A Sales Tax Hike on New York City Is Part of Budget

ALBANY – Lawmakers decided to stick shoppers in New York City with at least part of the bill for financing the MTA, agreeing yesterday to increase the sales tax in the five boroughs and neighboring locales.Pressing hard last week to pass a budget before the end of the fiscal year this Thursday, legislators approved a $17.9 billion transportation plan without saying how roughly $3 billion in the package would be raised. Lawmakers previously criticized Governor Pataki’s $19.2 billion transportation plan for being silent on revenue sources.Late yesterday, however, legislators announced they would come up with enough money to cover the interest on $3 billion in new borrowing for the Metropolitan Transportation Authority by a mix of tax and fee increases. The new borrowing, approved by legislators last week, does not include the $2.9 billion in borrowing lawmakers agreed to put to voters in a referendum later this year. The latter sum would be evenly divided between the MTA and upstate transit projects.The three new proposals include increasing by 0.125% the sales tax within the MTA’s 12-county service area; increasing the mortgage-recording tax by 20%, to 30 cents from 25 cents for every $100, and increasing some motor-vehicle fees. The mortgage-recording tax is imposed on any new, refinanced, or expanded mortgage. As for the DMV fees, the Legislature approved 10 of the 11 increases in motor-vehicle fees proposed by Mr. Pataki, including an increase in the cost of title applications to $50 from $10, and an increase of 25% in the cost of commercial trailer registration. The Legislature also agreed to increase the cost of registering a sport utility vehicle, an Assembly spokesman said. Taken together, the three revenue items are expected to net the state an additional $480 million in the coming fiscal year.“We fund everything in the budget with revenue,” the majority leader of the Senate, Joseph Bruno, said.The legislators’ agreement would drive New York City’s sales tax to 8.50% from the current 8.625% after the phase out of a temporary increase imposed two years ago. It would be added to the 0.25% sales tax that New York City and other nearby counties already pay into the MTA’s support. Lawmakers were said to be discussing an income-tax surcharge on unincorporated businesses to help fund the MTA’s $27.1 billion capital plan, but scuttled that idea in the face of strong opposition from downstate politicians.An aide to the governor, Kevin Quinn, said the governor would have to look at the proposed sales-tax increase in light of the Legislature’s overall budget before saying whether he would accept or veto it. Lawmakers increased the sales tax statewide by 0.25% two years ago, saying at the time the increase would be phased out this coming June. Mr. Pataki has renewed his call to phase that increase out on time.The new taxes were approved yesterday against the backdrop of increasing pressure to pass a budget before the end of this week. After outlining their plan to finance transportation, lawmakers pledged to pass all bills necessary for a legislative budget by midnight yesterday as several nettlesome issues – including the possibility that the final product would be unconstitutional – remained unresolved.Mr. Pataki appeared upbeat about presiding over the first on-time budget since 1984 during a press conference yesterday afternoon. He said the legislative counterproposal to his $105.5 billion spending plan remained about $2 billion too rich and contained several items that his staff viewed as illegal policy substitutions. Leaders of the Legislature say its budget is $1 billion more than Mr. Pataki’s.But Mr. Pataki, standing alone at a microphone in an ornate conference room adjacent to his office, said none of the outstanding issues constituted a real barrier to the goal he has set in recent months of proving to New Yorkers that Albany is not immune to change.“These are all issues that can be corrected,” Mr. Pataki said.The state Court of Appeals ruled in December that legislators could not modify a governor’s budget but could decrease or delete specific appropriations. Yesterday, Mr. Pataki said he identified more than six places where the legislative leaders appeared to be treading on unconstitutional ground. Mr. Pataki has said repeatedly that he would fight language changes. Assembly Speaker Sheldon Silver said he did not agree with Mr. Pataki’s analysis.The governor’s optimism followed weeks of sometimes contentious public negotiations with Mr. Bruno, a Republican of Rensselaer County, and Mr. Silver, a Democrat of Manhattan. The governor proposed the meetings as a way of demonstrating that the lawmakers could craft a budget in the open. The meetings also helped Mr. Pataki appear, at times, more conciliatory than his legislative sparring partners.When, for example, Messrs. Bruno and Silver outlined their plan to pass budget bills on issues that had not been negotiated already with Mr. Pataki and his staff, the governor played the part of a betrayed colleague.“If you want to go ahead and do this without us, that’s fine,” Mr. Pataki said.Mr. Silver countered the following day by suggesting that Mr. Pataki used the meetings to bully legislators.The two major questions going into yesterday involved transportation and Medicaid spending. Despite the new details on transportation, it remained unclear late yesterday whether the Legislature had made sufficient cuts to the state’s $44 billion Medicaid program to support the cap on local Medicaid spending they approved last week.Mr. Pataki has said the cap on local costs would have to be tied to cost-containment measures.“Just transferring the costs to the state is not Medicaid reform,” a Pataki spokesman, Peter Constantakes, said.Legislators said they were not sure whether their health-care proposal would be sufficient for the agreed-upon cap or to draw an additional $1.5 billion in federal funds that are also contingent on cost-containment. They have rejected an increased tax on gross receipts at hospitals and agreed to increase the gross-receipts tax on nursing homes. Mr. Pataki proposed cost-containment measures that he said would save the state $1.1 billion. The Legislature boasted last week it had restored $730 million worth of proposed cuts.When asked whether the Legislature’s budget contained enough teeth to support the cap on county costs, a Republican senator from Long Island, Dean Skelos, said: “That I’m not sure about.”A budget analyst with the Empire Center for New York State Policy, E.J. McMahon, said, however, that the Legislature’s proposed Medicaid plan remained the greatest obstacle in negotiations.“That’s the key issue,” Mr. McMahon said. “They have gone forward and agreed in principle to cap the local and New York City share of Medicaid costs while rejecting any significant proposal to reduce Medicaid expenses. Right now, they have something they can’t finance.”

A Sales Tax Hike on New York City Is Part of Budget

More from the New York Sun

Israel and Lebanon Coordinate Aid Convoy to Christian Villages in Combat Zone

Emerging Claim That Targeting Civilian Infrastructure Is a War Crime Proves a Bridge Too Far

Stanford Calls Bluff on Students Using Jain Faith To Dodge Meal Plan

More from the New York Sun

Israel and Lebanon Coordinate Aid Convoy to Christian Villages in Combat Zone

Emerging Claim That Targeting Civilian Infrastructure Is a War Crime Proves a Bridge Too Far

Stanford Calls Bluff on Students Using Jain Faith To Dodge Meal Plan

South Florida GOP Congresswoman’s Immigration Reform Bill Sparks Backlash From Colleagues, Conservative Commentariat

Middle-Class Americans Prove the Biggest Winners From Trump’s Tax Cuts in the Big Beautiful Bill

In a Funeral for Economic Liberty, the Casket Cartel Seeks To Bury the Competition

The Double Tragedy of the Jewish Bund

Borrowing a Page From El Salvador’s Bukele, Ecuadoran President Welcomes American Troops To Assist With His Drug Gang Crackdown