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Politics & Government

Smithtown Joins Suit Against MTA

Town rejects payroll tax that will attempt to plug the $378 million MTA deficit.

The Town of Smithtown recently joined several other Suffolk townships in a lawsuit against the Metropolitan Transit Authority (MTA) to protest a payroll tax implemented in 2009.

"The Town Board felt it was unfair to tax Smithtowners in order to hold the subway fare," Smithtown Town Supervisor Vecchio said. He joined the supervisors of Huntington, Islip, Babylon, Southampton, Brookhaven and Riverhead in the suit.

Presently, every school district, town government and small business in the 12 county MTA district must pay 34 cents for every $100 dollars of their payroll. This, along with other measures enacted by the MTA, is an attempt to plug the gaping MTA deficit of $378 million, as reported in Feb. 2010. 

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Enacted by the New York State Legislature, the payroll tax was signed by the Governor in May 2009 and was retroactive to March 2009. According to MTA officials, the payroll tax is expected to generate $1.28 billion in 2010. 

Historically, public transportation has been capital-intensive and MTA spokesperson Aaron Donovan reports that almost all systems around the world operate at a deficit. 

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The present MTA deficit negatively impacts Smithtown residents, costing the Town of Smithtown $110,000 annually. If you run a small business, you pay the tax there and then you pay the tax again in your school taxes and again in your town taxes.

The payroll tax was retroactive for businesses and townships but for the school districts the tax went into effect in September 2009.

According to Joan Nile, the assistant supervisor for finance and operations at the Smithtown School District, the payroll tax cost the district $264,156.87 last year.  This year it is going to cost the district $384,999.  

"For us, with benefits it's a loss of four to five teaching positions," Nile said.

Dr. Susan Agruso is Superintendent of the Kings Park Central School district.  "It's costing us $157,000, for me, that equals three teaching positions," Agruso said.  Her small Smithtown school district had to cut more than 25 teaching positions to pass its 2010-2011 budget.   

At this juncture, there is no sunset clause for the payroll tax, meaning there is no provision for it to end.

"How the MTA ought to be financed is a question for the Legislature.  Our role is to clearly articulate the magnitude of our expenses," MTA spokesperson Donovan said.  "Right now, the MTA's focus is on fundamentally overhauling the way it does business, in order to ensure that every dollar we receive in the form of taxes, fares and tolls is used wisely."

Supervisor Vecchio disagrees and finds the payroll tax grossly unfair to his constituents, most of which do not use public transportation. "It's the same old story, income verses operating costs.  The MTA needs to raise income, so they have to raise the fare," Vecchio said.

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