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MTA payroll tax roils leaders
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As Suffolk officials voice their discontent over Gov. David Paterson's MTA bailout, one town official characterized the law as unfair because it calls for reimbursing school districts but not other municipalities, while a school district official said the tax creates further complications for schools because the promised reimbursements cannot be counted on.
The $2.26 billion plan, which passed May 6, would shore up the MTA's growing deficit and finance future structural repairs by imposing a .33 percent mobility tax on all 12 taxing districts within the MTA service area, which is expected to raise $1.5 billion, plus a 10 percent increase in fares for subways and LIRR trains.
"Legislation created in haste and signed into law in haste can be amended just as quickly," said Huntington Supervisor Frank Petrone, who last week formed a committee to head off the proposed tax of representatives from the town's taxable districts.
But Smithtown Supervisor Patrick Vecchio, who nonetheless plans on joining in the supervisors' opposition at their next association meeting, said that the bill's passage makes effective resistance difficult. "The problem with it is it's now a law. … and the law is the law," he said. "I don't see anybody putting in a bill to overturn the law because it just won't happen."
Huntington alone would have to pay $190,000 in payroll taxes, not including the payments expected of schools, libraries, water and fire districts, town spokesman A.J. Carter said.
Northport Mayor George Doll said his village must now come up with an additional $15,000 for the payroll tax come September.
"I think that's a lot of money. There will also be a $400,000 school board tax, the town of Huntington has to pay more in taxes [and] anyone with a business ... will be taxed. We, as citizens, have to pay a portion of all these taxes. This is taxes on top of taxes. This isn't right."
Doll said he is looking for a volunteer to be on Supervisor Petrone's committee.
The MTA payroll tax would meanwhile put Brookhaven out $264,000, estimated Supervisor Mark Lesko, who was pessimistic about any real opportunity to fight back. "We understand residents of Brookhaven use the Long Island Railroad. We use the MTA. And if there's a need to bail it out, obviously, all municipalities on Long Island, at some level, should be willing to contribute. It just seems to me this is a very high amount and it's going to contribute significantly to our own fiscal problem, and that's unfortunate."
Lesko added, "At the end of the day, we're going to pay our taxes. And if this is part of our tax burden, we're going to pay it."
The tax would create a $110,000 shortfall in Smithtown's budget, according to Vecchio.
"Unfortunately," he said, "we'll have to take that money that will be due in 2009 out of our reserve funds, which we would probably have used toward next year's operating budget. So that's not helpful."
Sen. Brian X. Foley (D-Blue Point) voted in favor of the bailout, with the stipulation that school districts be reimbursed and the MTA be audited, Foley's communications director, Ibrahim Khan, said. "We feel that [the audit] is something that should have been done a long time ago."
Khan said that the alternative to bailing out the MTA would have been disastrous to the state's infrastructure. "While it's not a perfect bill, it's the best possible solution given the terrible circumstances we inherited from the former majority."
Assemblyman Michael Fitzpatrick (R-St. James) voted against because the tax, saying it puts too much burden on employers, particularly in a bad economy, and not enough on the MTA itself.
"When they say everything has to be spread equally, it is not being spread equally," Fitzpatrick said. "I refuse to vote in favor of increased taxation when you see egregious practices are allowed to continue because of organized labor's strength up here [around Albany]."
Sen. Kenneth LaValle (R-Port Jefferson) also opposed the legislation, saying it punishes Long Island, a region already hit with high taxes. "It places an additional burden on our municipalities, which means higher real property taxes," LaValle said.
The MTA tax will also cost Stony Brook University Hospital an additional $1.3 million in taxes, he said.
He fears that due to high taxes, small businesses won't hire additional workers and might even lay off employees, LaValle said.
"I have also heard, over and over again, that it will force, even though it is illegal, a lot of businesses to pay off the books," he said.
Yet Dan Weiller, spokesman for House Speaker Sheldon Silver, said Silver supported the bailout because it prevented fare increases and service cuts throughout the MTA service region. "These huge fare increases and dramatic service cuts would have had a devastating impact on Long Island, as well on the entire region," Weiller said.
Councilwoman Jane Bonner (C-Rocky Point), calling the tax "a job tax," said, "Raising taxes kills jobs. It's basic economics."
What's more, she said, Shoreham-Wading River is still awaiting $30 million from the state for the closing of the Shoreham nuclear power plant. "If the state is unreliable in paying back what they owe which they shouldn't have taken, I don't have very much faith that they'll pay this back."
Shoreham-Wading River schools now face an additional $100,000 in payroll taxes, on top of a 27 percent property tax increase, the district's assistant superintendent for business, Joseph Singleton, said. The exorbitant tax levy "has to do with money the district was promised and not receiving from the state — what they call 'prior-year' state aid. The board of education has decided at this point not to borrow any more money against that promise."
An additional tax on Eastern Suffolk BOCES services that amounts to $1 million will not be reimbursed, Singleton added.
Jeffrey Carlson, assistant superintendent for business in Three Village Schools, said his district is slated to pay about $270,000 in payroll taxes. The essential question is, he said, when would the district be reimbursed?
"If the reimbursement comes within the same year, that's one thing," Carlson said.
"Other than that, we would have to cut something else … or at least defer it to the following year, when we actually get the reimbursement. … From our perspective, if you're not going to require school districts to pay it, then don't make us pay it in the first place."
Karen Forman contributed to this report.
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