MINEOLA, N.Y. (CN) – Nassau County has challenged the 0.34 percent payroll tax the state imposed to rescue the Metropolitan Transit Authority from its financial troubles.
In his 32-page lawsuit in Nassau County Court, County Executive Edward P. Mangano assails the MTA’s financial history, and says the tax of 34 cents per $100 of payroll places an unconstitutional burden on Nassau County, the “largest suburban municipal entity for purposes of payment of MTA payroll taxes.”
Signed into law by Gov. David Patterson on March 7, 2009, the MTA Employer Payroll Tax does not reimburse local governments, Mangano says.
Two months after the first tax bill, the Legislature and Gov. Patterson rushed through a second MTA Tax Bill – introduced, approved and signed within two days – which included taxes, fees and surcharges on schools, local governments, learner’s permits and licenses, along with more than $3 billion in additional subsidies.
The MTA announced in May 2009 that it still had a $1.8 billion shortfall due to “self-supported debt” from risky bonds and investments, Mangano says.
Mangano claims the MTA entered into “volatile and risky” interest rate swap contracts with companies such as Bear Stearns, Lehman Brothers and AIG, which were sold or bankrupted in the financial crisis.
Mangano claims the MTA overpaid many of its employees, paying six-figure salaries to more than 10 percent of its workforce.
The Legislature tried to address the “tremendous debt” accrued by the MTA’s “fiscal irresponsibility” through the new MTA Tax Bill, Mangano says.
State Sen. Martin Dilan, D-Brooklyn, sponsored the second bill on May 6, 2009, and it was approved by a narrow margin on the same day without giving legislators time to read and understand it, according to the complaint.
Gov. Patterson signed it into law a day later, saying a “message of necessity” pre-empted the need for deliberation, the complaint states.
The new law included an additional $3 billion appropriation to the MTA. It contained nearly 20 sections that changed the structure and internal government of the MTA, the complaint states.
Mangano claims the governor’s office has refused to release the “jacket” of the MTA Tax Bill, which contains memos, comments and criticisms of a bill from members of the Legislature, government agencies and the public.
He seeks declaratory judgment that both of the MTA tax bills violate the New York Constitution mandate that appropriations require a two-thirds vote and that the MTA must be self-sustaining.
Mangano and the county are represented by Nassau County Attorney John Ciampoli.