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Plan to rescue MTA goes off rails: Bailout ‘falling apart’ over payroll tax dispute

Gov. Paterson Gov. Paterson

 A plan to rescue millions of straphangers from sky-high fare hikes and widespread service cuts suddenly veered off track in Albany Tuesday night, sources said.

Sources familiar with the talks between Gov. Paterson’s office, the Assembly and the state Senate said it became unclear that Senate Majority Leader Malcolm Smith could get a package passed - even without tolls on the city’s free bridges.

“It’s falling apart at the seams,” one source said, adding that some Senate Democrats also appeared to be balking at the employer-paid payroll tax part of the plan.

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