Taxi industry leaders were baffled at how a key piece of the latest MTA-bailout compromise plan--a $1 per taxi ride surcharge that accounts for nearly $200 million of the $1.8 billion proposal--would be collected by government officials.

"We can't figure that out," said Ethan Gerber, of the Greater New York Taxi Association, which represents 1,500 medallion owners. "Most people still pay by cash."

A spokesman for Senate Majority Leader Malcolm Smith said the logistics of the surcharge collection have yet to be determined. "I don't think that has been worked out," he said. "There's of course a technical aspect, just as there was for the [idea of] collecting tolls [on East and Harlem river bridges]."

The $1.8 billion proposal includes a payroll tax of 34 cents per $100 of wages, a $1 fee per trip for taxis, a 25% increase in the fee for driver's licenses, a $25 fee for vehicle registration and a fee on rental cars. The taxes and fees would affect the 12-county region around New York City that is served by the MTA.

The taxi portion of the plan especially mystified Mr. Gerber. "Private unsubsidized transportation is being used to subsidize public subsidized transportation that doesn't work because of its own inefficiencies," he said.

The proposal eliminates controversial proposed tolls on the Harlem and East River bridges, which had been part of the Ravitch Commission plan to save the MTA. It cuts potential subway and bus fare increases by about two-thirds, resulting in average increases of about 8%. To attract Republican support, the plan also calls for borrowing $1.2 billion to fund road and bridge projects upstate and on Long Island. Half of the $190 million generated by the taxi fee would go to finance that work.

Taxi drivers said the $1 fee would eat into their already slim profit margins. "This is a wage cut on taxi drivers," said Bhairavi Desai, executive director of the New York Taxi Workers Alliance, which represents 12,000 drivers. "Drivers would really suffer for a long time if this were to pass."

Ms. Desai was leading a delegation of drivers to Albany on Tuesday to give legislators an earful. Thousands more are expected to participate in a phone-in campaign to legislators' offices.

"Who has ever heard of a private industry bailing out a government agency?" she asked.

Vincent Sapone, managing director, of the League of Mutual Taxi Owners, predicted ridership would drop by at least one third, and tips would be cut in half. "A cab driver works 12 hours a day, 6 days a week to make ends meet," he said.

Drivers, who had unsuccessfully campaigned for a 50-cent surcharge when gas prices ballooned above $4 a gallon last year, were hoping the next increase could be used to fund a health care plan. But they worry a $1 surcharge to bail out the MTA could mean they'd have to wait another 10 years for any substantial increase.

The Alliance also agrees there would be no easy way for the state to collect the surcharge and charges that lawmakers lack a fundamental understanding of the industry.

"There is an underlying assumption here that the money will just be deducted from paychecks and easily collected by the state," Ms. Desai wrote in a letter to Gov. David Paterson, Assembly Speaker Sheldon Silver and Mr. Smith. "This is absolutely false."

Taxi drivers are independent contractors and the fee can't simply be taken out of their paychecks because they don't get paychecks, she says.

A spokesman for the city's Taxi and Limousine Commission would not comment on whether the agency would have to approve the surcharge or how it might be collected.

Opposition emerged even from those not concerned with the principle of the surcharge.

"Where revenue comes from and where it's spent should be connected," said a spokesman for Transportation Alternatives. "That revenue should be used to fund transportation alternatives right here in New York City, not repaving highways in Elmira."

Associated Press contributed.