By Marissa Maier
On Monday, March 29, Southampton Town Supervisor Anna Throne-Holst braved the precipitation at the Ronkonkoma train station to make a surprising announcement. Joined by the supervisors of the towns of Brookhaven, Huntington, Smithtown, Islip, Riverhead and Babylon, Throne-Holst said the municipalities intend to file a lawsuit against New York State over the Metropolitan Transit Authority (MTA) employer “Payroll” tax.
Similar to a lawsuit filed by William Schoolman, President of Classic Coach and the Hampton Luxury Liner, the towns argue the payroll tax bill breached the state constitution. At the press conference, the supervisors pointed out the legislation required a home rule message from the chief executive of each of the counties affected by the tax. The bill also failed to garner support from two-thirds of the state legislature, which is a requirement of a special law, or law that only affects a portion of the state.
“As town leaders, we work most intimately with the constituent base, and together we want to make it abundantly clear to the state that the payroll tax is an unacceptable way to pay for the shortfalls caused by poor financial planning,” said Throne-Holst. “As local representatives, it is our responsibility to stand up to the state for handing down inappropriate and, we believe, illegal ways to tax our residents with no justifiable level of service in return.”
Last year, the state legislature approved the payroll tax as a way to shore up the MTA’s $1.2 billion deficit. The tax charges employers an additional $34 for every $1,000 of payroll and applies to governments, schools and not-for profit organizations. According to Southampton Town, the county has contributed roughly $100 million toward the new tax with the town spending around $50,000. As part of his budget amendments, Governor David Paterson unveiled possible amendments to the payroll tax levy in early February. He proposes removing the fixed tax rate of $34 per $1000 of payroll. Instead, New York City employers would pay $54, while counties lying outside of New York City would pay $17 per $1,000. The state budget will be passed today, April 1.
State Assemblyman Fred Thiele, Jr. of Sag Harbor, though, would like to see an outright repeal of the payroll tax. He added officials in Albany are taking note of these lawsuits.
“There are a number of things they are taking seriously,” said Thiele. “First was the litigation brought by the Hampton Luxury Liner. Now you have a number of towns bringing forward a lawsuit. In addition you had a couple of special elections for assembly seats about a month ago [in which] Democrats lost seats and the MTA payroll tax was a factor in these races.”
Thiele specifically cited assembly seats in White Plains and East Patchogue, which were traditionally held by Democrats but were won by the Republican candidates in the special elections. Assemblyman Dean Murray of East Patchogue was outspoken in his criticism of the Democratic support for the payroll tax, added Thiele, and Murray called for a forensic audit of the MTA’s finances.
“I am glad these actions are being taken right now in the middle of the budget process,” added Thiele of the lawsuits. “It is on the radar screen, but I don’t minimize the fact that Albany seems to be dominated by the New York City interest. Part of the battle we have to fight is with the governor and the two legislative leaders who are from New York City.”