State Judge Rules MTA Payroll Tax Unconstitutional

Well, this is just crazy. A State Supreme Court judge has ruled that the MTA payroll mobility tax, which collects more than a billion dollars a year to keep the NYC region’s transit system running, was enacted in a way that violated the state constitution. The payroll tax was passed in 2009 to avert devastating service cuts. It initially collected 34 cents for every $100 of employers’ payroll in the 12-county MTA region, but the tax was rolled back substantially by the state legislature and the Cuomo administration in 2011.

The payroll tax remains one of the region’s single largest sources of transit funding, and doing away with it would throw the transit system into turmoil.

In his decision, State Supreme Court Judge R. Bruce Cozzens, Jr. ruled in favor of Nassau County, Suffolk County, and smaller municipalities in the MTA service region, saying that the payroll tax “does not serve a substantial state interest” and therefore needed to receive home rule messages from the municipalities affected, according to Newsday.

As Transportation Alternatives pointed out in a statement, the ruling “threatens the foundation of the state’s economy.”

We’ll have more on this story tomorrow, but it seems as though the region’s transit system is now at the mercy of an appeals court judge three appeals court judges to be named later, who will decide whether Judge Cozzens’ proclamation that there’s no “substantial state interest” in funding the MTA holds any water.

  • Mark Walker

    If Nassau and Suffolk don’t want to support the MTA, the LIRR is the obvious place to start cutting.

  • Joe R.

    I have to say that I never thought a payroll tax to support the MTA was a good idea. If you’re going to levy taxes, then tax behaviors we wish to discourage, such as driving. I’m hopeful with the demise of the payroll tax we might actually get a congestion tax of some sort passed. The only caveat is to do it right this time. Charge to enter NYC proper during business hours, not just the Manhattan CBD. The effect of a Manhattan CBD tax will be to turn the outer boroughs into parking lots for suburban commuters. A tax to enter the 5 boroughs would instead keep the cars completely out of the city. Probably 75% of the traffic in the outer boroughs from 6 AM through 10 PM is suburban car commuters.

    And yes, if we can’t get any funding for the MTA from Nassau or Suffolk then cut the LIRR first.

  • Anonymous

    That appeal would presumably be before a panel of judges in the Appellate Division, Second Department, which is based in Brooklyn and includes judges from all of the downstate counties other Manhattan and The Bronx. 

  • Daphna

    As others said, if Nassau and Suffolk do not want to pay for the MTA even though it services them, then the MTA should stop servicing them – shut down the LIRR until such a time as those counties want to pay their fair share.  The LIRR and MetroNorth riders have much more subsidized fares that NYC subway riders by a wide margin. Raise their fares so they are paying the same percentage of operations costs that NYC subway riders are paying.  I’m not sure if this is accurate but in the recent past LIRR fares were paying for only about 25% of operations, MetroNorth fares were paying for about 35% of operations, while NYC subway rider fares were paying 99% of operations (none of this includes capital expenses).  I do not want to have a war of one type of transit rider against another, but this does show that Long Island counties should be paying into the MTA since they are getting highly subsidized rides.

  • Ben Kintisch

    Uh oh. This is not good. MTA is already barely solvent on a year-to-year basis, and over-reliant on taxes tied to real estate. Time for congestion pricing.

  • Anonymous

    Have to join with @2555783a6f62598b6aadd2d882a4830f:disqus and say that I’ve never been a fan of the payroll tax. All it does is discourage employment in NYC. It doesn’t do anything to directly address the real issue. 

    That said, this is obviously very bad news. Not least because the next mayor will almost certainly spend a lot of rhetorical energy attacking anything resembling congestion pricing.   It’s just going to be business as usual: “It’s the unions! It’s the unions!” And on and on.
    We’re doomed.

  • Tom

    Daphna wrote ” The LIRR and MetroNorth riders have much more subsidized fares that NYC subway riders by a wide margin.”

    This is true only if you ignore NYC buses.

    According to the 2010 National Transit Database, NYC Transit (the total of subways, most buses, and Access-A-Ride) covered 50% of its operating costs from fares and “other” income (which I assume is things like advertising sales and retail space rentals in subway stations).

    MTA Bus (which operates the formerly private bus lines) covered 37%.

    LIRR covered 49%

    Metro-North covered 61%.

    So it looks like the commuter rail lines (especially M-N) are pulling their share of the load.

    http://www.ntdprogram.gov/ntdprogram/pubs/top_profiles/2010/Transit_Profiles_Top%2050%20Agencies-Complete.pdf

  • Surfstud31

    Why should people who don’t use MTA pay for it? I, for one, am thrilled about the court decision. Either ALL counties in the State should’ve been taxed or the tax should have never been passed. The MTA tax is ridiculous. It’s like asking subway riders to help pay for keeping my car running.

  • Andrew

    @6720368b943451356be85740cf733a3c:disqus Subway riders do, in fact, pay for the streets you drive (and probably park) on. And bus riders sit in traffic caused by too many cars.
    If you’re proposing that only drivers pay for streets and only subway riders pay for the subway, I’m game.

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