Legislative Memo

Ken Pokalsky
Vice President of Government Affairs
T 518.465.7517 x205


To Be Introduced



Excelsior Reforms



March 5, 2013


In its first two years, only about half of the available Excelsior credits have been awarded to business. Unfortunately, Excelsior tax credit capacity that is unallocated or unused in a given tax year is lost forever to the program. So far, an estimated $75 million in Excelsior economic development capacity has permanently evaporated. Because of its high job and investment targets, a large percentage of businesses interested in growing and investing in New York are precluded from applying for Excelsior support. The Business Council believes the state can do more to support economic growth, particularly in upstate, and particularly among new and small businesses, by assuring more complete use of already-designated Excelsior resources.

The Excelsior program has showed initial successes, with about 130 businesses committing to nearly $2 billion in capital and research expenditures and creation of nearly 14,000 new jobs, with the potential to earn $184 million in current and future tax credits. It has been an efficient program as well, with Excelsior program participants awarded about 40 percent of the maximum credits for which they are eligible.

The Business Council believes that Excelsior can produce greater overall economic benefits for New York by expanding eligibility requirements within targeted industry sectors, and increasing the maximum value of some of its tax credits. This approach provides ESDC with more flexibility in supporting economic development projects, while retaining full discretion in awarding Excelsior credits and determining the level of credits available for any particular project. Further, the program would maintain its existing credit caps, meaning that these reforms would not impact the state's financial plan, The program would continue to apply its overall cost-benefit tests, assuring significant payback to the state's taxpayers.

Our specific recommendations include:

Manufacturer 25 10
Agribusiness 10 5
Financial service data center/back office 100 50
R&D 10 5
Software development 10 5
Back office 150 50
Distribution 150 75

The Business Council believe that these reforms will make Excelsior more effective in bringing new, good paying jobs and increased capital investment to New York State. Importantly, these reforms would not increase the state's existing ten year financial commitment to the Excelsior program, nor would it diminish ESDC's role in determining the appropriate level of incentives to offer for a specific development proposal. The program would maintain its focus on key business sectors, and continue to assure a significant economic return on the state's investments.

For these reasons, we urge the Senate and Assembly to adopt these reforms as part of the final state budget for Fiscal 2014.