County, claiming payroll tax is unconstitutional, sues MTA

Nassau County filed suit against the region's transit agency last week after it threatened to pull funding from Long Island Bus — a move that could leave the county without a public bus system.

County Executive Edward Mangano announced at a July 29 news conference that he had filed a lawsuit against the Metropolitan Transportation Authority challenging the legality of its Employer Payroll Tax and seeking reimbursement of more than $3 million the county has paid as a result of the tax.

The suit was filed the day after the MTA proposed cutting its share of funding for L.I. Bus. The agency contributes $26 million to the system's $133 million budget, while the county, which owns the 47-line system, pays $9.1 million and the state pays $44 million. Fare-paying customers make up the difference.

Calling the payroll tax unconstitutional, Mangano said it impinges on the Home Rule Powers of local municipalities and discriminates against Nassau County and all businesses that must pay it. Additionally, Mangano claims the process in which the tax was implemented violated the state constitution.

In response, the MTA released a statement saying, "It's a shame that Nassau County is using this lawsuit to distract attention from its failure to fund its bus system."

Mangano claimed that without the MTA's subsidy, the county would likely be unable to continue operating L.I. Bus, thereby eliminating service for more than 100,000 riders. That outcome, he added, is the antithesis of the stated purpose of the payroll tax: increased mobility. According to Mangano, upon implementing the tax — which was approved in 2009 by both houses of the state Legislature — the MTA assured employers and business owners that they would benefit from the increased services the tax would help fund.

"What I see is a broken promise to employers," Mangano said. "Clearly the millions of dollars that Nassau's businesses have handed over to the MTA have not been used for the benefit of the public."

While the Nassau County government has paid $3 million in payroll taxes, the county's employers have paid about $100 million.

The tax, which is paid by employers in 12 counties, also helps fund the Long Island Rail Road and other parts of the MTA system. The state Legislature determines how the taxes are levied.

Mangano spokesman Mike Martino said it would be "tough to determine" how much filing the lawsuit will cost the county.

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