A Candid Ravitch Warns of $25 B. Budget Gap, Hints at Tax Overhaul

“We are going to examine very carefully the tax system in New York State,” Mr. Ravitch said. “California appointed a commission which suggested a different method of taxing business, and we’re going to look at it in the sense of being revenue-neutral.”

I asked him after the event more about this, and he didn’t offer much more other than to say he wanted to put something together in the coming months, and suggested I look at what California recommended.

The California proposal to which he seemed to be referring recommended last month a complete overhaul of the state’s tax system, calling for the creation of a new consumption-based approach that adds a new tax to all receipt by business in the state, and reduces income taxes.

“There are different ways of taxing people, and I just want to see if there’s a more efficient way of restarting the economy without costing us revenues,” Mr. Ravitch told me.

He also spoke out strongly against the concept of new income taxes, saying, simply, that we’re at our limit.

“There’s an increasing amount of anecdotal evidence that locational decisions are being made aversely to the interests of New York because of our very high income tax structure,” he said. “So I think we’re at the outer limits of elasticity of our tax structure, and we cannot look at the revenue side as a way of solving these budget deficits.”

Mr. Ravitch hinted that layoffs were in the cards–again, such warnings could strengthen his hand in negotiating with unions–particularly if the legislature does not pass a new, less generous benefit package for public employees.

And on the subject of transit–ostensibly the topic of the forum–he brought up his favorite abrasive topic: congestion pricing (he led a failed push for East River Bridge tolls earlier this year). He suggested the new head of the M.T.A., Jay Walder, would try once again to get some sort of congestion pricing through.

“I have no doubt that user fees or whatnot will come back and back, and they will happen,” Mr. Ravitch said. “I think the new chairman of the M.T.A. is a very bright guy, and I think he’s committed to trying to reintroduce the concept of user fees and tolls.”

Mr. Walder hasn’t taken a strong position on the topic, only to say that he isn’t planning to bring up the issue.

ebrown@observer.com