Updated 08/23/2012 12:04 AM
State Court Determines MTA's Payroll Mobility Tax Unconstitutional
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A state legislature-approved Metropolitan Transportation Authority payroll mobility tax was deemed unconstitutional by a state judge Wednesday, a decision that could leave a huge gap in the MTA's budget.
In a six-page decision, State Supreme Court Justice Bruce Cozzens Jr. said the payroll tax "was unconstitutionally passed by the New York State Legislature."
"The MTA payroll tax is a special law, which does not serve a substantial state interest," the decision reads. "This law should have been, according to the State Constitution, passed with either a Home Rule message or by message of necessity with two-thirds vote in each house. This did not occur, therefore this law was passed unconstitutionally."
The MTA Tax Bill, according to the decision, was passed on May 6, 2009 as an effort to make up a projected $1.8 billion MTA budget shortfall.
Essentially a payroll tax, it charges employers in the MTA's region 34 cents for every $100 of payroll.
The loss of the mobility tax would take $1.5 billion out of the MTA's budget, according to an MTA spokesperson.
Several counties, including Long Island's Nassau and Suffolk Counties, argued that the bill was unconstitutional because the tax doesn't benefit the entire state.
Supporters said the decision could be disastrous to the local economy.
"De-funding transit in the New York Metropolitan region will undermine the economy," said Noah Budnick of Transportation Alternatives. "This a region that contributes upwards of 50 percent of the tax revenue in New York State."
An MTA spokesperson said the MTA "will vigorously appeal today's ruling."
"We believe this opinion will be overturned, since four prior challenges to the constitutionality of the law making the same argument have been dismissed," the MTA said in a statement.