Judge declares MTA tax unconstitutional

A state court declared an MTA tax unconstitutional Wednesday, handing a victory to municipalities outside of New York City, but threatening to blow a massive hole in the cash-strapped agency's budget.

The lawsuit argued that the Payroll Mobility Tax, created in 2009 as part of a state bailout for the MTA, "unfairly burdened" employers, with the tax charging them 34 cents for every $100 of payroll.

The MTA gets about $1.5 billion each year from the tax.

In his ruling Wednesday, Judge R. Bruce Cozzens Jr. sided with the counties, towns and villages outside the city. He said the law "does not serve a substantial state interest" and that it "was passed unconstitutionally."

An MTA spokesman said the agency will "vigorously appeal" the 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," he said.

Paul Steely White, executive director of advocacy group Transportation Alternatives, slammed the judge's decision, saying it "threatens the foundation of the state's economy."

"Public transportation is critical to the New York City metropolitan area -- an area which provides 45% of the state's tax revenue, paying for countless public services from Niagara Falls to Montauk," he said in a statement.