MTA, NY Pols Fire Off on Court Decision Striking Down Key Transpo Tax
Thursday, August 23, 2012 - 01:40 PM
For the best summary of this issue LISTEN to this short conversation with WNYC's Matthew Schuerman:
(New York, NY - WNYC) When news broke last night that a New York Supreme Court Justice had struck down a crucial transportation tax, the NY Metropolitan Transportation Authority issued a tart remark that included a promise to “vigorously appeal today’s ruling."
Then the authority's financial officers had overnight to contemplate the prospect of having a $1.8 billion hole blasted into their annual budget if the ruling is upheld.
That could not have produced sweet dreams. Instead, it prompted the authority to send forth a more robust denunciation of Justice R. Bruce Cozzens Jr.'s finding that the tax, collected from 12 counties in and around New York City served by the NY MTA, was levied in a way that violated the state constitution.
MTA head, Joe Lhota said, "the ruling is flawed as well as erroneous." He added the lawsuit also contests four other dedicated taxes, totaling $1.8 billion per year. "The payroll mobility tax drives the entire economy of New York. Without the MTA, New York would choke on traffic," he warned.
At issue is a "mobility tax" that collects 34 cents per hundred dollars of payroll from employers, excluding small businesses. The tax was created in 2009 to save the NY MTA from a budget crisis caused by the recession.
In addition to running the largest subway system in the U.S., the city buses, the MTA also manages regional commuter rail companies and the bridges used by them.
Late last year, Governor Cuomo reversed the tax for certain small businesses, promising to replace "every penny" with money from the state's general revenues.
Below is the MTA's most recent fighting words in full, followed by reactions from New York Governor Andrew Cuomo and Mayor Bloomberg.
MTA Statement on Payroll Mobility Tax ruling
The MTA strongly believes that yesterday’s ruling from Nassau Supreme Court is erroneous. We will vigorously appeal it and we expect it will be overturned, since four similar Supreme Court cases making the same argument were previously dismissed.
The Payroll Mobility Tax maintains a regional transportation system that moves more than 8.5 million people every day and drives the economy of New York City, Long Island, the northern suburbs and the entire state.
Removing more than $1.2 billion in revenue from the Payroll Mobility Tax, plus hundreds of millions of dollars more from other taxes affected by yesterday’s ruling, would be catastrophic for the MTA and for the economy of New York State.
The MTA is getting its fiscal house in order. We have cut more than $700 million from our annual operating budget and eliminated 3,500 jobs. We are on track for this year’s discretionary spending to actually be lower than last year’s.
Without the Payroll Mobility Tax or another stable and reliable source of funding, the MTA would be forced to implement a combination of extreme service cuts and fare hikes. The Payroll Mobility Tax remains in effect for now, and we expect that it will survive this legal challenge.
Governor Cuomo told reporters this morning that he didn't think there would be a disruption to the NY MTA's budget, adding, "I believe this ruling is wrong and will be reversed."
In a separate event, Mayor Bloomberg told reporters that one way to make up for the NY MTA's potential loss of revenue would be to enact a congestion pricing plan like the one he proposed for part of Manhattan in 2008, which was defeated by a vote in the state legislature. The mayor then continued with a bit of sarcasm, "I betcha the legislature thinks they have a better plan. My suggestion is you address your question to those people who think they have a better plan."