TAX NEWS - June 2010

Brookhaven sues state over MTA tax

The Town of Brookhaven filed a lawsuit this week against the State of New York over the Metropolitan Transportation Authority payroll tax, according to Town Supervisor Mark Lesko.

Brookhaven officials and lawmakers from six Suffolk towns announced in April that they would join in a lawsuit against the measure, which forces businesses and municipalities to pay a tax meant to address the authority's budget gaps and keep planned capital projects online.

Mr. Lesko said Wednesday that the Town Attorney's office filed a separate lawsuit Monday in State Supreme Court as a challenge to the "job-killing tax."

Under the MTA payroll tax, employers in the five boroughs and seven surrounding counties are required to pay 34 cents for every $100 spent on payroll. The tax, which took effect last year, cost Brookhaven town $270,000 in 2009.

Brookhaven's lawsuit alleges the MTA payroll tax bill violates state constitutional law because it did not receive a home rule message and was not passed by at least two-thirds of each house of the State Legislature, as required for special legislation to take effect. The bill passed the State Assembly by 60 percent, and the State Senate by only 52 percent. The lawsuit further asks the court for a stay, which, if granted, would prohibit the state from imposing the tax on Brookhaven.

"The long and short of it is that we intend to go after this lawsuit aggressively," Mr. Lesko said. "We think we have a good case."

Mr. Lesko said other municipalities will also file separate lawsuits, although they will all be joined together later, he said.

The towns of Southampton and Huntington have filed their lawsuits and Islip Town is expected to follow soon, a town spokesman said.