ALBANY - Local governments and transit systems won't get a cut when tax revenue starts flowing from ride-hailing services like Uber and Lyft, which can expand statewide come early July.
Every trip on a ride-hailing service outside New York City will come with a 4 percent tax, which the rider will pay as an add-on to their fare.
All of that money will be kept by the state, despite previous proposals that had called for saving a slice for local public transit systems.
The approved plan means the estimated $24 million in annual tax revenue from Uber and Lyft riders will stay in the state's general fund and won't be earmarked for local governments or supplementing bus service, as some lawmakers and officials had hoped.
"What we were advocating for was sustainable funding so that we can support a growing economy," said Bill Carpenter, CEO of the Regional Transit Service in the Rochester area and president of the New York Public Transit Association. "Whether it was funding from ride-share services or another place, we need sustainable funding."
The state's $153 billion budget, approved by Cuomo and lawmakers earlier this month, approved a statewide regulatory system for ride-hailing services.
The agreement ended a multi-year battle over insurance-law changes that will allow the companies to more easily expand outside New York City, where they will continue to operate under the city's taxi laws.
The ride-hailing law takes effect in early July.
The law includes two separate fees that all riders will pay: The 4 percent state tax and a 2.5 percent surcharge for worker's compensation costs for drivers.
In January, Cuomo proposed a 5.5 percent tax. About a quarter of the revenue -- an estimated $8 million -- would have been reserved for public transit systems outside New York City in a fund controlled by Cuomo's office.
The Democrat-controlled Assembly, meanwhile, pushed for trips to be subject to sales tax -- a move that would have brought county governments into the loop. The state sales tax is 4 percent, while counties charge at least 3 percent.
Senate Republicans, meanwhile, were pushing for a lower tax altogether -- 2 percent. A portion of that revenue would have been reserved for transit.
By the time the final budget was approved, the tax was dropped to 4 percent, with the state keeping the whole thing.
"We continued to argue for a full sales tax, which would have given a local share to all the communities that could -- if they thought transit was their highest priority -- put it into transit," said Assembly Insurance Committee Chair Kevin Cahill, D-Kingston. "The other sides didn't agree, and it went away."
Public transit systems didn't walk away empty-handed, however.
Systems outside New York City received a $20 million boost in for infrastructure projects, bumping up their total state capital funding to $104 million in the budget, which runs through March 31.
And those same systems also received a one-time, 1.99 percent increase in operating funding from the state, pushing the total to about $510 million this fiscal year.
Carpenter said transit agencies are "grateful" for the growth, but said they will continue to advocate next year for a recurring increase in funding that will continue year after year.
"Public transit agencies were agnostic where the funding comes from, but we need to have a sustainable source of funding," he said. "You buy buses that last 12 years, you put routes out there that people build their lives around. We need funding that's sustainable."
Stephen Acquario, executive director of the state Association of Counties, said the approved tax structure wasn't a "deal-breaker" because residents had made clear they wanted ride-hailing services.
"Do I have a strong feeling that they missed the mark on it? No," Acquario said. "The overwhelming cry for ride-sharing services far outweighed the additional revenue to flow to the Capitol."
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