“Isn’t this taxation without representation? I thought we already went through this,” said Sag Harbor Variety Store owner Lisa Field when asked what she thought of the Metropolitan Transportation Authority’s new payroll tax.
The tax, signed into law earlier this month, will require local businesses, including hospitals, schools and governments, to pay a 34 cent tax for every $100 of payroll. Suffolk County is set to pump millions of dollars into the MTA to help shore up the authority’s $1.8 million deficit. From the halls of the state assembly to the sidewalks of Main Street, people are saying the MTA is unfairly taxing Suffolk County residents for a service they rarely use and the county is in essence funding the New York City transportation system.
State Assemblyman Fred Thiele contends the MTA package was made “behind closed doors” with officials, hailing from the New York Metropolitan area, leading the negotiations.
Back in March, Thiele seemed certain the tax wouldn’t be voted through, but the state legislature indeed passed it on May 6, after state senator Brian Foley of Long Island swayed the vote, allowing the package to pass by two votes in the senate.
“Between March and now a lot of arm twisting went on,” explained Thiele.
“I thought we were pretty effective in putting up a unified decision,” stated Suffolk County Legislator Jay Schneiderman of the efforts made by local officials to oppose the payroll tax. “We have lost the power, and all of this money is leaving Long Island and going to New York City.”
Schneiderman maintains the East End is underserved by the MTA. Although the county contributed $250 million to the transit authority last year, the MTA currently runs just three trains on weekdays from the East End to New York City.
Geoff Lynch of the Hampton Jitney said the transit system works well in New York City because the authority services a small geographic area with a high density population. But on the East End, he added, a smaller population is spread out over a wide geographic area.
According to a press release from Suffolk County Legislator Edward Romaine, the county will pay around $520 million when the new MTA taxes and fees are enacted or about $347 per resident per year — on top of the taxes residents already pay toward the MTA. Schneiderman believes only 10 percent of Suffolk’s population, or 150,000 people, ride the LIRR.
“The county will pay around $3,000 to $4,000 per rider. We could lease each of them a car and we could forget about the trains,” argued Schneiderman.
When asked if East End residents will get more LIRR service in exchange for their contribution to the MTA payroll tax, Sam Zambuto of the LIRR (Long Island Rail Road) said no.
“[The Payroll Tax] allows the LIRR to maintain the existing level of service and eliminates the service reductions that were slated for implementation,” Zambuto reported. “It also reduces the fare increase from an average of 26 percent to an average of 10 percent.”
MTA representative Kevin Ortiz said even with $1.8 billion in funds procured from the payroll tax and other fees, the MTA will still face a small deficit in the upcoming year. Ortiz argued that the new funds would bring additional wages to the county because the MTA uses the services ofÂ subcontractors in Deer Park, and other Suffolk locations. He added the MTA’s capital plan would create $11.8 billion in wages and salaries in the 12 counties it services.
“They have to look at the big picture,” said Ortiz of Suffolk residents.
But local residents, from hospital administrators to business owners, say they are having a hard time seeing the “big picture.”
“Everybody that is in business out here will be subject to this new tax,” asserted Sag Harbor Village Mayor Greg Ferraris. He added that the tax will cost the village administration upwards of $10,000.
Southampton Hospital faces an even steeper tax burden because of its large payroll. Marsha Kenny, the director of public affairs, said the hospital had already closed its books for the 2009 budget when they learned of the tax. The hospital expects to pay $140,000 to the MTA this year.
Len Bernard, the Sag Harbor School District Business Manager, estimated the school will pay between $46,000 to $50,000 for the tax, though the state has promised to reimburse school districts.
“I am not at all confident the state will give funds to reimburse the school districts,” remarked school superintendent Dr. John Gratto. “I am concerned that if they do reimburse the school district for the tax it will come at the expense of general state aid.”
“I can point to every single line item on the budget and tell you how it benefits someone in the community, but I can’t with this,” continued Gratto. “We are just subsidizing New York City.”
Responding to the outrage of local communities over the payroll tax, the Suffolk County Legislature voted on Tuesday, May 12, to create a commission to conduct a feasibility study on Long Island seceding from the State of New York.
“We want it to be on the ballot next year as a non-binding referendum to create the State of Long Island,” said Schneiderman. “Every year we give the state about $8 billion but we only receive around $5 billion in services.”
Schneiderman conceded, however, that a state hasn’t successfully seceded since the 1860s, when West Virginia split from Virginia.
“I think this is more symbolic,” said Schneiderman. “We want to send a message to Albany that the present situation is unacceptable.”
Thiele believes Suffolk County constituents are feeling increasingly overburdened by state taxes, especially in light of the economic downturn.
“I have never seen a recession end by taxing people more,” he declared.
It may be that the MTA payroll tax will have a trickle down effect, with implications not just for business owners but patrons of Long Island restaurants and retail establishments as well.
“A lot of businesses in the area increase their prices in the summer and decrease their prices in the winter,” said Tora Matsuoka, co-owner of Sen and Phao Thai Kitchen. “Prior to finding out about this tax, [and a new beer and wine tax] my feelings were that we wouldn’t readjust our prices, but it is something we are considering … taxes in New York are stringent and I think it is driving people out of the state.”