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Paterson aims to close MTA shortfall with two-tiered plan

Gov. David A. Paterson wants to extract more payroll taxes from New York City businesses and less from those on its edges as he tries to close the Metropolitan Transit Authority's tax revenue shortfall. If adopted, he said, his plan would generate a net increase of $230 million in revenue this year.

Paterson Monday proposed an amendment to his 2010-11 budget that would halve the "mobility tax" from Long Island and counties immediately north of New York City while increasing by almost 60 percent the taxes for city-based firms. It will achieve "regional equity," a taxpaying balance he said can be achieved through a two-tiered tax structure based on patterns of usage.

The proposal, which cuts suburban firms' payroll taxes from .34 percent to .17 percent, and hikes city-based firms' taxes from .34 percent to .54 percent, received mixed reviews from legislators, agency heads and consumer and business groups.

The two tiers are based on research that shows New York City is the destination for 90 percent of weekday ridership.

"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," Paterson said in a statement. He said it should yield $1.54 billion.

It would raise the minimum income requirement for firms required to pay the tax from $10,000 to $100,000, exempting 400,000 more businesses altogether, said Matt Anderson, spokesman for the New York State Division of the Budget.

Paterson said it offsets a new budget shortfall: MTA officials said last week they would collect $350 million less revenue in taxes than expected in 2010.

Still, MTA chairman Jay Walder said it would fall far short of mending the agency's wrecked finances. "It still leaves us with a shortfall of the MTA of nearly $500 million," Walder said at a hearing in Albany. "So we are still looking at a major hole."

State Sen. Dean Skelos (R-Rockville Centre), who opposed the mobility tax, said it "has had a devastating impact" on downstate firms and that it has slashed jobs and raised property taxes.

Gene Russianoff, of the Straphangers Campaign, a consumers group, called the proposal a "mixed bag" because it takes more from one group and less from another.

Long Island business leaders welcomed the proposal, with some insisting it be scrapped for employers outside the five boroughs. "I think short of repealing the tax, this is a significant improvement," said Matthew Crosson, president of the Long Island Association, the island's largest business group.

With Alfonso A. Castillo

and Tom Incantalupo

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