MTA Commuter Tax Pits New York City Against Suburbs

Benjamin Kabak describes the on-going saga (in Second Ave. Sagas, founded in 2006 to track the progress of Manhattan's long-awaited Second Ave. subway) of a vital revenue mechanism for the Metropolitan Transportation Authority that provides transit service - bus, subway, and commuter rail - for the five boroughs of NYC and seven surrounding suburban counties, including funds for the struggling Long Island Bus.

Round I (also reported here) went to Nassau County Executive Edward Mangano on August 22 with a ruling by a single N.Y. Supreme Court justice ruling that the payroll mobility tax (also referred to as the commuter tax) was unconstitutional. On June 26, a four-judge panel of the Appellate Division overturned that ruling, allowing the MTA to continue to collect the vital tax that had been authorized by the state legislature in 2009, accounting for 12% of its annual budget

The PMT, a 34-cent tax on every $100 of payroll paid by public and private employers in the 12-county MTA region, generates $1.2 billion annually. (Streetsblog, 2012)

Kabak questions the wisdom of using the courts to strike down the tax, offering an alternative venue for such efforts. 

In Albany, efforts to repeal or pare down the payroll tax will continue, but that’s the right approach. A legislative response is now required, and the payroll tax, imperfect but necessary, lives on as a permissible, constitutional exercise of legislative power that clearly serves a substantial state interest.

On June 28, Kabak writes that "Nassau County isn’t giving up. The Long Island plaintiffs will appeal this week’s decision to the Court of Appeals, the highest state court in New York’s judiciary system, Newsday reported today.

Kabak adds that "it seems that Nassau County Executive Edward Mangano is content to spend more taxpayer dollars pursuing a lawsuit he has no chance of winning." Without commenting on his chance of winning, we noted here that while Nassau may be a wealthy county, under Mangano's leadership the county found itself in dire financial straights just two years ago.

From the suburbs north of NYC, Mid-Hudson News Network writes "several upstate municipalities and the Orange County Chamber of Commerce were among those joining the Nassau County lawsuit challenging the tax. Nassau paid all of the legal fees."  

Orange chamber President John D’Ambrosio said he is disappointed with the ruling but is not giving up the fight to have the tax revoked. He said the business community will continue to lobby state lawmakers in Albany to eliminate it.

To sum up, Round I went to the suburbs; Round II went to MTA, and Round III just began. Stay tuned.