Martins Reacts as MTA Payroll Tax Ruled Unconstitutional

It may have cost former  the last election and now it's been deemed unconstitutional. The highly unpopular MTA Payroll Tax was struck down by a judge on Wednesday.

The ruling will reportedly put the MTA out about $1.5 billion per year, while that cash will remain in the pockets of businesses, municipalities, and taxing districts, many of which called the tax unnecessary. 

“I think people had a clear choice in that election,” said , who  and slammed the Democrat for . “Obviously there were all kinds of issues, I can’t speak to what influences a person’s vote but certainly that was part of our discussion during that campaign.”

Johnson was unavailable for comment.

Justice Bruce Cozzens, Jr. handed down his decision 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 which 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 or adhere to the “home rule” clause from the local municipalities.

“It’s been a hell of a week for the MTA,” Martins said. “First they blew up Second Avenue and now the down-state communities have blown up the MTA Payroll Tax.”

The MTA reportedly plans on appealing Wednesday’s ruling.

When adopted in 2009, the tax imposed a 34-cent tax for every $100 of payroll.

After considerable outrage throughout the first couple of years of the tax, the MTA rolled it back at the end of 2011, eliminating it entirely for businesses with an annual payroll under $1.25 million. The State Senate had , though the measure never got the required support from the Assembly.

Johnson was first against the tax before changing his mind in 2009, becoming the deciding vote in the state senate to pass the tax as part of a $2.3 billion bailout package. A total of 52 percent of the state senate and 60 percent of the state assembly voted in favor of the measure. Later that year Johnson was also named to the MTA Capital Projects Board.

Asked about the decision, Assemblywoman Michelle Schimel, D-Great Neck, said, “I do not comment on ongoing litigation. I’m concerned about the potential gutting of recent Long Island Railroad service restorations that a fiscal hole in the MTA budget can cause.” 

Still, numerous 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.

“It also sends a message to agencies like the MTA to become more efficient before looking to the taxpayer,” Nassau Executive Ed Mangano said in a press conference Thursday morning at the , calling the decision a “great victory.”

Nassau County has paid $9.9 million since the tax was enacted.

Mangano said that “we’ll analyze that,” when asked if the county would continue legal action should the MTA successfully appeal.

“This decision has to stand, it should not be repealed,” Martins said.

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 as MTA officials 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.”