Cutting MTA tax could lead to cuts, fare hikes: Chief

Transit officials and advocates on Thursday blasted a state judge's ruling that an MTA tax is unconstitutional, saying it could lead to "devastating" service cuts and "radical" fare hikes if it is not reversed.

MTA chief Joe Lhota called Judge R. Bruce Cozzens Jr.'s decision to strike down a payroll tax "flawed," saying he expected it to be overturned on appeal. But he warned that if the state's appeals court upheld the ruling, it could lead to an annual $1.8-billion hole -- a 15% reduction -- in the fiscally challenged agency's budget, requiring service cuts and larger than anticipated hikes.

"It is almost incomprehensible for me to figure out at this point in time the severity of the cuts that would be necessary combined with the fare increase that would be necessary ... to make up 15% of our revenues," Lhota said at a news conference.

The MTA faced a $900-million budget hole in 2010, when it made its "doomsday" cuts that slashed subway lines and bus routes.

"We know what happened in 2010," said Bill Henderson of the MTA's permanent citizen's advisory committee. "We inflicted a lot of pain."

"Think about the amount of pain you will have to inflict to save somewhere close to $2 billion a year," he said.

On Wednesday, Cozzens said the Payroll Mobility Tax, which charges employers 34 cents for every $100 of payroll, was unconstitutional because it "does not serve a substantial state interest." He said state legislators should have gotten the OK of local municipalities to pass the law, or get two-thirds approval, which didn't happen.

On Thursday, Gov. Andrew Cuomo said, "we believe the ruling is wrong and we believe the ruling is going to be reversed."

The decision was received warmly by businesses in counties, towns and villages in suburbs outside of New York City, which had argued that they did not directly benefit from MTA services.

But Robert Yaro, of the Regional Plan Association, argued that the MTA helps the entire region. "The system will begin to go downhill again and it will take the economy and the quality of life of the entire Metropolitan region down with it," he said.

A spokeswoman for state Attorney General Eric Schneiderman, who is fighting on behalf of the agency, declined to comment on Thursday.