Tags: NYC | commuters | jobs | taxes

Commuters Who Take NY Jobs Should Pay Taxes

Wednesday, 01 August 2012 07:48 PM

The New York State Comptroller Tom DiNapoli issued his review of the City of New York's current financial plan last week. The State Comptroller is required to annually audit the city's financial plan and budget and report his findings to the public. I always read at the very least the executive summary.

The report makes the point that the city's financial condition is still precarious. The opening paragraph of the executive summary states why.

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"One year ago, New York City projected a budget gap of $4.6 billion for FY 2013 and out-year gaps that reached $4.9 billion. Since then, the city has successfully closed the FY 2013 budget gap and narrowed the FY 2014 budget gap to $2.5 billion without raising taxes or cutting basic services. Most of the improvement, however, has not come from higher revenue forecasts, but from drawing down reserves and other nonrecurring resources."

I do not intend to analyze this aspect of the city's vulnerability. I will leave that for another day. I will state, however, that in every year since the budget was first balanced in fiscal year 1981 under my administration, the Financial Control Board or the State Comptroller has noted the city's use of what is often referred to as "one shot revenues," or more elegantly as "nonrecurring resources."

And every year, there became available such new nonrecurring resources. They have become a regular part of the city's resources needed and used to balance its budget and I believe always will appear in a city that has grown from an adopted budget in 1981 of about $14 billion to a current budget of $68.5 billion. Such nonrecurring resources are normal and should be included in the plan to balance the city's budget. The only question being the size or amount of the resource.

I recall saying as mayor of this great city that New York City's budget was the fourth largest budget in the U.S. First, of course, was the U.S. government budget; second was the California state budget; third, the state of New York's budget; and fourth, the budget of the City of New York.

I was struck by a statement in the Comptroller's report, where he commented on unemployment in the City of New York related to the Great Recession.

Comptroller DiNapoli reports, "Even though the city has regained more than 150 percent of the private sector jobs lost during the recession, personal income tax collections are not expected to reach their prerecession levels until FY 2015 because job growth has been concentrated in lower-paying industries, the public sector continues to contract and compensation on Wall Street has been constrained. The city's unemployment rate has returned to its recessionary peak of 10 percent and is even higher among some segments of the labor market, which reveals that the recovery has not benefited everyone equally."

If we have gained back "more than 150 percent of the private sector jobs lost during the recession," how could our current unemployment rate be at the "recessionary peak of 10 percent," nearly two points higher than the national rate of unemployment which is 8.2 percent?

The answer is that the 10 percent unemployment rate applies to New York City residents, not to the commuters who work in New York City who come into the city every day, earn their living here and participate in all that this special city offers.

We are the safest large city in the U.S. Our first responders, including fire fighters, cops and medical personnel, are there in case of emergency. The tried and true people's transportation is provided by the Metropolitan Transportation Authority (M.T.A.) with its subways and buses.

There was a time when commuters who partook in the city's services paid a relatively small share of the cost, approximately one-sixth of what a resident with equal income paid in city income tax. But that ended in 1999, when the state legislature, with Sheldon Silver, Democrat, as Speaker of the Assembly and Joe Bruno, Republican, as Majority Leader of the State Senate, and George Pataki as governor, conspired to end the commuter tax during Rudy Giuliani's mayoralty and deprived the city of that enormously needed commuter tax which if in effect today, would bring to the city an annual recurring steam of revenue of at least $600 million.

Today in Albany, Shelly Silver is still Speaker. There is a new Majority Leader, Dean Skelos, and a new governor, Andrew Cuomo. Shouldn't they, irrespective of party, seek to have commuters again assist in modestly defraying the cost of services that they have the benefit of every single day? This is a matter of fundamental fairness that is made even more urgent by the city's precarious financial situation.

Furthermore, the newly-gained jobs — 50 percent more than before the recession which occurred in 2008 — have largely gone to commuters and not to city residents.

Just as commuters have benefited from these jobs, they should bear some tax burdens. Tax revenue is needed to keep New York the economic engine for the state of New York that it is.

On a related note, it would seem, based on the choice of commuters over residents, that those employers have found residents wanting in necessary skills. Shouldn't the various industries — Wall Street securities firms, banks, the service industry, especially hotels, the large retail employers, as well as the boutiques and all the other employers in town — band together in creating facilities that will teach our young men and women graduating from high school the special skills needed to hold the available jobs that are now going to commuters?

Also, shouldn't they offer to help the Department of Education make public school students graduating the system more ready and able to apply for and perform the new jobs coming into the city?

New York City for me will always be special — the apple of God's eye — whatever that means. Those of us who live and work here have an obligation to pay it back in some form by helping to make it financially stronger and passing it on to future New Yorkers as an even better place in which to live and work.

Edward Koch was the 105th mayor of New York City for three terms, from 1978 to 1989. He previously served for nine years as a congressman. Read more reports from Ed Koch — Click Here Now.

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