Wednesday, July 23, 2008

Bloomberg Urges Indian Giving For Fare

With the MTA proposing a fare increase for the second straight year, the agency is finding that city and state law makers are in no mood to comply. As the NY Times reports this morning, "A proposal by the Metropolitan Transportation Authority to increase transit fares and tolls in 2009 drew sharp criticism from an array of powerful officials on Tuesday, as the mayor, City Council speaker and Assembly speaker said they would oppose it, and the governor pledged “to do everything I can to prevent it.”

The mayor was particularly sharp in his remarks, implying that the MTA is not being managed efficiently: “Anybody that tells me they’ve got a $10 billion budget and can’t find ways to cut 5 percent, that’s just poor management,” Mr. Bloomberg said at a City Hall news conference." Speaker Quinn was no less harsh: “Before the M.T.A. comes asking for more from the city, the state or the public, they need to do a little more housekeeping, which means cutting their overhead, cutting their management budget and cutting their administrative budget.”

At his City Hall press conference, however, the mayor for the first time suggested a new source of additional revenue. As was reported yesterday in The Politicker; “There is certainly not going to be more money coming from the city," Bloomberg said. "We don’t have it. If the state mandated that we had to put more money in, we’d have to raise city taxes." Bloomberg said revenue has to be found elsewhere and suggested the state collect taxes from cigarettes sold on Indian reservations."

This suggestion has a great deal of merit. Here's the NY Sun's take: "Mr. Bloomberg said the city has no additional money to provide the MTA. He also said that if the agency can't sufficiently cut back its expenses without government funding, it would be showing "poor management." He encouraged the state-run agency try to find new sources of income, and specifically pointed to a tax on cigarette sales at state Indian reservations, a strategy he predicted would bring in between $200 million and $300 million a year."

Or more even. According to a New York Association of Convenience Stores report earlier this year: "The fiscal toll of the New York State tax department’s continued refusal to curb rampant cigarette tax evasion has climbed to more than $1.6 million per day in lost tax revenue, according to a new economic analysis. If the Spitzer administration enforced the collection of taxes on Native American tribal sales of cigarettes to non-Indian customers – as it is supposed to under current state law – new revenues to the state would range from $575 million to $625 million per year, the report said."

This is money that the beleaguered state and city treasuries are badly in need of, and the legislature has already passed the enabling legislation that consecutive governors, including Governor Paterson, have been loath to enforce. It's a dereliction that is costing small business owners all over the state, as customers flock to the "no tax" reservation sources.

In fiscal hard times this failure is especially egregious-and according to a story in this morning's NY Post, it's only going to get worse for New York's tax payers: "An increasingly pessimistic state financial monitor warned yesterday that falling tax revenues and increasing expenses are going to produce monumental, higher-than-forecast city budget gaps starting next year. In a sobering report, the Financial Control Board said the bloodbath on Wall Street and the sharp downturn in the overall economy is going to produce an estimated $4.3 billion shortfall in fiscal 2010 and a $7.5 billion hole in fiscal 2011."

In this climate, the failure to collect Indian retailer tax revenues amounts to malfeasance on the government's part, and Mayor Mike should be applauded for making the case. Now it's up to store owners, tax payers and elected officials-along with health advocates who're seeing their anti-smoking campaigns stymied by an aggressive black market-to come together to insist that this tax loophole be shut so that mass transit riders aren't stuck with an unnecessary fare hike.