There’s not much of a surprise here, but a major credit-rating agency says a court-mandated repeal of the Metropolitan Transportation Authority payroll tax would be a “credit negative” for the financially strapped entity.
In today’s credit outlook, Moody’s Investors Service called a recent state Supreme Court decision ruling the tax unconstitutional would put a significant strain on the MTA—if it holds through the appeals process.
Moody’s warns that the MTA is facing revenue issues regardless of the outcome of the payroll tax.
“The threat to this revenue stream highlights the operational stress faced by the MTA,” the report reads. “We expect spending, particularly fixed expenditures such as pensions and health care, to grow at a relatively rapid rate, while revenues such as its mortgage recording tax have lagged.”
The payroll tax was instituted by the state in 2009 as a bailout for the MTA. It’s a 34-cent tax on every $100 of payroll for most employers in the 12-county MTA region, including Westchester, Rockland, Putnam and Dutchess. The MTA has said it will “vigorously appeal” the lower court’s ruling.
Here’s today’s credit outlook from Moody’s. The relevant section begins on page 30: