By ALEX COSTELLO
The MTA bailout and reform package, passed by the state Senate and Assembly last week, prevents massive fare hikes, but adds a payroll tax that could be a burden to many Long Island businesses and school districts. School districts are expected to pay the tax, but could be reimbursed by the state for their cost. The 0.34 percent Metropolitan Commuter Transportation Mobility Tax -- $3.40 per $1,000 of an employer's payroll -- is expected to raise $1.53 billion annually.
It remains unclear exactly how school districts will be reimbursed. "It's impossible to explain. It makes no sense," said Dr. William Johnson, superintendent of Rockville Centre schools. "If they have that money to give us, why don't they just give it to us? Or why don't they give it to the MTA? Why take it from us and give it back to us? It doesn't make any sense."
The payments that schools have to make, an estimated $180,000 for Rockville Centre, will come from funds schools have set aside and will not cause a tax increase this year. But some school officials are worried that the state, with financial troubles of its own, may renege on its promise to reimburse the schools for the payroll tax. And others echo Johnson, wondering why, if the schools are just going to get the money back, they have to pay at all.
"If the governor was serious about relieving school districts from the MTA job tax mandate, he would have simply exempted them," said Senate Minority Leader Dean Skelos (R-Rockville Centre) in a written release. "Since Governor Paterson and others before him have sought to cut state aid to suburban school districts, there is no guarantee that they will ever get the reimbursement money from the state, and that means people paying the highest property taxes in the country will pay even more."
Not only are school districts directly affected by the payroll tax, but so is Nassau BOCES, which is funded by the 54 school districts in Nassau County. According to Assemblyman Harvey Weisenberg (D-Long Beach), BOCES would face its own payroll tax, a cost that would be passed on to school districts across the county. And there are still questions about whether BOCES, which is not technically a school district, would be reimbursed by the state. If not, schools would have to absorb their portion of the BOCES payment -meaning higher taxes for residents in the future.
The village will feel the sting of the payroll tax as well. According to Michael Schussheim, village comptroller, the municipal government is looking at a tax of about $50,000, which was not anticipated when the village board passed its budget last month.
"We're going to either have to modify the expense budget and reduce funding in other areas to pay the tax, or we're going to have to rely on increased revenues, which is highly unlikely," said Schussheim. "So the former is probably what's going to happen." He added that there is no way of knowing yet what would be cut from the budget to accommodate the tax.
The Rockville Centre Public Library has a similar problem, facing a tax of more than $5,800 that was not factored into its budget. According to library Director Maureen Chiofalo, the library has enough money in reserve to pay the tax next year, so patrons do not need to worry about increased taxes or programs being cut. The future is less certain, however.
"We would just have to tax [the patrons]," Chiofalo said. "We'd put in a line for the payroll tax. Or cut something. But in this economy, you don't want to cut, because people are looking for more and more. And pulling back is counterproductive to the community."
The Diocese of Rockville Centre, which operates 53 elementary schools, will also be affected by the tax. "Catholic education ... cannot continue to absorb the increasing burden placed on it by New York state when we are providing a great benefit to our society," Sean Dolan, the diocese's director of communications, wrote in an e-mail. "While we understand the need to keep the mass transit system solvent and affordable, there must be a sense of fairness to this payroll tax."
"This is a $2.2 billion tax increase that will be paid by businesses, local property taxpayers and commuters," said Skelos. "Unfortunately, some people are going to be paying for this tax with their jobs."
"Long Island employers are already struggling, and to hit them with a payroll tax to support the MTA, I'm not in favor of it," said Michael Shenker, past president of the Rockville Centre Chamber of Commerce and a partner at Rubenstein, Shenker, Zacarese and Marks, an accounting firm on North Park Avenue. "[It is] basically going to affect the bottom line directly. Right from the profits."
Republicans in the Senate unanimously voted against the bailout package, calling the payroll tax a "job killing tax hike." "We were rewarding incompetence, as far as I'm concerned," said Assemblyman Robert Barra (R-Lynbrook). "This is a group that has not done a good job. And now the taxpayers and the riders are going to take it right on the chin."
"I am vehemently opposed to this tax and have expressed my concerns in this regard to the Assembly's leadership," said Weisenberg, who sits on the Assembly's Transportation Committee. "I believe we need to explore viable revenue-generating alternatives to this payroll tax."
The bailout plan reduces the fare hikes the MTA approved earlier this year, but does not eliminate them. The MTA initially planned to raise the price of a monthly ticket from Rockville Centre from $211 to $267. Under the bailout plan, ticket prices will go up about 10 percent, meaning that a monthly ticket should cost about $232.
While no one is pleased with the most contentious aspect of the bailout plan - the payroll tax - some see it as an additional burden for Long Island, which is involved in its annual fight for its "fair share" of state school aid.
"Once again," said Barra, "[it] gives Long Island a sock right in the kisser."
Comments about this story? ACostello@liherald.com or (516) 569-4000 ext. 207.
