The Metropolitan Transportation Authority (MTA) is the circulatory system of the region; supplying the funding it needs is an extremely important priority. In a well-intentioned search to plug the MTA’s $1 billion annual future budget hole, MTA Chairman Thomas Prendergast, with the support of transit advocates, recently urged Mayor Bill de Blasio to increase the City’s annual contribution to the MTA capital plan from $100 million to $300 million. He also called upon the City to contribute $1 billion toward the cost of the Second Avenue Subway extension.¹

Calls for “the City” to provide more funding should be clear about who is really being asked to foot the bill: New York City taxpayers who already provide most of the MTA’s revenue through the combination of local, regional, and state taxes.

The City’s direct contribution through its tax revenue is bigger than many realize and has grown in recent years. In 2014 the City of New York allocated $731 million toward the MTA’s operating budget, $100 million for capital projects, and $91 million for debt service on bonds issued by a City-sponsored authority to pay for the $2.1 billion extension of the No. 7 Subway.² This totals about $922 million annually.

Residents and businesses that pay local taxes to support the City’s direct contribution also pay a large share of the regional and statewide taxes the State allocates to the MTA. These state-authorized taxes comprise $5.4 billion of the MTA’s annual revenues, with $4.1 billion from regional taxes, including the payroll mobility tax, and $1.3 billion appropriated from statewide general taxes.³ A conservative estimate is that residents and firms within New York City pay 74 percent of regional taxes, or $3.0 billion, and the same New York City sources account for 45 percent of statewide revenue.⁴ These two “city” contributions total $3.6 billion; when combined with the $922 million from revenue allocated in the City budget, New York City taxpayers provide the MTA $4.5 billion annually, in contrast to the $2.1 billion paid by taxpayers outside the city.

There is a better way to raise the money the MTA needs: user charges on motor vehicles. Tolls now cover the cost of operating and maintaining the MTA’s seven bridges and two tunnels and provide another $587 million to help pay for mass transit services.⁵ The cross-subsidy is appropriate because motorists benefit from reduced congestion made possible by the availability of mass transit; without trains and buses the highways would be overwhelmed. In addition motor vehicle use generates negative consequences including air pollution and greenhouse gases for which society bears a cost; collecting fees from motor vehicle users puts a price on these harmful effects and creates incentives to lower the negative impacts.

More money can and should come from motorists. One innovative option is a vehicle-miles traveled (VMT) tax, which collects revenue from vehicle owners based on the distance they travel, the weight of the vehicle, or the route used. Launching a VMT tax in New York could provide a fiscal foundation for future highway and mass transit investments and put New York State in a leadership role in addressing this looming national issue.