Lawmakers have urged that counties outside of New York City be exempted from a proposed payroll tax increase in order to help the finances of the Metropolitan Transportation Authority (MTA). In a letter released on Monday, a bipartisan group of lawmakers consisting of Senators James Skoufis, Monica Martinez, Michelle Hinchey, and Rob Rolison, questioned whether suburban communities would benefit from the tax increase.
The lawmakers said that the proposal maintains the large majority of the $800 million projected revenue by preserving the payroll tax increase in New York City. They argued that the estimated fiscal impact of exempting community colleges, hospitals, and non-New York City municipalities is a small fraction of the realized revenue. Thus, this plan would inject hundreds of millions of new dollars into the MTA while protecting the overtaxed suburbs and correcting problems in the underlying, existing tax.
The letter acknowledges the tricky politics of raising tax revenue from suburban commuter municipalities in order to fund the MTA. Over a decade ago, a deeply unpopular payroll tax for the New York City area was considered a factor in the Republicans’ successful flip of the state Senate. However, the political reality is different in 2023: Democrats hold supermajorities in both the state Senate and Assembly despite losses in districts in the Hudson Valley and on Long Island last year.
The tax would apply to employers within the MTA’s service region, which stretches through the Hudson Valley and onto Long Island. Counties in the MTA service area receive commuter rail coverage from the authority. This year, Gov. Kathy Hochul is seeking to use revenue from the tax included in her $227 billion state budget plan to strengthen the MTA’s bottom line. Hochul also wants to use money from three casino licenses to bolster the MTA.
Governor Hochul has defended the tax plan as a relatively small amount of money in order to boost the MTA as state officials seek to increase ridership in the wake of the COVID-19 pandemic.
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