Eighty percent of businesses will no longer have to pay a payroll tax if they reside in the Metropolitan Transportation Authority region, but the loss of revenue also could hurt the MTA’s finances, a Moody’s report today said.
The Moody’s report said the MTA expects to lose about $212 million in payroll taxes in calendar year 2012 and approximately $310 million annually thereafter. The state is expected to pick up the tab through higher taxes on the wealthy, which is slated to bring in about $2.6 billion in new revenue next year.
But if the state reneges on its promise to the MTA, it could imperil the MTA’s finances. (h/t to Bloomberg’s Esme Deprez)
“The state’s vote to reduce a substantial new revenue stream implemented only two years ago signals a shift in government support for the MTA,” the report reads. “It comes at a time when the MTA plans to increase its borrowing to maintain and expand the largest transit system in the country.”
Moody’s warns that the payroll tax was a dedicated revenue stream and now could be “vulnerable to state budget cuts.”
The MTA had expressed support for the deal brokered two weeks ago by Gov. Andrew Cuomo and lawmakers, but it continues to face its own fiscal challenges.
“Future credit assessments will focus on the details of the state’s backstop,” Moody’s said. “The MTA’s financial operations are already tight, and failure to restore the lost revenue may put negative pressure on the MTA’s transportation revenue bonds (TRBs), rated A2 with a stable outlook.”