Westchester County could join 15 Hudson Valley and Long Island municipalities and a business group in their legal challenge to the Metropolitan Transportation Authority payroll tax imposed for the first time last year on the region”™s employers.
The state”™s action in 2009, included in a $3.22-billion tax bailout bill for the deficit-ridden MTA, has been widely opposed by businesses, nonprofits and municipalities outside of New York City in the MTA metropolitan commuter district. In addition to the five boroughs, the district includes Westchester, Rockland, Orange, Putnam, Dutchess, Nassau and Suffolk counties.
Employers and self-employed persons in the region with quarterly payrolls of at least $2,500 are taxed 34 cents per $100 of payroll expenses.
Nassau leading challenge to tax
Nassau County Executive Edward P. Mangano leads that county”™s legal challenge to the tax in state Supreme Court. In late September, Nassau was joined in the lawsuit by Suffolk County; the Long Island villages of Floral Park, Valley Stream, Mineola and New Hyde Park and, in Orange County, the towns of Chester, Monroe, Warwick, Highlands, Wawayanda, Blooming Grove and Crawford and the village of Highland Falls. The Orange County Chamber of Commerce represents that county”™s businesses in the suit.
They claim the payroll tax is unconstitutional and illegal in part because it impinges upon the home rule powers of local municipalities, unequally taxes and discriminates against some employers and arbitrarily exempts others and intrudes upon the municipalities”™ fiscal authority and sovereignty. The tax was enacted as the MTA, faced with a $1.8 billion deficit in 2009, sought financial relief from Albany to avert what the agency warned would otherwise be drastic service cuts for train and bus commuters.
The plaintiffs claim the state Legislature”™s bailout bill violated requirements of the State Constitution, in part because the special law did not originate with requests for the measure from local governments and did not pass the state Assembly and Senate with the required two-thirds affirmative vote. The municipalities in their complaint also claim the 2009 law, by levying an “overly burdensome” payroll tax, is unconstitutional because it will interfere with local governmental business such as budgeting, taxation, transportation and capital formation.
They have asked the court to order a halt to further collection of all taxes and fees included in the payroll tax bill.
Astorino wants Westchester to join fight
Calling the state”™s MTA bailout measure “a poorly thought-out and hastily implemented decision,” Westchester County Executive Robert P. Astorino wants the county to join the lawsuit filed on Long Island. Astorino recently introduced legislation to allow the county”™s participation.
Astorino noted that Westchester residents already pay about $165 million to support the MTA as well as the highest property taxes in the nation. The state”™s action “makes no sense given the economics we live with every day,” he said in a prepared statement. “In fact, it”™s only making things worse. Yes, the MTA is hurting, but so are we. They”™re just adding insult to injury by piling on one more tax and giving businesses another reason to leave the state.”
A majority of the 17-member county Board of Legislators must approve the county”™s joining the legal challenge. The county executive”™s leader on the board for the legal move is Legislator John Testa, R-Peekskill. Testa jointly introduced the resolution with Legislator John Nonna, D-Mount Pleasant, who heads the board”™s legislation committee that will first review Astorino”™s proposal.
“It is time that Westchester County joins its counterparts throughout the region in challenging the unconstitutionality of this unfair tax,” Testa said in a prepared statement. “In light of the egregious waste and abuse uncovered in recent audits by the New York State Comptroller”™s office, we owe it to our school districts, businesses and not-for-profits to do everything we can to ease their tax burden and save jobs.”?Nonna, an attorney, said there are “strong arguments” against the constitutionality of the payroll tax.
Astorino said the lawsuit would be handled by the county attorney”™s office at no additional cost to the county.
