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Court Ruling Puts Millions in Transit Funds in Jeopardy

According to a State Supreme Court judge, an MTA budget-balancing tax on businesses was not passed legally.

A State Supreme Court judge in Nassau County ruled Wednesday that a tax levied on small business owners to fund millions of dollars worth of subway, bus and commuter rail infrastructure projects and upkeep was unconstitutional, according to a Reuters report.

The judge ruled against the MTA Payroll Tax first instituted in 2009 because it applies to only 12 city and suburban New York counties—a move that the court said requires a home-rule message approved by at least two-thirds of the State Legislature.

The MTA reportedly plans to appeal the ruling.

Reaction to the decision from transit advocates was swift.

"This decision threatens the foundation of the state’s economy," said Paul Steely White, executive director of Transportation Alternatives. "Public
transportation is critical to the New York City metropolitan area—an
area which provides 45 percent of the state’s tax revenue, paying for
countless public services from Niagara Falls to Montauk. We hope Gov. Cuomo resolves this case, and that the appeals court will consider the substantial state interest when reviewing this ruling."

When adopted in 2009 by the Ravitch Commission called by then Gov. David Paterson to help shore up the MTA's finances, the tax imposed a 34-cent tax for every $100 of payroll.

After considerable outrage throughout the first couple of years of the tax, the MTA rolled it back at the end of 2011, eliminating it entirely for businesses with an annual payroll under $1.25 million. The , though the measure never got the required support from the Democratic-controlled Assembly.

Joseph Pinciaro contributed to this story.

Scottilla August 23, 2012 at 08:10 PM
However, the 8 1/2 MILLION people who use the MTA daily, work for and patronize the same small businesses, will have to make up the shortfall with higher fares and worse service.


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