Local state senators introduced a bill in the Senate Monday that, if approved, would repeal the Metropolitan Transit Authority payroll tax for all employers in counties outside New York City.
Approved in 2009, the tax imposes a .34 percent levy on payroll for all employers, including schools and governments, in New York City and the seven surrounding suburban counties.
Many local lawmakers have challenged the fairness of the tax since its inception, claiming that eastern Long Island receives paltry service from the MTA. Bill cosponsor state Senator Ken Lavalle (R-Port Jefferson), who represents the North Fork and voted against the original legislation, called the payroll tax “ill conceived and onerous.”
He’s not the only one who feels that way.
“There is absolutely no doubt that the MTA, without increasing fares or cutting services, can balance its books after this legislation is implemented,” state Senator Lee Zeldin (R-Mastic), one sponsor of the bill, said in a statement.
Mr. Zeldin gained traction in his bid to oust former senator Brian Foley by campaigning on Mr. Foley’s vote to support the MTA tax.
As ways of relieving the transit authority’s budget woes, the freshman senator, who took office in January, cited real estate transfer taxes, eliminating overtime abuse in the MTA and investigating having a private agency run the MTA.
Under the proposed legislation, small businesses with 25 employees or less, as well as schools, would not have to pay the tax as of January 1, 2012.
The payroll tax would be reduced to .23 percent for all other employers in the seven counties outside New York City, including Suffolk, as of that date. It would be further reduced to .12 percent as of January 2013 and repealed as of January 2014.
As of January 2014, the tax would remain at .21 percent for all businesses within the five boroughs.
Marcus Povenilli, Mr. Zeldin’s deputy chief of staff, said the bill was introduced Monday but it is not known when senators will vote on it. He added that state Assemblyman George Latimer (D-Mamaroneck) will introduce the same bill in the Assembly.
“We hope that it moves swiftly through the system,” he said.
But Desmond Ryan, a New York State political analyst and the executive director of the Association for a Better Long Island, said it might be hard for the bill to gain momentum in the Assembly, which would also need to approve the repeal.
“It will probably gain some traction in the Senate, but I’m not sure where the Assembly stands on the bill,” he said. “The Assembly is predominately made up by people who are city-centric.”
An MTA spokesperson defended the tax Monday, calling it vital support for the transit authority.
“The payroll mobility tax, passed by the Legislature in 2009, provides a vital $1.4 billion in annual support for public transportation across the downstate region — 15 times more money than was saved by last year’s painful service reductions,” said MTA spokesperson Aaron Donovan in a statement. “The MTA’s focus is on using this revenue as efficiently as possible, which we are achieving by identifying savings projected to reach $1 billion annually by 2014.”
Mr. Donovan indicated that higher fares could be coming down the line.
“Because we have already taken these steps, finding additional savings from means other than fare increases or service reductions would be very painful,” he said. “As we continue cost-cutting, further reductions become harder and harder to achieve.”
The repeal of the MTA payroll tax would be welcome news to William Schoolman, owner of the Bohemia-based Classic Coach company, which directly competes with the MTA yet pays more than $15,000 to the agency due to the tax. In 2009, Mr. Schoolman filed a lawsuit against the transit authority claiming the payroll tax is unconstitutional, and he has also started the website www.mtataxpayerabuse.com.
“This year [the company’s payroll tax] will be more than last,” he said. “We certainly hope [the local senators] are successful in their efforts.”