 
It”™s a welcomed measure of financial relief coming from Congress, but opponents of the Metropolitan Transit Authority”™s regional payroll tax hold scant hope that federal stimulus funds will be used by the MTA to reduce its operating deficit and derail the newly enacted state levy on employers before it gathers steam out of Albany.   Â
The U.S. House of Representatives and Senate recently passed a supplemental appropriations bill that included an added provision to allow public transit agencies nationwide to use up to 10 percent of their American Recovery and Reinvestment Act funds for operating expenses. Previously those funds were restricted to capital improvement projects.
Rep. John Hall, the Hudson Valley Democrat, was among the letter-writers in Congress who pushed for the change and helped insert the provision in the spending bill that this month went to President Barack Obama for signing. Hall noted the provision will allow the MTA to use $110 million of its federal stimulus money for operating costs.
The 12-county payroll or mobility tax, expected to generate about $1.5 billion annually over the next two years, was approved by state legislators last month as a means to reduce the agency”™s operating deficit and avert drastic service cuts and more severe fare and toll hikes. The first payment is due from employers and self-employed individuals within the MTA service region on Nov. 2. Those taxpayers, including nonprofits, small businesses and school districts, will pay 34 cents for every $100 of payroll expense.Â
Hall has asked the MTA to use the newly available stimulus funds to offset the payroll tax, specifically in the Hudson Valley counties included in his 19th congressional district ”“ Westchester, Dutchess, Putnam, Orange and Rockland. With those counties slated to pay almost $90 million in the new levy, the MTA”™s share of federal funds is “more than enough to end the payroll tax on Hudson Valley counties,” he said.
“The Hudson Valley is being disproportionately and unfairly hit by this tax,” said Hall. “We need to take actions that will create jobs, not impose new taxes on payroll that will cut jobs.”
“Congressman Hall did what he could to get this money available,” Hall”™s press secretary, Meaghan Smith, said last week. “Now the ball is in their (the MTA”™s) court and the state legislators”™.” Â
Business advocates in the region, however, last week said the transit agency and legislators are not likely to play ball with payroll tax opponents under the new federal rules. Some recently have gone to Albany with proposals similar to or the same as Hall”™s.Â
In Albany, what”™s done is hard to undo, said Paul Vitale, vice president for government relations at The Business Council of Westchester. Regarding the payroll tax”™s derailment in the Hudson Valley, “I”™m not very hopeful overall because it would require state approval,” he said. “I”™d love to see it happen but I think it”™s highly unlikely.”
At the MTA, “These dollars have probably already been spoken for,” he said. With the payroll tax designed to give the agency a steady source of income annually, “I don”™t see them making a switch. I can”™t see the legislators or the MTA letting that payroll tax go, because that”™s their recurring revenue stream for the future.”
“Once these taxes go in, it”™s really very difficult to get them out”¦It would be very tough until the economic times changed dramatically. Right now we”™re in the midst of economic turmoil for the foreseeable future and the MTA is going to have those needs,” said Vitale.
At the Orange County Chamber of Commerce, “As far as we”™re concerned, anything that”™s going to eliminate that payroll tax would be welcome,” said Carol Smith, chamber vice president for government initiatives. “I don”™t know if this would have to go through Albany or not for that to happen. I don”™t know if federally they can do it.”
“It would be great if it happens, but excuse me if I”™m being a little leery,” she said.
In Rockland County, County Legislator Edwin Day last week drafted a local resolution calling on the State Legislature to require the MTA to use about $70 million of its federal stimulus funds to roll back the payroll tax for Rockland, Orange, Dutchess and Putnam counties. The recent federal spending provision “gives our state representatives a golden opportunity to right a grievous wrong” inflicted on those counties, he wrote.
Rockland Business Association President Al Samuels said he recently met in Albany with state legislators to propose the $110 million in freed-up federal funds be used to reduce the value gap between MTA services received in Rockland and Orange counties and the revenues MTA annually collects there. The $110 million sum exactly matches the two-county value gap when the new payroll tax is added, he noted.
“I”™m being territorial, I admit it,” Samuels said.
Samuels said the response he heard in Albany to a payroll tax rollback was: No way. It would require new legislation and the signature of a leading proponent of the MTA tax, Gov. David Paterson.
“There”™s no way in hell that legislation is going through,” Samuels said. “We don”™t even have a Legislature that”™s functioning.”
Payroll tax opponents, though, should continue to push in the second year of the state”™s MTA bailout program to reverse the tax”™s impact on the two “most egregiously affected” counties, said the Rockland business leader. “I have never seen such an egregious and offensive act perpetrated on one set of citizens in this state to benefit another group,” Samuels said.
MTA officials did not reply to a request for comment on Hall”™s proposal last week.
