By ALEX COSTELLO and ANTHONY BOTTAN
The two-year, $2.2 billion plan, known as the Metropolitan Commuter Transportation Mobility Tax, passed with Senate Democrats' 32-30 majority. It includes a .34 percent payroll tax, or $3.40 per $1,000 of an employer's payroll. The tax is expected to raise $1.53 billion annually, state officials said. While the bill was passed by the Senate, Republicans in the Senate unanimously voted against it, calling the payroll tax a "job-killing tax hike."
For businesses, or any organization with a payroll, the new payroll tax is seen as another burden during an already struggling economy. "I don't know why they are putting the MTA budget woes on the backs of our businesses," Valley Stream Chamber of Commerce President Debbie Gyulay, said. "When you're trying to exist in business, that could be the thing that puts them over the edge. Small business is supposed to be the backbone of the economy and now you're burdening them with an extra amount of money."
While schools are being charged with the payroll tax as well, they will be reimbursed by the state at a later time, state officials said. Some schools officials, like Superintendent Dr. Marc Bernstein, are worried that the state may renege on its promise in the future and not reimburse the schools.
"It certainly has a negative impact on the school district," Bernstein said of the tax. "We should be receiving dollar for dollar reimbursement, which means we have to pay those dollars upfront and apply for reimbursement, which creates a time lag in cash flow. In the past, promises have been made by the state to provide certain funding for the district, and not all have been fulfilled."
Bernstein said he could not calculate how much the district would pay in payroll taxes.
Senate Minority Leader Dean Skelos (R-Rockville Centre) agreed with Bernstein's concern. "If the governor was serious about relieving school districts from the MTA job tax mandate, he would have simply exempted them," said 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."
Michael Fox, deputy treasurer for the village, said that the tax will cost the village around $35,000 to $40,000 a year, but it would not materially affect the village's standing. "Thirty-five to $40,000 in $32 million budget is not a lot," Fox said. "I don't think it's the right way to go. It's ludicrous to the put the payroll tax on people in Valley Stream who don't even use the MTA."
Fox noted that with the money spent for the payroll tax, the village could have replaced two code-enforcement vehicles, or complete some roofing repairs to buildings in the village. However, he added, the village has been hit harder in other areas. "The county taking away our sales tax is worse," he said. "We used to get $105,000 from the county in sales taxes, now we get nothing. That affects us more."
Terry Lynam, a spokesperson for North Shore-LIJ and Franklin Hospital, said the payroll tax limits the hospital's ability to start new programs and go ahead with badly needed construction projects. He added that the healthcare cuts in the approved state budget and the payroll tax is causing financial pain. "The combination of the two poses some serious fiscal challenges for our hospitals," he said.
Lynam said the payroll tax will cost Franklin Hospital around $300,000.
Executive Director of the Peninsula Counseling Center, Herb Ruben, said the payroll tax would have a tremendous impact on the center, and would cost the non-profit organization around $15,000. "We have over 100 employees, and we have had cuts in a lot of funding sources," Ruben said. "To add another loss would make things much more difficult."
In addition to the controversial payroll tax, the bailout plan also includes measures to bring more control and oversight to the MTA. The MTA will be audited this year, and then the legislature may do it every two years. It would also have to write a mission statement every year and proposals for how they will meet it, and give it to the governor, legislature and post it on the MTA Web site. In addition, it will have to report on its financial condition, internal control procedures, and perform a self-assessment.
The bailout plan also reduces the high fare hikes the MTA approved earlier this year, but does not eliminate them entirely. Originally, the MTA was planning to raise fares by 26.5 percent, meaning that the price of a monthly ticket from Valley Stream would increase to $267 from $211. Under the bailout plan, ticket prices will go up about 10 percent, meaning that a monthly ticket should cost about $232.
