Officials Urge State to Uphold MTA Tax Ruling

MTA Tax ruled unconstitutional, Nassau and Suffolk politicians ask state attorney general to deny MTA’s appeal.

State and local officials from across Nassau and Suffolk counties involved in the lawsuit against the MTA Payroll Tax are urging the state not to allow an appeal following a  judge’s ruling that declared the tax 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, argued that the tax which charged employers 34 cents for every $100 of payroll was unconstitutional based on the fact that it did not benefit the entire state, and either did not pass both houses of the state legislature with a two-thirds majority vote or adhere to the “home rule” clause from the local municipalities.

Bill Schoolman, the owner of Bohemia-based charter and tour bus company Classic Coach, was the first one 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.

"I've been on the record seeking a repeal of this unfair, job-killing tax," said Assemblyman Brian Curran, R-Lynbrook. "It hit the wallets of working families, seniors and local, small businesses for too long."

“We can’t be a ‘New New York’ and be open for business with taxes like the MTA Payroll Tax still in effect, so whether we got rid of it legislatively last winter where we chipped away at it a little bit or in the courts, this tax was a bad idea the day it was passed, it was a bad idea now, I’m happy to see it go by the wayside,” added Assemblyman Ed Ra, R-Franklin Square.

Lynbrook Village Administrator John Giordano said that since the inception of the MTA tax in 2009, the Village of Lynbrook has paid $181,000 in total.

"We're pleased that the tax was repealed," he said, "but we also have to be prepared that the MTA may seek legislation to try to correct the enactment process to make the tax valid. In the meantime, Lynbrook is already studying its legal options on seeking reimbursement of the $181,000 that has been paid since 2009."

Mangano said that “we’ll analyze that,” when asked if the county would continue legal action should the MTA successfully appeal.

While some legal challenges may still remain, the MTA Payroll Tax has got to go. Yesterday's ruling joins me in standing up for our neighbors," added Curran.

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.”

With additional reporting by Jaime Sumersille and Matthew Hogan.

Martin Gavin August 25, 2012 at 11:05 AM
The MTA tax was wrong from the start. If things are so bad that the state needs to suck more money in than that cost needs to be shared by ALL taxpayers and not just business owners, not only because that's flat out fair, but also because it sets a bad precedent. Think about it...if LIPA or Con Ed money problems, does that mean business should just pay to bail them out too? It was wrong from the start. Shame on them to burden business with that tax and for it to be allowed to happen without any due process.
Robert G. Schaffrath August 25, 2012 at 12:36 PM
Just like with education and health care, there isn't enough money on the planet to satiate the needs of the MTA. You could take every dollar the citizens of downstate New York have and give it to the MTA and the next year they would be back for even more. Expenses always rise to meet income with that agency. Unlike a business that needs to take a hard look at its expenses and waste, the MTA always cuts service and pays lip service to real waste cutting. Then they go back to the "well" and demand more money from the residents of the metro area in the form of taxes, fare increases and higher bridge tolls. Frankly the state needs to finally say enough is enough and tell the agency to do some real cuts and not a superficial "we tried". As I recall from working in a forune 10 company, if you cannot find a way to cut a budget ten percent, you are not trying hard enough.


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