approximately $230 million for MTA). It also addresses projected out-year deterioration, providing more than $200 million in additional annual revenue on an ongoing basis in 2011 and beyond.

Self-employed individuals and partners with income below $100,000 would be exempt from the payroll tax, up from the current threshold of $10,000. As a result, an additional 400,000 small businesses would now be exempt from the payroll tax.