As the 2011 legislative session winds down in Albany, state lawmakers from Westchester and Putnam counties and Long Island have joined in a bipartisan push to phase out the Metropolitan Transportation Authority payroll tax for employers outside New York City, calling it an “ill-conceived” and “onerous” jobs-killer that has stymied business growth.
The legislation follows in a long line of Albany bills to repeal or modify the controversial tax since it was enacted in 2009. Nineteen other bills have been introduced in the current session and none have passed from committees to a floor vote. Sponsors of the June bill, though, said its bipartisan backing and phased approach to eliminating a reliable revenue source for the MTA give this bill a better chance of passage by both the Senate and Assembly.
Part of a $3.22-billion bailout bill for the deficit-freighted MTA, the tax ”“ 34 cents per $100 of payroll ”“ has been vociferously opposed by business and economic development groups and municipal officials throughout the lower Hudson Valley. It applies to employers and self-employed persons with quarterly payrolls of at least $2,500 in the MTA”™s metropolitan commuter district, which includes Westchester, Rockland, Orange, Putnam, Dutchess, Nassau and Suffolk counties in addition to the five boroughs.
A bill introduced June 6 in the Assembly and Senate would reduce the tax for the seven suburban counties to 23 cents per $100 of payroll as of Jan. 1, 2012. The tax would be lowered to 12 cents per $100 at the start of 2013. It would be fully repealed for employers outside the city on Jan. 1, 2014.
For employers within New York City, the MTA tax would be reduced but not eliminated. They would see a 6-cent rate drop, to 28 cents per $100 of payroll, on Jan. 1, 2013. The tax would be lowered to 21 cents per $100 at the start of 2014 and remain in effect at that rate for the five boroughs.
Small businesses with 25 employees or less and public and private schools would be exempt from the tax as of Jan. 1, 2012, both in the city and in the outlying counties. Public schools currently are required to pay the tax but are reimbursed by the state.
The bill”™s sponsors said the exemptions would apply throughout the MTA commuter region to spare those “financially vulnerable” schools and businesses from the “devastating” tax rates.
Its Assembly sponsor, George Latimer, the Democrat from Rye, in his justification for the bill said the tax has had “a crippling effect” on business. “Not only has there been a severe negative impact on exiting business, it has also stymied growth of new business at a time when the government should be incentivizing people to start new businesses.”
Latimer, who voted in favor of the original tax legislation, said repealing the payroll tax outside the city is “an equitable strategy” because residents of the region are not as reliant on MTA services as are New York City residents who daily use MTA subways and buses.
State Sen. Greg Ball, the Republican from Patterson and a co-prime sponsor of the Senate bill, said the proposal to eliminate the tax in phases over 2 ½ years recognized “the $1.3-billion hole” that its repeal will leave in the budget of the MTA. Some previous repeal efforts in Albany “were more political than substantive,” he said.
“There”™s a real brewing push to absolutely see if not an immediate, a phased repeal of the payroll tax,” Ball said. “I think we have to push ahead to get a common-sense solution passed.”
“I believe that of all the bills you see here, this one has the highest likelihood of being the final bill that reaches the greatest consensus,” he said.
State Sen. Lee M. Zeldin, a first-year Long Island Republican who made repeal of the payroll tax the top issue in his election campaign, has led the recent push. “There is absolutely no doubt that the MTA, without increasing fares or cutting services, can balance its books after this legislation is implemented” he said at a recent press conference. “I am extremely confident that this bill is the legislative solution to not only repeal the MTA payroll tax, but also help shine a light on how the MTA can begin to fix its own financial house.”
Zeldin recently wrote to Gov. Andrew Cuomo asking him to add a repeal of the MTA payroll tax to his agenda. Â He also asked state Comptroller Thomas DiNapoli to do a thorough top-down forensic audit of the MTA”™s finances.
