Ball Announces Plan to Phase Out MTA Payroll Tax

New York State Senators Greg Ball, R, C-Patterson, and Lee M. Zeldin, R-C, I-Shirley, presented the details of a bill that would eliminate the Metropolitan Transit Authority payroll tax for schools and small businesses by January 2012. 

They were joined by lawmakers, community members and business owners during a press conference on Wednesday in Yorktown.

"We’re in the midst of one of the worst economies that we’ve had since the Great Depression," Ball said. "And it is absolutely insane to think that we can dig our way out of this problem and out of this economy by taxing jobs that were already hemorrhaging."

The MTA payroll tax represents $1.4 billion in revenue of the MTA's overall budget, he said, and that must change. 

"If we're gonna make sure that we repeal and rescind this horrific tax that's killing jobs in the Hudson Valley and throughout New York State," Ball said. "We've got to make sure we build a broad coalition to get it done." 

What he calls a "piece of landmark" legislation would phase out entirely the MTA payroll tax over the next two and a half years throughout Dutchess, Putnam, Westchester, Orange, Rockland, Nassau and Suffolk Counties.

Zeldin said he and Ball have been trying to come up with a "as close to a perfect solution as possible" by reviewing audits, budgets and consolidated balance sheets. 

Under the bill, small businesses with 25 employees or less, as well as public and non-public schools, would be completely exempt from the tax on Jan. 1, 2012. All other businesses with 25 or more employees will be included in a phase-out plan that calls for the tax’s complete repeal on Jan. 1, 2014.

The seven counties outside of New York City will be completely phased out by the end of 2013; and for the five counties within New York City the tax will be reduced to .21 by 2014.

As a result of repealing the tax, all seven counties will see savings. For Westchester County, the savings would be $29.1 million in 2012, $60 million in 2013 and $90.9 million by 2014. The numbers, Zeldin said, are during the phase out and does not include the money the small businesses and schools will see as a result of the bill. 

"The MTA has the ability to do more with less," Zeldin said. "Right now the state and local government is tightening its belt. Small businesses, families, right here in Westchester County are doing the same thing to tighten their belts. The MTA needs to do the same."

Officials have outlined cost saving suggestions for the MTA to balance its budget without the tax. Here are some of the ways, officials have suggested the MTA can cut expenses to balances its books:

• Eliminate overtime abuse- more $400 million is spent on overtime annually
• MTA should share in enforcement camera fines in MTA bus lanes
• Competitive bidding/ privatization of NYC bus system
• Public/private partnerships
• Reduce outside litigation costs by increasing utilization of in-house attorneys or the NYS Attorney General’s office
• Sell some of the MTA’s capital assets currently valued at over $50 billion
• Reduce the cash and investment float
• Reduce the amount of managers and supervisors, which is currently more than 10,000 of the MTA’s 66,000 employees
• Crack down on pension padding where possible
• Cashless tolls throughout the system
• Reduced “vacancy/absentee” coverage of MTA Bridges and Tunnels
• Improve process for approving personal and miscellaneous services contracts.

"The MTA PR machines are already out there working hard," Zeldin said. "They’re trying to say that the only way they’ll be able to deal with this legislation is by drastically increasing fares dramatically cutting services—that is just not true."

State Assemblyman Steve Katz (R, I-Yorktown) also expressed his support for the bill saying he believes it represents the future. 

"This is the salvation we've been looking for," he said. 

Westchester County Legislator John Testa (R-Peekskill) was among the officials who helped the county join in the MTA lawsuit. He said the tax is a job killer and is now pleased to see the bill.

"It's the right thing to do for the taxpayers of Westchester and New York."

"The MTA Payroll Tax is a burden on not-for-profits, businesses, local governments and most importantly taxpayers," Assemblyman George Latimer (D-Rye) said in a statement. "We cannot constantly balance the books of the MTA with additional regional taxes that have significant negative impact on so many people, many of which do not even utilize MTA services very often."

He called the MTA Payroll Tax a "classic unfunded mandate" on municipalities, businesses, and not-for-profits forcing them to "unfairly tighten their belts even further."

Chairman of the Putnam County Legislature, Vincent Tamagna said he is also in favor of repealing the tax.

Councilman Terrence Murphy said Yorktown pays $66,000 in MTA taxes a year and said he hopes to see the bill pass.

Yorktown councilman Nick Bianco said he thinks the plan will pass because of the bipartisan support. 

"The tax came immediately and we will get rid of it slowly," he said. 

The payroll tax was created by the state Legislature in 2010 to fill an MTA budget gap. Suburban counties hit by the new tax are suing overturn the payroll tax.

What do you think of the efforts to repeal the MTA tax?