By ALEX COSTELLO and ANTHONY BOTTAN
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, school districts, and employees of all kinds, profit and not-for-profit. School districts are expected to pay the tax, but could be reimbursed by the state for their cost. The .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.
The problem is that it remains unclear exactly how and when the school districts will be reimbursed. "If the state decides not to reimburse us the money, it will adversely impact us because every year we'll have to pay for this MTA bailout, but we're not getting anything for it," said Connie Robinson, director of finance and operations for the East Rockaway school district.
The payments that schools have to make, an estimated $59,000 for East Rockaway, will come from funds districts have set aside and will not cause a tax increase this year. The Lynbrook school district, which has 500 employees, will pay about $144,000 in payroll taxes.
The villages feel the pinch
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 it is not, schools would have to absorb their portion of the BOCES payment - which would mean higher taxes for residents in the future.
The villages will feel the sting of the payroll tax as well. Lynbrook Village Administrator John Giordano said the village has about 200 employees, and the payroll tax will cost it about $43,000. "This just creates another unfunded mandate from New York state that our local taxpayers will have to pay," Giordano said.
Lynbrook Mayor Brian Curran agreed with Giordano. "In posing a payroll tax on municipalities, it is inconsistent with the pledge made just last week by the governor to prevent unfunded mandates on local governments," Curran said.
East Rockaway's village administrator, John Mirando, said he does not understand why people who don't use the MTA's services are paying for its budget woes. "Why should they finance the MTA?" Mirando asked. "They should look at their operations and cut costs instead of adding it on taxpayers. I'm a firm believer that people that use it should pay for it. This is something people should be screaming at their representatives about."
Mirando added that the payroll tax will cost the village about $10,000, and it could not have come at a worse time. "We just adopted the budget and had no idea they would propose this," he said. "Now this will be an unfunded tax that will cost the village $10,000 more on the total budget. It puts the burden on another agency instead of those using the funds."
Hard on business owners,
not-for-profits
Jeff Greenfield, owner of NGL Insurance on Merrick Road in Lynbrook, has 15 employees, and said he will pay out nearly $30,000 in payroll taxes, which, in a bad economy, makes it harder to continue doing business. "It's a financial hardship and burden on employers trying to survive in a down economy," Greenfield said. "We're fighting to maintain our work force, and this is an extra expense and burden."
Greenfield, who is also the executive vice president of the Lynbrook Chamber of Commerce, noted that at a time when the village is struggling to attract new businesses to its commercial district, the tax will make that all the more difficult. "There is a lack of business expansion," he said, "and this is one more negative reality ..."
All not-for-profits, hospitals, municipalities, any company or organization that has a payroll, will feel the hit of a payroll tax.
Winthrop University Hospital President John Broder said that the combination of health care cuts in the state budget and the payroll tax has created a "very challenging environment." Winthrop has about 5,500 employees, Broder said, and a payroll of $334 million, so that works out to about $1.24 million in payroll taxes. Add that to the health care cuts, he said, and the hospital is losing nearly $9 million. "We will not have layoffs, but we will have to forgo all the capital projects that were in place," he said.
Approximately $119 million in capital projects - included expanding the hospital's neuroscience unit and adding another Cyber Knife unit - will be put on hold indefinitely. "We are doing everything we can to weather the storm," Broder said. "We have to monitor our expenses closely, and we are disappointed that we can't move forward on these projects."
Taking it on the chin
Republicans in the state Senate unanimously voted against the bailout package, describing the payroll tax a "job-killing tax hike."
"We were rewarding incompetence, as far as I'm concerned. This is a group that has not done a good job," said Assemblyman Robert Barra (R-Lynbrook), referring to the MTA. "And now the taxpayers and the riders are going to take it right on the chin."
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 Lynbrook and East Rockaway 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 not only for residents and business owners, but for Long Island as a whole, which faces an annual fight for its "fair share" of state school aid.
"Once again," said Barra, "[it] gives Long Island a sock right in the kisser."
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