Officials Urge State Not to Appeal MTA Tax Ruling

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, including New Hyde Park, Mineola, Valley Stream and Locust Valley. They 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 nor 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.”

Assemblyman Andrew Raia, R-East Northport, called the decision a major win for Long Island taxpayers. "No longer will taxpayers have to bear the burden of the MTA's poor fiscal management," he said.

State Sen. Carl Marcellino, R-Syosset, voted against the MTA payroll tax in 2009 and urged the MTA and Attorney General Schneiderman not to appeal the
decision. "Instead of appealing this decision the MTA should follow the example of individuals all across the Island who are tightening their belts and doing more with less," said Marcellino. "It is imperative that the MTA trims its own budget before asking the public to pay one cent more in taxes or fare increases."

Rep. Steve Israel, D-Huntington, also spoke against the tax. “While the MTA tax is entirely decided by the state, not the federal government," said Israel, "today’s decision is a reminder that the federal government must fulfill its share of transportation investments to relieve the costs borne by local taxpayers and commuters."

Huntington Town spokesman AJ Carter said the town is encouraged by the decision and that it will benefit residents. "If the law is unconstitutional in Nassau County, it is unconstitutional throughout the state," said Carter, who added that the town hopes the decision is upheld on appeal.

Nassau County has paid $9.9 million since the tax was enacted. Nassau Executive Ed Mangano called the decision a "great victory" and said during a press conference at the Nassau Legislature that the MTA should become more efficient before looking to the taxpayer. He added that the legislature will "analyze" whether or not to pursue legal action should the MTA successfully appeal.

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 steeply 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 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.”