MTA Chief's Exit Yields New Calls for Audit, Repeal of Payroll Tax

The finances of the Metropolitan Transit Authority (MTA), which operates New York's subways and suburban train network, are under renewed scrutiny as a search gets underway to find a new chief at the beleaguered agency.

Local lawmakers are stepping up calls for the state to conduct an in-depth audit of the MTA, which has yet to be done despite 2009 legislation authorizing it, and for the repeal of a controversial payroll tax that critics say is killing job creation and fueling property tax increases.

At a press conference Monday, Sen. Greg Ball (R-Patterson) and Assemblyman Steve Katz (R-Yorktown) will call for a 'forensic' audit of the MTA in light of the recent announcement that Chairman Jay Walder will step down in October.

"We have an opportunity here, with new leadership at the helm, to get a fresh start and save taxpayers, communities and small business owners millions of dollars,” Ball said.

The agency has been dogged by various allegations over the last several years, including claims that contracts were awarded to well-connected but sub-par contractors. The MTA also spends hundreds of millions of dollars each year on overtime, allowing dozens of employees to earn six-figure salaries and the huge pensions that come with them.

Governor Andrew Cuomo recently announced that a special commission will conduct an international search for a new MTA chief. The right candidate, the governor said in a statement, will be committed to "reducing costs and waste, while improving efficiency and service"—the same approach Cuomo took to this year's austere state budget.

Walder's replacement faces an uphill battle. The MTA is set to run out of money at the end of the year, and is billions of dollars short of being able to fund proposed projects. At the same time, public perception of corruption and ineptitude at the agency, mixed with anger over fare hikes and the payroll tax, could make it politically untenable to drum up new revenue.

Assemblyman George Latimer (D-Rye) held a public forum in May to probe service delays last winter on the Metro North New Haven Line, which MTA operates. He said he agrees with his GOP colleagues that the leadership vacuum means the time is right for change.

"When the service isn't up to speed and the riders are complaining and MTA still isn't financially solvent, you've got to find out exactly why that's the case," Latimer said.

"We need to ask questions we've never asked before," he added.

If an audit takes place, many of those questions will likely revolve around the need for the two-year-old payroll tax, which amounts to 34 cents for every $100 of payroll and extends to large and small businesses as well as local governments, meaning the cost is often absorbed through property tax increases.

"It is completely irresponsible to ask the people, and employers, of New York State to spend one more dime funding this agency until a complete accounting of their finances is made public,” Assemblyman Katz said.

Latimer forwarded a proposal earlier this year that would have phased out the tax by 2014 in suburban counties, and decreased it in New York City, but the bill went nowhere. The Senate, meanwhile, passed a similar bill in the waning days of the legislative session. A separate proposal for an audit was championed in April by Sen. David Carlucci (D-Clarkstown).

An MTA spokesman was not immediately available to comment, but the agency has said it welcomes a forensic audit while defending the payroll tax as a vital source of revenue that averts fare hikes and cuts in train service.