Council Members: This Tax, Or the Other One?

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By Azi Paybarah

September 26, 2008 | 1:22 p.m

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Council members Simcha Felder and Peter Vallone Jr. are circulating a letter in support of re-instating the commuter tax.

The letter, sent to other council members, argues that reinstating the commuter tax and closing costly loophole in the state pension law are crucial to the city's budget. "[T]he alternative," the letter says, is "further cuts to city services and a proposed mid-year property tax rate hike."

The letter pits the commuter tax, which Democrats in the State Senate don't want to do, squarely against the property tax increase--which Democrats in the City Council don't want to do.

The letter, which was forwarded to me by an interested reader, is below.

Dear Colleague,

Please join us in signing onto a letter urging Speaker Silver and Majority Leader Skelos to reinstate the commuter tax and close the legal loophole that allows "double dipping" by public employees collecting disability pensions.

The repeal of the 33-year-old commuter tax in 1999 has cost the City hundreds of millions of dollars each year, and at least a total of $5.5 billion in total tax revenue since.

The "double dipping" legal loophole allows public employees who are injured in work-related accidents to sue for future lost earnings in addition to collecting accident disability pension. Private companies,not bound by the same law, deduct pension payments from the amount they have to pay in damages. A revised law would help control the soaring pension costs and, according to the Law Department, save the City nearly $164 million by settling pending cases as well as $11 million per year in the future.

This combination of new revenues and savings would put a significant dent in projected budget shortfalls, with the alternative being further cuts to city services and a proposed mid-year property tax rate hike.

We have attached the letter to Speaker Silver and Majority Leader Skelos, as well as a proposed resolution calling on the State to close the "double dipping" loophole. If you are interested in signing on or have additional questions, please call [staffer] at 212-###-#### or reply with an electronic signature.

Sincerely,

Council Members Simcha Felder and Peter Vallone, Jr.