Nassau files suit against MTA, state over payroll tax

Nassau County Thursday joined scores of outraged business owners, elected officials and other taxpayers in taking on the MTA's controversial payroll tax, which opponents have branded as unfair and unconstitutional - especially in light of the transit agency's fare hikes and service cuts across the region.

The county filed a lawsuit against the state and the Metropolitan Transportation Authority, aiming for repeal of the tax, which was the foundation of a nearly $3-billion state bailout last year of the financially struggling transit agency.

The tax demands 34 cents for every $100 of payroll from employers in the 12-county MTA service area. County Executive Edward Mangano said it costs Nassau government about $3 million a year and county business owners another $100 million.

"The MTA calls this a 'mobility tax.' Well, I see it as a nobility tax, where it is only used to pay the princes of the MTA," said Mangano, who acknowledged that the suit is a response to the MTA's plan to pull about $100 million in funding from Long Island Bus - a move that would potentially shut down the county-owned bus system.

MTA spokesman Jeremy Soffin said while the state imposed and collects the tax, "clearly this funding is desperately needed to fund the MTA's service." An MTA statement released later called Nassau's suit an attempt to "distract attention from its failure to fund its bus system."

The William Floyd school district and the owner of a private bus company have filed suits challenging the tax, and the towns of Southampton and Southold filed a joint suit earlier this month. Six other Suffolk towns announced their intention to challenge the tax in court. The suits already filed make similar legal arguments, including that the State Legislature did not pass the tax bill by a 60 percent majority or seek input from affected counties.

While the suits argue procedural flaws, a growing number of Long Islanders speaking out against the tax say it is simply an unfair and unwelcome burden in a tough economy.

"I'm very happy he's doing this," said businesswoman Annemarie McMullan, whose Annie Shines Cleaning Service in Massapequa Park has paid about $800 toward the payroll tax since its inception in March 2009. "They shouldn't be relying on businesses that are struggling to survive to balance their budget. Most of my employees, 98 percent of them, don't use mass transit."

At North Shore-Long Island Jewish Health System, the Island's biggest employer and the ninth-largest in New York City, spokesman Terry Lynam said officials there worry about increased public transit costs for the many patients and employees who need that transportation to get to hospitals.

"Given the fact that we're paying more than $8 million a year in payroll taxes to the MTA, we obviously feel access is an important issue and we need to be able to have a return on the investment that we're making on transportation," he said.

William Schoolman, owner of Hampton Luxury Liners charter bus company, filed the first lawsuit looking to abolish the tax in December. He has argued that Long Island shoulders a disproportionate burden from the tax because the majority of the MTA's services benefit New York City. "It's a corrupt tax because it supports and subsidizes a corrupt organization - namely the MTA," Schoolman said.That sentiment has been shared by state lawmakers from outlying counties, who say constituents are not getting enough bang for their MTA buck.

Some have proposed adjusting the tax to have suburban employers pay less and New York City businesses pay more.

Even Gov. David A. Paterson noted that in Suffolk "the train isn't even remotely close to where these businesses are, [and] they had the same rate."

He proposed dropping Long Island's payroll tax to .17 percent, and increasing the city's to .54 percent. A Paterson spokesman did not respond Thursday to a request for comment.

Austin Shafran, spokesman for the state Senate Democrats, who pushed for the tax, said the legislature is considering changes.

"Our priority is to provide relief for taxpayers that have been overburdened for years," he said.

But some transit advocates say it is important that everyone living in the 12 counties served by the MTA pay their fair share, regardless of how often they ride a train or bus. Neysa Pranger, spokeswoman for the Regional Plan Association, said even counties where transit ridership is sparse benefit from increased property values and fewer cars on roads. With Ellen Yan