The MTA payroll tax reduction included in the deal announced today is a big win for the Senate Republicans, some of whom have been pushing for and/or campaigning on elimination of the controversial surcharge for years – practically since it was first instituted as part of the 2009 bailout deal.

This plus the middle-class tax cuts were the sweetener necessary to get the Senate majority to go along with the idea of making the state’s wealthiest residents pay higher taxes – or at least more than they would be paying if the so-called millionaire’s tax were allowed to sunset as scheduled at the end of the month.

Here’s what Gov. Andrew Cuomo said in his press release:

“The MTA payroll tax would be reduced on small businesses, and private schools would exempt from the tax. As a result, the payroll tax, first implemented on businesses in 2009, would be eliminated or reduced for 294,900 taxpayers, Cuomo estimated. The income-eligibility for the tax would also be raised, sparring 415,000 taxpayers from the tax, Cuomo said. The state would compensate the MTA for the $250 million in lost revenue.”

Some more details, according to a lawmaker who has been briefed on the plan:

As it stands now, all businesses in the 12-county MTA service area must pay 34 cents for every $100 in payroll paid, generating around $1.5 billion in revenue for transit annually.

Thanks to this deal, businesses AND NONPROFITS!! with payrolls of $1.75 million or less will see a reduction as follows: Complete elimination for $1.25 million and under, .11 percent for $1.25 million to $1.5 million, .23 percent from $1.5 million to $1.75 million.

This applies to the entire service area. There’s some confusion as to whether this sunsets along with the tax code changes (in 2014). The Catholic Conference (see below) says yes. My source initially said no, but is double checking. I’ll get back to you shortly.

UPDATE: According to Cuomo spokesman Josh Vlasto, just the tax code portion of the deal has a sunset provision, the rest is all permanent – including the MTA payroll changes – but there remains some confusion on this, because a Senate GOP source had different information.

UPDATE3: Last word on this: YES, Virginia, there is a sunset provision. As per Senate GOP spokesman Scott Reif, the changes last three years – through March 31, 2015. So, bad information from Vlasto.

In addition, all schools – public, private and parochial – will be exempt from the payroll tax altogether. Until now, only public schools were exempt, and they had to pay the tax up front and then file to get the money back from the state after the fact. The MTA got their cash, and the state made up the difference. (A reader asked me earlier today whether this change will be retroactive. Answer: We’re still trying to figure that out).

UPDATE2: Non-public schools, I’m told, will simply be exempt under this deal, and won’t have to go through the two-step process of first paying the money and then getting it back later.

All these tax breaks add up to $250 million, which will NOT be covered by the $1.9 billion to $2 billion generated by the tax code changes. Instead, it will come directly from the general fund. That’s great news for the perennially cash-strapped MTA, which released the following statement (attributed to no one in particular):

“We are grateful to the Governor, Majority Leader and Speaker for reaching an agreement that ensures the MTA will continue to receive the level of funding needed to keep New York and its economy moving.”

Props to the DN’s Ken Lovett for reporting first that the payroll tax reduction was in the offing, (he actually had something on this Sunday), and also to Politics on the Hudson, which had more details this morning.

For a more comprehensive look at this issue, head on over to Streetsblog.

This is also a win for the Catholic Church, which has been pushing for its schools to get the same treatment as their public counterpart when it comes to the payroll tax. NYS Catholic Conference Executive Director Richard E. Barnes released the following statement this afternoon:

“For more than two years, downstate religious and independent schools have been subject to an onerous payroll tax to help fund the MTA, while their public school counterparts were reimbursed by the state for the same tax. With Catholic schools in crisis across the state, this extra burden on schools and tuition-paying parents exacerbated an already tenuous situation.”

“While several legislators and leaders in the past two sessions have sought to remedy this unfair treatment, the matter continued to go unresolved and has cost religious and independent schools an estimated $8 million per year that they could not afford.”

“We are therefore very grateful to Governor Cuomo, Senator Skelos and Speaker Silver for coming together today to reach agreement on an exemption from the tax for our schools. This was a matter of basic fairness and we applaud these officials for recognizing it. We understand the application of this exemption will sunset in three years and we, of course, urge the legislature to institute a permanent exemption.”

“While today’s action will not relieve the enrollment and funding crisis facing our schools, it will certainly be helpful and we urge the legislature to pass it. We look forward to working with the governor and legislature in the upcoming session to more fully address this crisis facing parents and children in independent and religious schools, which could ultimately have catastrophic impact on all New York taxpayers.”

UPDATE3: The Catholic Conference just released an amended statement from Barnes with the sunset provision comments removed, explaining:

“As it is unclear in the absence of bill language whether the MTA payroll tax exemption portion of the three-way agreement will include a sunset provision (or whether only the income tax portion will), we have removed a sentence from Mr. Barnes’ statement that refers to a sunset.”