William Floyd schools sue against MTA payroll tax

The William Floyd school district has added its voice to a chorus of critics, filing a lawsuit challenging the application of the Metropolitan Transportation Authority's payroll tax against the school district. The suit, filed earlier this month in State Supreme Court, claims the tax violates both state law and the state constitution.

"I'm not familiar with the lawsuit, but I think everything in the payroll tax has been done legally," MTA chief Jay Walder said.

In March, seven Suffolk County town supervisors announced plans to overturn the tax with a constitutional lawsuit. At the time, several constitutional law experts told Newsday that state constitutional law is so vast and amorphous that it was nearly impossible to speculate on the strength of such a lawsuit.

Brookhaven, Huntington and Southampton have filed suits.

Bill Schoolman, owner of Hampton Luxury Liner bus company, filed a similar lawsuit in December alleging the MTA tax is unconstitutional, in part because it forces him to "subsidize my competition." Schoolman said last week he believes Brookhaven should have joined his lawsuit rather than filing its own.

Brookhaven Supervisor Mark Lesko said the town suits could eventually join with Schoolman's suit or each other, while noting Schoolman's complaint is "a little different" because the town isn't being asked to give money to a competing agency.

The payroll tax, adopted last year as part of a bailout of the MTA, collects 34 cents per $100 of payroll from employers in the MTA service area, including school districts.

According to state law, on or after June 1, school districts were to be reimbursed 100 percent of payments made in the prior year. They have yet to receive that money.

"Promises were made, and they have yet to be fulfilled," East Islip Superintendent Wendell Chu said recently. East Islip's payroll tax was $175,000.

The State Legislature included $60 million in reimbursements for the payroll tax in budget bills it adopted Monday. It is unclear whether Gov. David A. Paterson will veto those funds, along with other school aid restoration he did veto Monday night.

The William Floyd district proposed $12.5 million in cuts - including laying off 150 employees, cutting summer school and reducing full-day kindergarten to half-day - in the 2010-11 budget approved last month by voters. "This extra burden is really hurting our district, causing us to make many additional cuts," Superintendent Paul Casciano said.

William Floyd paid $311,000 in the MTA tax in 2009-10, and it expects to pay $350,000 next year.

Annualized, the tax cost to Long Island school districts would have been $24.4 million this year, said Lorraine Deller, executive director of the Nassau-Suffolk School Boards Association.

"Our residents should not have to pay for the fiscal inefficiencies of the MTA," said William Floyd school board president Robert Vecchio. "We will not be an ATM for the MTA."

With Alfonso A. Castillo, James T. Madore and Patrick Whittle