This final blog of the TfL series focuses on New York’s Metropolitan Transportation Authority (MTA). The MTA may sound like a strange candidate: pre-pandemic ridership was already declining the system suffers frequent delays and difficulties improving its infrastructure. In 2017, the New York Times even called London’s tube a wonderland in comparison to its city’s own network.
Despite these issues, the one part of the MTA that London should be envious of is its funding model. The fiscal independence that New York State has allowed the MTA to both diversify its sources of funding and adapt them when required. This could serve as inspiration for TfL in its current negotiations with the Government to find a post-pandemic long-term funding settlement – although it would require a different governance model with further fiscal powers for the Mayoral Authority.
MTA has a vast and diversified range of funding streams
Unlike the funding models analysed in the previous blog series, New York has a very diversified model. According to 2019 data, fares accounted for 37 per cent of overall revenue – almost half of TfL’s. More than that share (around 43 per cent) is raised through the following dedicated taxes, levies, and tolls:
- Toll revenue: MTA does not have a congestion charge yet, but it does implicitly charge for car use by collecting tolls from tunnels and bridges. Depending on the location, tolls (one-way) range from $2.45 – $10.17 . This tool collects 12 per cent of MTA’s revenue.
- Payroll mobility tax: This sees a contribution of 0.34 per cent from employers within the Metropolitan Commuter Transportation District (MCTD), which include 12 counties. This tool accounts for around 10 per cent of total revenue. A system like the Parisian VT.
- Metropolitan transportation business tax (‘corporate surcharge’): A surcharge of 30 per cent on any firm operating in the MCTD. This is around 8 per cent of total revenue.
- Sales tax: New York’s mass transit system received a 0.375 per cent sales tax surcharge, which is raised in the MCTD counties. It accounts for approximately 6 per cent of the MTA’s revenue.
- Real Estate related taxes: This is composed of two taxes. The Real Property Transfer Tax raises revenue from commercial property transactions and the Mortgage Recording Tax levies revenue from commercial property mortgages in New York City. These two are only applied in New York City and allocated to MTA. On aggregate they account for 4 per cent of revenue.
- Petroleum Business Tax: An additional levy of 0.75¢ per gallon for petroleum businesses operating in the Metropolitan Commuter Transportation District. This accounts for around 4 per cent of MTA’s revenue.
In addition to raising revenue and diversifying MTA’s revenue streams, these tools also achieve other policy goals. Some of them implicitly aim to charge for car use (tolls or the petroleum business tax), like in Singapore; while others (payroll mobility tax, sales tax, and corporate surcharge) fund the system as a public good for the whole metro region, like in Paris.