Monday, August 27, 2012

Court dismissal of MTA tax could jeopardize finances

Written by 
  • Print
  • Email

New York's Metropolitan Transportation Authority said Aug. 23 it would appeal the decision by a state Supreme Court judge that a state tax on suburban businesses to help finance regional railroad service was unconstitutional.

The judge's decision, if upheld, would remove $1.26 billion in revenue from MTA's budget generated by the payroll mobility tax, further straining the agency's budget. Politically, it exacerbates tension between suburban areas reliant on MTA rail services, including both Long Island Rail Road and Metro-North Railroad, and New York City.

State Supreme Court Judge Bruce Cozzens Jr. of Nassau County said Aug. 22 the payroll mobility tax passed in 2009 was unconstitutional because it was "a special law, which does not serve substantial state interest"—language New York-area rail and transit advocates Thursday challenged as vague and misleading.

Judge Cozzens ruled that state legislators needed a "home rule" message or a message of necessity approved by two-thirds of the state legislature before enacting the statute. Cozzens said the current rule was passed in 2009 by only 60% of the Assembly and 52% of the Senate.

The suit against the tax was brought by Nassau County Executive Edward Mangano and Long Island localities. The tax also covered most employers in neighboring Suffolk County on Long Island, as well as Rockland, Orange, Dutchess, Putnam, and Westchester counties, and the five boroughs/counties of New York City.

Get the latest rail news

Rail news and analysis from Railway Age, IRJ and RT&S by email