A New York State judge ruled today that a state tax that contributes to the bottom line of mass transit is unconstitutional.
The state mobility tax provides more than 15 percent of the mass transit system operating budget in the tri-state region, according to the Metropolitan Transportation Authority.
Judge R. Bruce Cozzens on Wednesday said the tax “does not serve a substantial state interest” and therefore needed home rule messages, which allows the state to engage in local matters., reported the Associated Press.
Joseph Lhota, chairman of agency which services all of the five boroughs, Long Island, upstate New York, and Connecticut, issued a statement saying that the agency would vigorously appeal the ruling.
The mobility tax charges employers in the metro region 34 cents for every $100 of payroll. It was passed in 2009 to avert service cuts as the MTA faced a record deficit.
The ruling was considered a victory for Nassau County which had filed suit against the state legislature for enacting the tax.
Below is a copy of the statement from MTA chairman Lhota:
Thank you for coming here today. I’m joined by Richard Anderson, president of the New York Building Congress; Denise Richardson, managing director of the General Contractors Association of New York; and Robert Yaro, president of the Regional Plan Association.
Yesterday’s ruling that the Payroll Mobility Tax is unconstitutional is flawed and erroneous. The MTA will vigorously appeal this decision.
I am confident the MTA will prevail in its appeal. In four earlier challenges to the Payroll Mobility Tax, the same arguments were thrown out by the state courts, and the law was expressly determined to be constitutional.
However, this flawed ruling puts a spotlight on several critical issues for the MTA, for the 8.5 million people who ride it every day, and for everyone in the New York City region.
The Payroll Mobility Tax is a key component of the transportation system that drives the economy of New York City, of Long Island, of the northern suburbs, and the entire state of New York.
Without the services the MTA provides, New York would choke on its own traffic. And without the Payroll Mobility Tax, the MTA would be forced to balance its budget with a combination of devastating service cuts and fare hikes.
The Payroll Mobility Tax provides $1.2 billion for the MTA each year. The law being challenged also includes four other dedicated subsidies for the MTA.
If yesterday’s ruling stands, it would take $1.8 billion out of the MTA budget – that’s almost 15 percent. That would be a catastrophe for the services the MTA provides – and for the entire regional and state economy that depends on it.
The MTA is getting its fiscal house in order. We have cut our annual spending by $700 million a year, and that will rise to $890 million a year by 2015. We have eliminated 3,500 jobs. We are on track for this year’s discretionary spending to actually be less than last year’s.
Still, our non-discretionary costs keep rising. The MTA needs the Payroll Mobility Tax – or another stable and reliable source of funding – to continue to move 8.5 million people a day and serve the entire New York State economy.
As I said, we will vigorously appeal this ruling and we expect to prevail.