EDITORIAL: MTA sends us to the tipping point for taxes
As Tea Party-style anger ignites political races across the country, Long Island is having its own anti-tax moment.
People are fed up with paying the new Metropolitan Transportation Authority mobility tax - better known as the payroll tax - which amounts to nearly $200 million more that Island employers are paying annually since the tax was enacted in 2009.
Yet every day seems to bring further news of cuts in rail and bus services. Several towns, and now Nassau County, are suing, saying the MTA tax is unconstitutional. Whatever the legal merits, the balance of payments seems unfair to Long Islanders.
The movement here even has its own slogan, reminiscent of a certain Boston Harbor event: It's taxation without transportation.
The tipping point for Nassau County came last month, when the MTA released its 2011 budget, which eliminated $27 million for Long Island Bus. The MTA has been subsidizing this service for a decade, something it does for no other suburban bus system. Nassau twisted political arms to win this special treatment, while Suffolk and Westchester counties have always paid their own way. But dumping this obligation all at once on the broke Nassau County budget would shut down Long Island Bus.
This isn't the equivalent of sharing the fiscal pain with the riders of the subways, the Long Island Rail Road, Metro-North Railroad or city buses - all of whom are weathering service reductions and fare hikes. The county should assume full responsibility for Long Island Bus, but a gradual phaseout of the MTA subsidy is in order.
At the same time, the county has filed a lawsuit in Nassau County Supreme Court, saying that the MTA payroll tax is unconstitutional. The county's complaint is procedural: It argues that a bill that affects several localities - as opposed to the entire state of New York - requires a two-thirds majority vote in both the State Senate and the Assembly. The bill that enacted the hated payroll tax in May 2009, for the 12-county MTA region in and around New York City, passed the Senate on a close party-line vote, 32 Democrats to 29 Republicans.
"Payroll tax" is actually an inaccurate name for what the tax does. Sole proprietors - from dentists to freelance writers to accountants - also pay the tax, even though they may not employ anyone but themselves. It's a charge of 34 cents for every $100 of payroll or earnings. Forms from the state Department of Taxation and Finance began showing up in people's mailboxes last year.
The tax applies to local governments as well as nonprofits, businesses and private schools. Only public schools are exempt, although they had to pay the tax up front and are only now being reimbursed for 2009. Nassau County officials estimate that employers there pay $85 million to $95 million more to the MTA now; Suffolk's estimate is $100 million.
The payroll tax rankles, especially, as reports surface about MTA workers doubling their salaries in overtime and 90 percent of LIRR employees qualifying for federal disability payments. Some wryly describe the LIRR as a retirement and disability organization that runs trains.
The tax was one element of a "bailout" for the MTA in the spring of 2009 that was meant to avert 23 percent fare hikes and a "doomsday" scenario of cutbacks to the vast MTA network. The bailout was also supposed to be large enough to create regional bus service for Westchester, Suffolk and Nassau.
But three things went wrong. Senators representing city boroughs eliminated a plan to toll 13 East River and Harlem River bridges - a $600 million idea that might have paid for regional bus service. And the payroll tax is bringing in less than the annual $1.5 billion estimated. The forecast for 2010 is $1.28 billion. Finally, in late 2009 and again early this year, Gov. David A. Paterson and lawmakers swept nearly $300 million from the MTA to patch state budget holes.
The MTA now depends on nearly a dozen special taxes on everything from cell phones to mortgage transfers. This vital agency should be supported more directly, with revenue that is not so dependent on the economy's ups and downs
Meanwhile, the MTA's 5-year capital budget has pushed Long Island improvements off into the future. In a letter to the MTA last week, the Long Island Regional Planning Council complained about the lack of funding for big projects like the Third Track on the LIRR's Main Line and double-tracking between Farmingdale and Ronkonkoma. The added tracks would allow more inter-Island commutes. More than 70 percent of Suffolk residents and half of Nassau's work on the Island.
Long Island should not be further squeezed off the MTA priority list. Albany needs to revisit city bridge tolls as well as Mayor Michael Bloomberg's congestion pricing plan. And there are other ideas worthy of discussion: taxes on carbon emissions, gas purchases, vehicle miles traveled. Single passengers could pay a fee to use the HOV lanes on the LIE.
Long Island has clearly been pushed to its limit of being taxed more to receive less. State leaders must head off this Tea Party mood - or find themselves tossed over the side of the ship. hN
