Legislative Memo

T 518.465.7517





Increased industry fees to support superfund



March 17, 2003


The Business Council strongly opposes this legislation that would impose $18 million in new hazardous waste management fees. These new fees would primarily hit the state's manufacturing sector, and the most significant impacts would affect businesses in upstate New York.

This proposal has nothing to do with the so-called "polluter pay" principle, since the revenues would be used to clean up contaminated sites for which the affected businesses are in no way responsible. It is a "tax business" approach, and is contrary to New York's ongoing efforts to improve our economic climate.

New York has taken a number of positive steps in the last eight years to improve its economic climate, and the state's economic performance in the recent national downturn clearly illustrates that we have become more economically competitive.

Even so, the state's manufacturing sector continues to struggle, in part due to a nationwide (and worldwide) downturn in industrial production, and in part due to cost-of-doing-business factors in New York State.

According to the most recent U.S. Census of Manufacturing, total manufacturing jobs in New York fell by 5 percent, or 50,400 jobs, between 1997 and 2000. Despite these loses, manufacturing continues to be the backbone of the upstate economy, with the industrial sector directly providing or indirectly supporting nearly 50 percent of all private sector jobs upstate.

As New York poises itself to participate in the national economic recovery, and continues to promote economic development in upstate communities, this is the absolutely the wrong time to be impose significant new fees on the state's manufacturing sector.

The hazardous waste program fee surcharges proposed in A.5303 range from $4,000 to $360,000 per year, and – according to state data – will affect nearly one thousand businesses and other waste generators. For some businesses, these surcharges would result in program fees equivalent to $400 per ton of wastes generated. These surcharges are on top of existing state-imposed "program fees," per ton "special assessments," and permit fees, and they would be imposed irrespective of whether the hazardous wastes are recycled or reused in the manufacturing process, rather than disposal of.

Based on our research, New York State's existing hazardous waste-related fees are already among the highest – if not the highest – imposed by any state. An additional $18 million in surcharges would make us the undisputed champion in this arena – another cost-of-doing-business factor where New York is way beyond the national norm.

There is a sound alternative! The Business Council has proposed that state superfund be refinanced with existing general fund revenues, on a pay-as-you-go basis. Specifically, we recommend that state superfund be supported using a dedicated portion of existing Article 9-A corporate franchise tax. This will result in a stable, permanent revenue source to support the state's remedial efforts. In contrast, revenues from these proposed surcharges will undoubtedly decline over the long term, due to increased industrial efficiency and ongoing changes in the composition of the state's industrial sector.

Our proposal is based on recent legislative actions in New Jersey – our nearest rival in terms of business fees imposed to support state superfund spending – which chose to use existing corporate income tax revenues rather than new business fees as part of its refinancing efforts.

We believe this approach is sound from both a fiscal and policy perspective:

The Business Council continues to support refinancing of the state's superfund program as part of a package that includes a statutory brownfield program and several basic reforms to the state's superfund program. However, for the reasons discussed above, The Business Council strongly recommends against approval of A.5303.