POLICY PRIORITIES AND
LEGISLATIVE PROGRAMS FOR 2004
Our committees and councils have identified other important initiatives that will help New York gain more jobs in 2004 and beyond.
- Business Law / General Counsels
- Contract Procurement
- Economic Development
- Education and Job Training
- Environmental Conservation
- Financial Services
- Labor & Human Resources
- Occupational Safety & Health
- Small Business
- Unemployment Compensation
- US Border and Trade
- Workers' Compensation
A top legislative priority for 2004 is to fight against business tax increases, and continue to push for increased efficiencies and cost reductions in state-financed programs. We will continue our efforts to adopt tax reforms that will dramatically improve the state's economic competitiveness.
Fight the "New Jersey" Package - In 2003, spending advocates pushed a proposal - based on 2002 New Jersey legislation - that would have more than doubled the state's $1.8 billion corporate income tax. Components of that massive tax hike proposal included: an alternative minimum tax that amounted to a gross receipts tax on all corporations ($400-$460 million); "worldwide combination reporting," which would force New York's global companies to pay taxes that they or their subsidiaries earned out-of-state and overseas (up to $400 million); and decoupling with recent federal corporate tax reforms regarding depreciation (up to $545 million).
Continue the State's Tax Reform Success - The Business Council has proposed tax reform/economic stimulus package that targets key economic sectors in New York State. It would:
businesses to elect a "single sales factor" allocation
for assessing corporate franchise tax liability, thereby providing a
significant tax incentive for maintaining and adding employment and
capital investments in New York State;
- make permanent
the investment tax credit for the securities industry,
a measure that will help promote redevelopment of lower Manhattan as
a world center for the financial services industry;
an expansion of certified capital companies, or CAPCO's,
which will make additional, private sector capital available for new
investments in lower Manhattan;
the tax treatment of charges for telecommunications services aggregated or bundled with nontaxable telecommunications; and
- create parity for all telecommunications carriers in the application of existing Section 183 provisions regarding the taxation of dividends.
The "Fair Real Property Taxes" Act - The Business Council is advocating an expansion of the role of the State Tax Tribunal to include business challenges of local real property tax assessments. The Tax Tribunal, an independent office established to hear state-level tax disputes, has a proven record of rendering impartial and timely decisions. In contrast, challenges to local assessments can take years in State Supreme Court, and result in widely inconsistent rulings across New York State.
Manufacturers' Sales Tax Exemption - Energy used directly in manufacturing activity has long been exempt from state and local sales tax. However, this existing sales tax exemption does not apply to the full range of manufacturing uses of energy, and other important business energy uses.
The Business Council supports the extension of this sales tax exemption to:
and software located within a facility that is used predominantly in
the production of tangible personal property for sale by manufacturing,
processing, generating, assembling, refining, mining or extracting.
and software located within a facility that is used predominantly in
research and development in the experimental or laboratory sense shall
be exempt from the sales and use taxes imposed.
drills, end mills, milling cutters, or any other type of tooling that
- energy costs related to maintaining a controlled manufacturing, processing, assembling, generating, refining, mining, extracting, farming, agriculture, horticulture or floriculture environment, and makes energy costs associated with research and development in the laboratory.
ENERGY COST AND RELIABILITY
The cost, availability and reliability of electric power remains among the most important issues for Business Council members. The Business Council has a multi-faceted agenda that will promote lower costs and increased reliability within the state's electric power markets.
Transmission Upgrades - The 2003 blackout brought renewed attention to the need to have an efficient and effective transmission siting process in place, which together with other measures, would serve to encourage greater investment in New York's world class energy delivery infrastructure in order to ensure the continued reliability and security of the state's electric system. The Business Council is advocating a series of measures to promote additional investments, including: the use of existing NYSERDA funds to finance key interconnections within the state power grid; through both federal and state legislation, increase the ability of transmission and distribution businesses to recoup their upgrade costs in a equitable and timely manner; reform the manner in which power transmission and distribution facilities are treated under the state real property taxation laws.
Push Back on Regulatory Initiatives - The Business Council has targeted several regulatory initiatives that could have significant adverse impacts on the cost and reliability of electric power in the state. The most significant, and most immediate, of these is the "renewable portfolio standard," currently being developed by the Public Service Commission, at the directive of Governor Pataki. Under this proposal, 25 percent of the state's power generating capacity is supposed to be "renewable" (e.g., hydro, wind, solar) by 2013. The Business Council has joined with other business interests across New York State to urge the PSC to complete and review all impact assessments before moving forward with any renewable portfolio plan.
Other key regulatory initiatives being addressed by The Business Council include attempts to impose mandatory "real time pricing" on the state's power distribution system; an initiative to adopt regional limits on CO2 emissions from power plants (a measure that would severely impact our remaining coal-fired generating capacity); and an emerging policy to require costly "dry cooling" on power plants seeking water discharge permit renewals on the Hudson River.
Promote Siting of Additional Capacity - There is little disagreement that the state needs to develop significant in-state generating capacity. Unfortunately, the legislature allowed the state's comprehensive power plant siting law to expire at the end of 2002. While program reforms could expedite the approval of new plants, The Business Council and other business interests have supported a straightforward extension of the pre-existing Article X law. Unfortunately, extender legislation has been hung up primarily on calls for even more procedural requirements, and more rigorous environmental standards.
WORKERS' COMPENSATION REFORMS
Despite a decade's worth of improvement, workers' comp costs in New York remain significantly above national averages and continue to have a major impact on the competitiveness of the state's manufacturing community.
The Business Council's priorities include:
state assessments that support the "second injury fund." This fund allows
businesses to shift the cost of certain awards for previously-injured
employees to a state fund financed through assessments on all employers.
The Business Council has proposed lowering the assessment from 150 percent
of the fund's prior year disbursements, minus net assets, to 110 percent
of prior year disbursements. This change will produce an immediate $100
million cost savings for New York State businesses.
the cost of "permanent partial" awards by imposing a 500-week limit
on benefits for partial disabilities not covered by statutory payment
schedules. In New York, these cases account for just 12 percent of claims,
but 77 percent of cost.
objective medical guidelines to determine the degree of disability in
permanent partial disability cases. The guidelines should consider both
anatomic and functional disability in permanent partial disability cases
and should provide a standardized, replicable method for physicians
to use to determine comprehensive, whole person impairment percentages.
Forty-six other states use objective medical guidelines, which ensure
that medical providers evaluate similar cases using consistent criteria.
In New York, different medical providers reach different conclusions
about the extent of impairment in similar cases. This outcome helps
make permanent partial claims the overwhelming reason for the high cost
of New York workers compensation system.
HEALTH CARE/INSURANCE COSTS
The Business Council has four health care priorities for 2004:
- Help employers
drive system change at the local level.
Medicaid reform that reduces the growth in expenditures and improves
small businesses to buy a foundation health insurance plan free of some
of the costly state insurance mandates.
- Lastly (or first), do no harm.
Employers across the state are growing weary of double-digit health insurance increases. That's the clear message from respondents to our resent survey of New York State businesses. Nine of ten rank employee health insurance as having a high impact on company operations - the highest such ranking from a list of other cost concerns.
Medicaid Reform - New York's Medicaid program is too big and too expensive. It lacks the measurement tools that are common in any business and recommendations to reform the program invariably become stalled or fail altogether.
Our top two recommendations to a special Senate Medicaid Reform Task Force mirror what is common in the private sector: 1) the priority focus should be on Medicaid patients with chronic illnesses; and 2) harnessing information technology can improve decision-making.
Medicaid patients with chronic illnesses - Research has shown that a relatively small number of Medicaid patients account for a large share of the state's Medicaid expenditures. Disease state management, an approach that has solid footing in the private sector, promotes case management of high-cost, high-risk patients, such as those with diabetes and congestive heart failure. The result is better patient care and less variation in care delivered from region to region.
Harnessing information technology - Extensive data is collected about New York's health care system, much of it is readily available. It is powerful information, but not used to its maximum. Some systems still can not communicate effectively with each other due to a lack of common platforms. The state can help remove these and other information technology obstacles.
Supporting regional initiatives - We are pleased with the rejuvenated interest in the private sector to be involved in generating change at the local level.
Buffalo and Rochester have formal efforts to lower health care costs and improve health outcomes. Syracuse is well on the way to community involvement in health system change. Business leaders in Albany have shown interest in rallying around initiative as well.
Ideally, regional health care groups can unite employers, providers and insurers in reviewing health care programs and initiatives in their community. The goal is to improve access, quality and cost of the local health care system.
The Business Council needs to continue to engage the legislature in some areas of reform, whether to "first, do no harm" when it comes to mandates, government price-setting and "play or pay" taxation of employers or to develop a more affordable health insurance option for small businesses who are struggling with skyrocketing costs.
ECONOMIC DEVELOPMENT INCENTIVES
As we continue to hammer away on these across-the-board reforms, there are several targeted economic development programs of importance to Business Council members that we need to focus on in 2004.
Investment-based RPT benefit - Manufacturing continues to be the backbone of most regional economies in Upstate New York, and The Business Council believes that the state needs a more effective tool to promote and reward capital investment and job retention in the manufacturing sector. Since the primary focus of the state's Empire Zone program - and especially with the enhanced benefits adopted in 2000 - is on job creation, it does not apply to many manufacturers that are continuously investing in their instate facilities, but not increasing job levels.
The Business Council has proposed a refundable real property tax credit (modeled on the EZ program credit) that would be available state-wide to manufacturers that make significant capital investments and retain existing employment. Criteria would be: a capital investment that equals or exceeds 10 percent of the facility's assessed value, or $10 million, whichever is less (we believe these thresholds represent significant investment thresholds for both large and small manufacturers); and retention of at least 90 percent of the facility's average employment base during the preceding five year period. The benefit would be a credit against state income taxes equal to the cost of real property tax payments on such property. In effect, this benefit would be comparable to the enhanced "QEZE" property tax benefit established for Empire Zones in the 2000 program amendments (see Article 14 of the Tax Law.)
Power for Jobs Extender - The "Power for Jobs" program provides reduced cost electric power to businesses that had significant power loads and that commit to specific job creation or retention targets. According to NYPA, savings average 25 percent, compared to generally available power rates. Many Business Council member companies, mostly manufacturers, participate in the Power for Jobs program.
The program was launched in 1997, as a "temporary" measure to allow for the development of retail competition in the electric power industry, and is set to fully expire in 2005, although many power allocations will begin expiring in early 2004.
Effective retail competition, which is dependent on a significant increase in instate generating capacity, has yet to materialize in many areas of the state. Therefore, The Business Council supports another three year extension of the Power for Jobs program. The program was initially supported by low-cost NYPA Fitzpatrick power and gross receipts tax credits granted to participating utilities. Since neither of these sources will be available after 2005, The Business Council recommends that program financing come from a combination of corporate franchise tax credits, sales tax credits and/or NYPA resources.
Empire Zone Program reform - The Empire Zone program will be the subject of competing "reform" initiatives in 2004. The Senate will continue to push for the creation of additional zones, with the goal of giving county-wide (rather than municipality-specific) zone designation authority to every county in the state. The Assembly, on the other hand, will push legislation that would drive zone acreage - and zone benefits - back into a limited number of economically-distressed areas, and to impose more strict rules for disqualifying beneficiaries that fail to meet job creation and retention targets. The Governor is expected to introduce his own reform package, with a focus on controlling program costs which are nearing $250 million per year. Earlier this year, the Governor proposed cutting state support for local zone administration, and requiring municipalities to finance fifty percent of the program's enhanced real property tax benefits.
The Business Council shares the Governor's concerns regarding program costs, and believes the state should adopt reforms that assure that Empire Zone benefits are awarded to locally significant development projects. For example, rather than having the state finance a 100 percent real property tax credit for all QEZEs, the state could offer a 50 percent credit to all QEZEs, and authorize local governments to opt-in to financing the remaining 50 percent of the credit on a targeted basis. Localities would be required to identify targeted industry sectors, in an approach similar to that currently required for the 495-b program. This reform would reduce the state's cost of the current EZ program, and help direct enhanced credits to strategically significant investments.
High Tech Investments - Over the past five years, New York State has committed over millions to the support of high technology research and development, with the majority of these funds devoted to university-based research consortiums under the oversight of NYSTAR (the New York State Office of Science, Technology and Academic Research). The Business Council has been highly supportive of these research investments, arguing that they will be the key to shaping the state's economic future. The Business Council believes that the state's high technology priority for 2004 is the continued support, and full funding, of the financial commitments made to these NYSTAR centers.
While environmental regulations can certainly impose cost barriers to capital investment, in many instances the delays and uncertainties imposed by the environmental review process can have even greater adverse impacts on economic development efforts.
Effective Implementation of the Brownfield Act - Compared with brownfield programs adopted in many other state's, New York's new brownfield law contains significant uncertainty about project approval timetables and cleanup requirements. On the other hand, it contains fairly generous tax credits for the cleanup and redevelopment of brownfield sites. The Business
Council will be working on several levels to promote the effective and efficient implementation of the state's brownfield redevelopment program including: working with the DEC on key implementation aspects, including the development of use-based cleanup standards; working with the legislature to address technical deficiencies in the legislation that call into question important liability and tax credit benefits; and continue to push for legislative reforms that make both the state's superfund and oil spill cleanup programs more fair, and more likely to result in pro-active, private sector cleanups. One of those is the repeal of a new tax on site-cleanup costs.
New Source Review - The U.S. Environmental Protection Agency has adopted several major reforms to its "new source review" and "prevention of significant deterioration" programs, which require extensive preconstruction review and enhanced emission control requirements on projects that could result in major increases in criteria air pollutant emissions (volatiles, nitrogen oxides, particulate matter, carbon monoxide and lead). Over the years, these programs have produced extensive body of federal and state regulations and guidelines, resulting in extremely complicated uncertain regulatory requirements - effective barriers to investments in power plants and manufacturing facilities. At present, New York State is involved in legal challenges against the federal reforms, and the availability of these reforms to instate business is uncertain. The Business Council has been working with both the Department of Environmental Conservation and the Attorney General's office on an implementation plan that addresses the state's concerns about environmental protection and enforcement, while retaining the fundamental federal reforms for New York State businesses.
Expedited Project Review. Through combined statutory and regulatory changes, The Business Council is supporting measures to streamline and add certainty to the Department of Environmental Conservation's project review process. These changes would apply to the DEC's "uniform procedures" - its general rules for reviewing permit applications - as well as to its formal rules for conducting adjudicatory hearings on disputed permits. Specific reform measures include: clarifying the standard for when a permit application is "complete;" heighten the standard for adjudication of issues through permit hearing process; make comment and review timetables mandatory, absent good cause to extend them; establish the time period after an application is complete to conclude the application and hearing process; create a "fast-track" process for applications that meet certain criteria (e.g., replacement projects, pollution reduction, etc.); preclude SEQRA from exceeding established regulatory standards.