David Paterson taketh away, and then David Paterson giveth. Just over two weeks ago, when David Paterson unveiled his executive budget for the 2010-2011 fiscal year, it contained a shock for the MTA. Payroll tax receipts were project to be $104 million less than originally anticipated, and the MTA’s overall budget hole has grown to nearly $800 million since then.

Today, Paterson announced his 21-day amendments to the Executive Budget, and the MTA should net an additional $230 million in 2010. “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 that is significantly impacting all levels of government,” Governor Paterson said in a statement. “In addition, it also makes key improvements to the current tax structure, promoting regional equity and delivering relief to small businesses.”

Before we rejoice, a few caveats: First, this budget adjustment simply corrects for Albany’s originally overly optimistic revenue projections. In May 2009, the payroll tax was projected to bring in $1.54 billion for the MTA, and prior to this amended budget, the MTA was going to receive just $1.3 billion this year. Paterson may be patting himself on the back with this press release, but all he has done is to restore the funding levels to where they should be.

Second, someone has to pay for this $230 million increase, and at a time when the suburban counties that make up the outer-lying parts of the Metropolitan Commuter Transportation District are in revolt over the payroll tax, you can bet that the burden will fall on the heads of those within the five boroughs. Paterson’s press people offer up this explanation:

The amended proposal eliminates the current flat Mobility Tax structure (0.34 percent of payroll for all MCTD counties). It increases the tax rate for New York City businesses to 0.54 percent of payroll. It also cuts the tax rate in half for businesses outside of New York City in the Metropolitan Commuter Transportation District (MCTD) to 0.17 percent. Under the new proposal, New York City businesses would now contribute 88 percent of all mobility tax revenues, up from 70 percent. This will ensure a more equitable distribution of tax liability in line with the fact that New York City is the destination for over 90 percent of weekday ridership.

The following table helps contextual the changes:

Basically, New York City businesses will see an increase of nearly 60 percent in the payroll tax to support the MTA while businesses outside of the city who clearly benefit from the presence of mass transit will have to pay less. Paterson claims this to be an “equitable” solution, but it seems to be a prime example of Paterson’s political pandering at a time when his poll numbers are down.

In response, the MTA had this to say:

“The MTA is grateful to Governor Paterson for his continued focus on funding the MTA and the critical service we provide to 8.5 million New Yorkers every day. The MTA’s revenues have taken two significant hits since December: a nearly $400 million deficit was closed in December with administrative reductions and service cuts; and just last week we learned of a new approximately $400 million shortfall due primarily to reduced State projections of the payroll mobility tax. Based on the estimates provided by the Governor’s office, the changes to the payroll mobility tax proposed today would provide $230 million to recover much of the latest $400 million in deterioration and could lessen the need for additional cuts on top of those passed in December. It would not eliminate the need for the service cuts and administrative reductions included in the MTA Budget passed in December.

“The proposal also changes the structure of the payroll mobility tax, which is a decision to be made by the Governor and the Legislature. Even if this restructuring is enacted, the MTA will remain focused on overhauling how it does business to reduce costs and operate within the funding provided.”

For now, at least, we can breath a sigh of relief as the agency should see some of its deficit reduced. Unfortunately, that increased state contribution will come at the expense of those who live and work in New York City.

These days, the MTA’s federal stimulus grants have become hot topics of conversation. Some would prefer to use the legally permissible 10 percent siphoned from the stimulus grant to help cover the ever-widening operating deficit. Others don’t feel comfortable taking money away from the also financially distressed capital budget. But what if the money isn’t being spent?

According to a report issued recently by the New York Building Congress, few of the city’s $1.57 billion in transportation stimulus funds have spent. In fact, the city itself has spent only $857,000 of that money, and while the MTA has spent more of its allotted dollars, spending is far off pace. Of the MTA, the NYBC said:

According to the State Comptroller’s figures, the MTA has spent $39,000 of stimulus funds on a bridge replacement on South First Avenue over the MetroNorth Railroad. Approximately $10.9 million is earmarked for this project.

At the end of 2009, no federal stimulus money had been spent on the two MTA projects slated to receive the most ARRA funds; the Fulton Street Transit Center, which is expected to receive $423 million, and the Second Avenue Subway, which has been approved for $276 million.

According to MTA, the agency has been allocated a total of $1.075 billion in ARRA funds and has awarded contracts worth $886 million. However, the MTA acknowledges that just $14 million has been spent to date.

This data underscores a point I’ve made about the stimulus grants in the first place. Generally, shovel-ready projects were mostly funded, and the MTA — along with many other state organizations — used its stimulus dollars to cover project deficits. NYBC’s head echoed this sentiment.

“As New York City nears the first anniversary of federal stimulus legislation, we remain greatly concerned about the slow pace of capital spending on transportation projects,” NYBC President Richard T. Anderson said. “Virtually all of the stimulus money spent and received to date has been devoted to programs designed to lessen the impact of the economic downturn on individuals, bolster the operating budgets of local governments, or fund small-scale construction projects. While such spending is important, it does little to stimulate the broader economy, create new jobs and prepare the region for renewed growth.”

So what is to be done? If anything, this latest development strengthens the case for the Russianoff Plan. Congress passed the stimulus money in order to stimulate the economy, and an operating budget crisis at the MTA will lead to job losses that we as a city would prefer to avoid. If those federal dollars can be used to avert some cuts and some staff reductions, then, the money would be going to good use. Of course, some of the payroll fat at the MTA deserves to be cut, and some of the efficiency-based service changes should be implemented anyway. As of now, though, this money is just sitting there.

I’m still not on board with the Russianoff Plan, but I can see where this debate is leading. Eventually, the MTA, faced with a huge debt and a pile of unused cash just sitting there, will take some of the stimulus funds from projects that, in a few years, will need more money. The economics of it all just keep getting more and more muddled as time goes on.