Their reaction to last week’s court ruling against the MTA’s payroll tax makes you wonder why we have state Republicans. Why are these supposed conservatives relying on one rogue judge to solve problems that elected lawmakers must solve themselves?
Whether or not you like the payroll tax, the state approved it through the magic of democracy.
In 2009, the MTA was in trouble, as its income from mortgage-related taxes dried up even as its costs rose. Then-Gov. David Paterson and the then-Dem-controlled Legislature didn’t want to touch the MTA’s problem costs, which largely come from the generous pension and health benefits the state gives to strong labor unions.
So they took the easy way out — approving a tax package that included a new three-tenths-of-a-percent levy on downstate employers’ payrolls.
The tax will grab nearly $1.3 billion this year, making up nearly 10 percent of MTA revenues.
But the state’s suburban Republicans have made killing the tax their No. 1 cause.
They achieved a hollow victory last year, when Gov. Cuomo promised to reduce the tax for small businesses in return for GOP support for a tax hike on wealthy earners, with some of those funds going to replace the MTA’s lost money.
And last Wednesday, the Republicans were in heaven after Nassau County Judge R. Bruce Cozzens Jr. ruled the payroll tax unconstitutional. From the crowing, you’d think the suburban Republicans had singlehandedly steered the state off the road to fiscal perdition.
“This is a great victory for every taxpayer, as we buried the job-killing payroll tax,” exulted Ed Mangano, the Nassau county exec. State Assemblyman Ed Ra of Nassau called it “a major step toward reducing taxes and making New York more business-friendly.”
This boasting is as empty as the MTA’s coffers would be without the tax.
Cozzens’ rationale was that the payroll levy “does not serve a substantial state interest.” The tax is a local matter, he said, so state lawmakers needed home-rule messages from taxed counties to impose it (or two-thirds majorities in the Assembly and Senate).
This reasoning defies decades of state policy, all enacted under democratic procedures. New York’s elected officials have considered downstate subways, roads and bridges a “state interest” since 1968, when the lawmakers created the MTA to govern transit across counties.
Running a massive public-transportation system as a series of local concerns just doesn’t work. The suburbs would always want the city to pay more than its fair share, and vice versa.
Plus, if the MTA were to shut down tomorrow, the rest of the state — including rural areas far from Gotham — would suffer. Downstate folks couldn’t get to work, and so they couldn’t pay state taxes — which subsidize upstate.
Cozzens’ thinking is so odd that four other courts have ruled the other way; an appeals court will likely agree with them.
But the problem is practical as well as legal. What if the appeals court agrees with Cozzens?
It would help if the state GOPers would pressure Cuomo and MTA chief Joe Lhota to really cut costs — specifically by making sure the MTA reduces worker benefits. But the GOP-run Senate already enacted statewide pension reform without raising the retirement age for new city bus and subway workers.
And you don’t hear the state GOP suggesting steps that other states have taken — such as passing a law to remove health benefits from the contract-bargaining process, so the MTA could set worker contributions for health care unilaterally and focus on bargaining other stuff.
In other words, state Republicans don’t like taxes — but won’t fight the unions, either.
So how could the MTA make up for the lost payroll-tax money? Well, it could hike fares by 25 percent — meaning a monthly pass from much of Long Island would cost $280, not $223.
Or it could kill capital projects — including bringing the LIRR to Grand Central. Or slash service and maintenance, so suburbanites have more miserable commutes.
You won’t hear state Republicans suggest any of these grim-but-realistic options. Instead, state Sen. Greg Ball of Putnam County rolled out the old canard, saying that the MTA needs an “independent audit” — when the problems are obvious.
Unless Cozzens has a currency-printing press in his chambers, he hasn’t solved anything.
Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.