State and local officials from across Long Island are urging the state not to allow an appeal following a judge’s ruling that the state's MTA Payroll Tax is unconstitutional.
The ruling by Justice Bruce Cozzens, Jr. was handed down on a lawsuit first brought in 2010 by Nassau and Suffolk counties as well as numerous villages, including New Hyde Park, Mineola, Valley Stream and Locust Valley. The ruling, which charged employers 34 cents for every $100 of payroll, determined the tax was unconstitutional.
But one prominent Long Island Democrat, , D-Glen Cove, said it is time to reassess the MTA's finances with an eye toward protecting two underperforming North Shore LIRR lines.
Bill Schoolman, the owner of Bohemia-based charter and tour bus company Classic Coach, was the first to launch a lawsuit over the payroll tax, taking out a mortgage on his home to file the suit.
“It’s pretty bad news that New York State taxpayers last year contributed illegally $9 billion to keep the MTA running,” Schoolman said. “The law’s pretty clear: public authority is supposed to be self-sustaining.”
“It also sends a message to agencies like the MTA to become more efficient before looking to the taxpayer,” Nassau Executive Ed Mangano said in a press conference Thursday morning at the , calling the decision a “great victory.”
Nassau County has paid $9.9 million since the tax was enacted.
Lavine, whose 13th Assembly District spans Nassau's North Shore, voted for the tax when it was enacted. Democrats argued it was necessary to help finance the MTA, the giant authority that operates the Long Island Rail Road, Metro North and numerous other public transportation lines.
"My reaction is that while it remains to be seen what happens pending the various appeals of the case, if we have to back to square one we will have to determine the MTA's overall financial picture," the Assemblyman said.
At stake, said Lavine, are two financially vunerable LIRR lines, the Port Jefferson Branch and another terminating in Oyster Bay. Both have been losing money.
"We must make sure the LIRR continues to serve our riders, especially when we consider the two lines on the North Shore," Lavine said. "We can not afford to lose service on either of those two important lines."
The MTA has had "...a hell of a week for the MTA,” said . “First they blew up Second Avenue and now the down-state communities have blown up the MTA Payroll Tax.”
Cozzens' ruling was based on the premise that the tax did not benefit the entire state, as the tax only applied to the seven downstate counties and the five boroughs. He ruled that the legislation neither passed both houses of the state legislature with a two-thirds majority vote nor adhered to the “home rule” clause from the local municipalities.
The Village of Mineola was one of the original parties which levied the suit against the tax while Martins was still mayor.
“It’s $270 million that was siphoned out of our local economy each and every year,” Martins said. “$270 million that would go a long way toward restoring jobs, giving a boost to our small businesses."
Martin’s senatorial predecessor, Craig Johnson, was first against the tax before changing his mind in 2009, becoming the deciding vote in the state senate to pass the tax as part of a $2.3 billion bailout package. A total of 52 percent of the state senate and 60 percent of the state assembly voted in favor of the measure. Later that year Johnson was also named to the MTA Capital Projects Board.
“I think people had a clear choice in that election,” Martins said. “Obviously there were all kinds of issues, I can’t speak to what influences a person’s vote but certainly that was part of our discussion during that campaign.”
Johnson was unavailable for comment.
Mangano said that “we’ll analyze that,” when asked if the county would continue legal action should the MTA successfully appeal.
“This decision has to stand, it should not be repealed,” Martins said.
What is not clear is how this will affect riders of the MTA, with fears that to make up for any lost funding, the agency may steply raise fares or tolls.
“What they should expect is efficiencies,” Mangano said, saying that the county is without the subsidy from the MTA, thus saving the agency money. “They should find another way through cost-cutting and efficiencies. They have $60 million in assets and other efficiencies that can be achieved before looking to the taxpayer or the rider.”
What is also unclear is if local municipalities must also continue to send in payments for the tax as MTA officials or if payments will be withheld.
“We’ll analyze that with counsel,” Mangano said, repeating the answer when asked if the county would seek retroactive reimbursement for taxes paid as well as on behalf of local businesses who paid the tax. “We would like to do that.”