Westchester County officials and municipal allies are mulling their options in the wake of a recent appellate court ruling that the widely opposed Metropolitan Transportation Authority (MTA) payroll tax on employers in the region is constitutional.
Enacted in 2009, the tax ”“ up to 34 cents per $100 of payroll for employers with annual payrolls over $1.25 million ”“ has been strongly opposed by business groups and municipal officials in the 12-county MTA commuter region. The court ruling keeps in place a state levy for which business owners this year filed protective income tax refund claims after a lower court ruled in August 2012 that the law was unconstitutional.
That earlier decision sprang from a 2010 lawsuit led by Long Island”™s Nassau County and joined by Westchester, Putnam and Suffolk counties, the Orange County Chamber of Commerce and more than a dozen towns and villages in the region. A state Supreme Court justice in Nassau County ruled that the special law enacting the tax required a home-rule message of support from affected local governments because it did not apply to all of the state.
The state has continued to collect the MTA tax from employers during the appeals process. Officials at the state Department of Taxation and Financial Services last fall said they expected the law to be upheld on appeal.
State Appellate Division judges in Brooklyn on June 26 reversed the lower court judgment and declared the MTA Employer Tax Law constitutional. Because it provides a funding source for essential transit and transportation services in the metropolitan region, it serves a “substantial state concern” and therefore is exempt from the home-rule message requirement, the court ruled.
MTA spokesman Aaron Donovan said the authority was “pleased” with the appellate decision. He said the tax “provides more than $1.2 billion per year to fund the region”™s railroads, subways and buses ”“ the backbone of the region”™s economy.” Eliminating that revenue “would have had a catastrophic impact on the region”™s 8.5 million daily transit riders,” he said.
In Mineola, Nassau County Executive Edward P. Mangano pledged to continue the fight to eliminate the payroll tax. “The tax is overburdensome, unfair and we will be appealing the ruling,” he said in a statement.
In White Plains, George Oros, chief of staff to Westchester County Executive Robert P. Astorino, said Astorino “is disappointed in the court”™s decision. He has always opposed this imposition of this tax. It costs Westchester County millions of dollars a year and represents yet another unfunded mandate.”
Oros said the county attorney is reviewing the decision and will consult with Nassau County on “the next steps.”
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