NEW YORK—A tax that gleans more than $1.2 billion for the MTA every year was deemed unconstitutional on Wednesday evening by a Nassau County judge.
Supreme Court Judge R. Bruce Cozzens, Jr. said in his six-page ruling that although the MTA services a large part of the state within the Metropolitan Commuter Transportation District—encompassing seven different counties, including Nassau—residents outside of the district would likely not be affected “if there were a decrease in the capability of the MTA.”
“The budgetary crisis of the MTA is not a substantial state concern,” he said.
The vote should have passed with a home-rule message or by a two-thirds vote in each house, therefore the state unconstitutionally got involved in local affairs, according to the Judge’s ruling. Yet the home-rule message in this case would have to be passed by multiple local governments, including New York City’s City Council.
The payroll mobility tax takes a percentage of a businesses’ income and gives it to the MTA. The tax was previously .34 percent of payroll expense across the board, but now ranges from .11 to .34 percent, with only companies making over $436,500 paying the latter.
When the MTA had a projected $1.8 billion budgetary shortfall in May 2009, the state legislature passed the payroll tax to help plug the gap. The MTA currently has a balanced budget.
The MTA issued a statement Thursday saying the ruling “is erroneous” and the organization plans to “vigorously” appeal it.
“We expect it will be overturned, since four similar Supreme Court cases making the same argument were previously dismissed,” the MTA stated, adding that removing the tax would force the MTA “to implement a combination of extreme service cuts and fare hikes.”
Politicians outside of New York City, and Brooklyn Senator Martin J. Golden, have supported legislation to repeal the tax, but that legislation has not advanced since January.
“The MTA Payroll Tax is an unconstitutional, job killing tax, which should have never been passed in the first place,” said the bill’s sponsor, State Senator Lee M. Zeldin, in a statement. “We must support our nation’s largest mass transit system, but we can’t be reckless with how we go about that important mission.”
Paul Steely White, executive director of Transportation Alternatives, said the decision threatens the state’s economy.
“Public transportation is critical to the New York City metropolitan area—an area that provides 45 percent of the state’s tax revenue, paying for countless public services from Niagara Falls to Montauk,” he said in a statement Thursday.
The tax will continue for now, pending the outcome of an appeal.
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