NY: State lawmakers want to withdraw Orange County from MTA

State lawmakers representing Orange County have filed legislation to withdraw the county from the Metropolitan Transportation Authority's commuter district, which would eliminate fees and taxes on Orange County residents that help fund the public transportation agency.

State Sen. James Skoufis, a Cornwall Democrat and vocal critic of the MTA, is sponsoring the legislation in the Senate. His colleague, Jonathan Jacobson, D- Newburgh, is carrying the Assembly's version of the bill.

In a news release announcing the measure this week, Skoufis said that despite contributing funding to the agency, Orange County residents have seen minimal benefit from its services, including infrequent train service west of the Hudson River with no direct ride into Manhattan.

"Orange County residents pay similar if not identical MTA fees and taxes as other, highly serviced areas," Skoufis said in a statement. "With only a single, sporadically operating train line for the over 400,000 residents in the county — and continued disregard from the MTA and the chief architects of congestion pricing — my constituents are being pickpocketed left and right."

Jacobson also criticized a lack of investment in Orange County.

"The MTA has not kept its end of the bargain by failing to expand service and adequately maintain its infrastructure in Orange County," he said in a statement. "It is time to leave the MTA. Orange County can do better."

In response to the legislation, MTA CEO Janno Lieber said Thursday that he was "extremely sympathetic" to a lack of service west of the Hudson, which affects Orange and Rockland commuters. He criticized New Jersey Transit's Port Jervis and Pascack Valley lines, then pointed to ways the MTA is trying to help west-of-Hudson commuters reach trains across the river, where Metro-North's Hudson Line goes direct to Grand Central Terminal.

"What we're doing that I think is more positive is subsidizing different strategies for folks to get to the east side of the Hudson, over to the side of the Hudson, where we have real Metro-North service, which is fantastic," Lieber said.

Skoufis and other Orange County representatives strongly opposed the controversial congestion pricing plan enacted last month that tolls commuters entering midtown and lower Manhattan in an effort to limit traffic and pollution. He had called for reduced tolls for Orange County, given the lack of public transportation infrastructure to help Orange County commuters avoid needing to drive into the congestion pricing zone. Last March, Skoufis proposed that Orange County be added to an existing plan that reduces tolls for Rockland and Westchester commuters crossing the Gov. Mario M. Cuomo Bridge, but his plan was not included in this year's state budget.

Withdrawing from the MTA's commuter district would eliminate several funding streams generated by myriad fees and taxes that Orange County residents and businesses either contribute to or pay directly. These payments are in addition to fares and tolls and include sales tax, real estate transfer tax, mortgage recording tax, mansion tax, gas tax, corporate tax, business payroll tax, fees for vehicle registration and driver's licenses, telecommunications surcharges and ride-sharing surcharges.

However, determining exactly how much money Orange County residents pay the MTA and how it is collected is complicated. After days of work, Skoufis' team estimated about $100 million a year comes from Orange County via fares, taxes, fees and surcharges. It was not immediately clear how Skoufis' team came up with that number.

Jacobson similarly struggled to calculate the county's contributions. But he provided some findings to the Times Union on Thursday. According to his calculations, in 2024, Orange County employers paid $25 million to the MTA via the payroll mobility tax, residents paid $8.75 million in mortgage taxes, $1.465 million was paid in sales taxes, Orange County government paid $146,250 through a statewide mass transportation operating assistance program, and $620,000 for maintenance, use and operations at the Metro-North commuter railroad station in Harriman.

Jacobson said his calculations were not a comprehensive list of what Orange County residents contribute. He added that he "quizzed" Lieber during a transportation hearing in Albany earlier that day and was disappointed the MTA's leader could not tell him how many people rode the trains daily in Orange County nor how much the county contributed to the organization's budget.

When a Times Union reporter approached Lieber after the hearing, he also could not say what the financial impact would be to the MTA if Orange County withdrew from the commuter district.

"I don't know the answer to it," he said. "It will have some financial impact. I don't know how big it is, but what I'm mostly concerned about is that I want all of our customers to feel like they have good transit options."

An MTA spokesperson also refused to answer direct questions about Orange County's contributions.

Here's what we know about how some of these fees are determined.

Payroll tax

Businesses and self-employed people in the commuter district pay a quarterly payroll tax, sometimes referred to as a payroll mobility tax. This tax was enacted by the state Legislature in 2009. It applies to businesses that withhold state income taxes and whose payroll expenses for covered employees in the district exceed $312,500 per quarter.

The state Department of Taxation and Finance segments the commuter district counties into two zones. Orange County and the other six Hudson Valley counties in the district are in Zone 2 and the tax is determined based on payroll expenses. Those with quarterly payroll expenses up to $375,000 pay a rate of .11%; businesses with quarterly payroll expenses between $375,000 and $437,500 pay .23%; those with expenses exceeding $437,500 pay .34%.

Surcharge

Certain large corporations in the commuter district also pay a surcharge to the MTA that is 30% of their franchise tax.

Gas and sales taxes

Most businesses within the commuter district that purchase or sell fuel for vehicles are subject to a tax. Customers who buy gas for their cars also pay a .75 cents per gallon sales tax to the MTA at the pump.

Separately, there is a .375% sales tax imposed within the commuter district.

The MTA also collects payments from New York City and the Hudson Valley counties in the commuter district for what it calls local operating assistance.

"The sheer variety of funding sources — of taxpayer-funded cash grabs, to be blunt — points to exactly the feeling I and so many of my constituents have had for decades: the MTA has been treating Orange County residents as their ATM," Skoufis told the Times Union on Thursday. "And, there's good reason Rockland County, when they were looking to pull out of the MTA a decade ago, went to the trouble of hiring a consultant just to evaluate their investment. It's almost as if the state was intentionally hiding from public view how the MTA makes its money."

Capitol Bureau investigative reporter Raga Justin contributed to this report.

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