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Editorial: MTA payroll tax or not, New Yorkers still pay

A file photo of a train pulling into

A file photo of a train pulling into the Ronkonkoma LIRR station. (Sept. 30, 2011) Photo Credit: Ed Betz

Saying that a court ruling this week invalidating the MTA payroll tax is a victory for taxpayers is like saying your right pocket won without mentioning that your left pocket lost.

One way or another, taxpayers are going to be funding the Metropolitan Transportation Authority. Nassau County's victory as a plaintiff in this case in State Supreme Court, even if it stands up on appeal -- and that's a big if -- won't change that. There's nobody else to tap.

The MTA payroll tax was never a particularly wise way to finance public transportation. The levy, which charges employers in the MTA region 34 cents for every $100 worth of payroll, was a political solution created in 2009 to fill a huge hole in the MTA budget when the recession dried up other funding, such as the mortgage recording tax. Once enacted, the payroll tax became burdened with incomprehensible paperwork and massive opposition.

Because of that opposition, the MTA tax on small businesses was reduced last year, and abolishing it entirely has been a campaign rallying point for many state Republicans; it was a factor in the defeat of two Democratic state senators from Long Island who voted for it.

But politicians, beyond decrying waste, fraud and abuse, don't have a lot of ideas on how to fund the MTA in lieu of the tax. And it can't all be done through fares.

There isn't a public transit system in the nation that operates without subsidies, and the MTA, which gets $1.2 billion annually from the payroll tax, as well as funds from other taxes and fees, can't either.

The MTA says almost 60 percent of operations were paid for by fares this year, a proportion they say is the highest rider contribution in the nation.

And MTA Chairman Joe Lhota said losing the payroll tax, without creating another source of funding, would force "devastating service cuts" beyond imagination. For reference, he pointed to the mere $90 million in expense cuts the authority imposed in 2010, and the draconian service reductions that were the result.

But mass transit serves more than just its riders. The metropolitan area is the economic engine not just for the five boroughs and the counties that get service from the authority, but for the whole state. All New Yorkers, not just MTA train, bus and subway riders, would suffer if this public transit system faltered, just as all New Yorkers, whether or not they drive, would suffer if the roads were allowed to disintegrate.

The MTA says four prior and similar court challenges to the constitutionality of the tax -- based on the claim that a home-rule message needed to be sent to the legislature before the tax could be enacted -- have been dismissed. Gov. Andrew M. Cuomo said Thursday that he expects this week's ruling by State Supreme Court Justice R. Bruce Cozzens to be overturned, and the flow of cash to the MTA from the payroll tax to continue uninterrupted.

Whether that turns out to be the case won't change the crux of the issue, however, and it's why any victory dance is shortsighted. If a $1.2-billion annual hole is blown in the MTA budget, whether through a court action or via a legislative vote, that hole will have to be filled. And the taxpayers are going to be the ones to fill it.