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Economic Development Overview
SFY 2009-10 Executive Budget Revenue Measures

Staff Contact: Ken Pokalsky
December 22, 2008

New York Governor David Paterson issued his proposed Executive Budget for Fiscal 2010 this week. Overall, the budget claims $369 million in gap closing items within the states economic development program, including retrenchments in the Empire Zones program, significant staff reductions, and other program changes. In addition, the proposal includes two new development incentives.

The following describes the Executive Budgets most significant economic development initiatives. We look forward to your input as we assess these proposals, and hope that you can remain involved in our advocacy efforts in response to these and other budget issues.

Please feel to contact me at any time to discuss these proposals, or for additional information. My contact information is at the end of this summary.

Empire Zones

The Executive Budget proposes to require all currently certified QEZEs to recertify. In order to remain eligible for Empire Zone benefits, the business must show a 20:1 ratio of wages, benefits and investments at their QEZE sites versus zone credits used at such sites. For companies certified prior to 4/1/05, this test will apply to all tax years for which the company has been certified since 2001. For companies certified after 4/1/05, the test applies to the first three complete tax years after certification.

Going forward, new QEZE certification will be limited to manufacturing and financial services sectors, and to extraordinary projects, with each category to be defined in regulation. To be newly certified, a company will have show an estimated 20 to 1 ratio of wages/benefits/investments to zone tax credits for the first 3 years after certification, and document achievement of that ratio after three years in the program. Companies in these categories are eligible for benefits regardless of whether they are located within previously designated zone boundaries.

The Administration has said that between one quarter and one half of currently certified QEZEs could be decertified under this proposal. A company that is not recertified would lose both future Empire Zone credits, and any credits that have been carried forward from prior tax years. This proposal would apply to tax years starting on or after 1/1/08. The Administration is projecting $272 million in savings for Fiscal 2010.

The budget would also eliminate local zone boards from the certification process, eliminate state funding for zone boards.

Click on these links for the bill memo and bill text regarding Empire Zone changes.

Agency Restructuring/ReductionsThe Executive Budget proposes to restructure major economic development agencies by:

Other Program/Funding ChangesThe Executive Budget would:

FY 2008-09 Deficit Reduction Plan

The Governor also re-released a set of gap reduction measures for the current fiscal year, ending March 31, 2009. These include the elimination of $8 million in economic development funding under the JOBSNow, technology transfer, facility development and state marketing programs, and for new investments at Albany Nanotech. The Governor is proposing that the FY 2009 deficit reduction measures be adopted by February 1, 2009.