Suburban Lawmakers Seek Exemption From MTA Payroll Tax

Long Island Railroad
The Long Island Railroad's West Side Yard in Manhattan. (Photo by Todd DeFeo/The DeFeo Groupe)

(The Center Square) — A bipartisan group of suburban New York lawmakers want their regions to be exempted from a proposed payroll tax increase being pitched by Gov. Kathy Hochul to help bail out the Metropolitan Transportation Authority.

In a letter to Senate Majority Leader Andrea Stewart-Cousins, D-Yonkers, the lawmakers representing districts on Long Island and the Hudson Valley called the 14-year-old payroll tax “onerous,” and said expanding it would be unfair to suburban communities outside New York City where commuters don’t rely on the MTA to get to work.

“We respectfully request that all counties outside of New York City’s five boroughs be exempt from the executive’s proposal to expand the MTA Payroll Mobility Tax,” state Sens. James Skoufis, D-Woodbury, Michelle Hinchey, D-Kingston, and Monica Martinez, D-Hauppauge, Rob Rolison, R-Poughkeepsie, wrote in the Feb. 16 letter.

Hochul’s $227 billion budget proposal calls for hiking the top payroll tax to 0.50% from 0.34% on employers and self-employed workers in NYC and the seven suburban counties served by the MTA’s system. The payroll tax was implemented 2009, but has been a source of friction between NYC and the suburban leaders.

The expanded payroll tax on NYC employers, which would drum up an estimated $800 million a year, is aimed at improving the solvency of the MTA, which operates the city’s fleet of subway cars, trains, and buses.

The Democrats called on legislative budget writers to exempt community colleges, hospitals and municipalities outside NYC from the total payroll tax, not just the increased rates.

“Significant public funds flow to these groups and it is as anti-taxpayer as much as it is nonsensical to siphon some of those funds to an unrelated MTA tax,” they wrote. “It is long past time that we address this inequity.”

Hochul and the Democratic-run Assembly and Senate must agree on a budget deal for the new fiscal year, which begins April 1.

The governor says the additional funds are needed to help buoy the MTA, which has seen ridership and fare collections plummet during the COVID-19 pandemic and hasn’t fully recovered.

“For many, many New Yorkers, the MTA is their lifeblood,” Hochul said during her Feb. 1 budget speech. “If we don’t invest in that, we won’t be looked at favorably by future generations.”

Suburban Democrats have criticized other aspects of Hochul’s budget proposal, including her plan to withhold an estimated $626 million in federal Medicaid dollars that county governments would otherwise get over the next year. Local officials say the move could force them to raise taxes to make up for the lost revenue.

Some Democratic lawmakers have expressed concerns that Hochul’s controversial proposals could make it more difficult to elect Democrats on Long Island and in the Hudson valley, where they have struggled to win elections in recent years.

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