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2011-2012 Final Budget Agreement

The legislature largely adopted the spending plan proposed by Governor Cuomo, and closed a projected budget gap of $9 billion with no new taxes or state borrowing. Instead, the legislature followed the Governor's proposal for spending cuts and restructured government. In addition, the budget includes several significant economic development measures.

Key details of the final Fiscal 2011-12 state budget include:

CONTRACT PROCUREMENT

The final budget provides SUNY & CUNY with enhanced discretion in the areas of procurement and the leasing and transferring of state lands.

Both SUNY and CUNY are authorized to: (1) purchase goods; (2) execute contracts for construction and construction-related services; and (3) execute printing contracts without prior approval of the Comptroller and Attorney General.  

Similar authority is provided to the SUNY Hospitals to: (1) purchase goods and; (2) enter into joint and group purchasing arrangements for goods without prior approval of the Comptroller and Attorney General.  

Language related to public-private partnerships for SUNY and CUNY was rejected. (S. 2808-D/A. 4008-D, Part D)

Language was rejected which would have limited BOCES ability to claim shared services aid for an array of non-instructional services including telecommunications, copying, and employee benefit management.

ECONOMIC DEVELOPMENT

Modifies the Excelsior Jobs program by extending the program by five years, extending the eligibility period for all Excelsior tax credits from 5 to 10 years, modifying the real property, jobs and investment tax credits, and making additional changes: (1) the cap on total available Excelsior tax credits is reduced by $50 million/year in 2016 through 2020, to reflect that first year Excelsior recipients will not be eligible for 10 year benefits; and (2) Excelsior is expanded to include businesses subject to Section 185 of the Tax Law, applicable to agricultural cooperatives. (S.2811-C/A.4011-C, Part G).

Governor's “Recharge NY” program bill is adopted as part of the budget. It creates a permanent replacement for Power for Jobs and related NYPA energy costs savings programs; with 910 MW in blended NYPA hydro and purchased power; contracts up to 7 years duration; expanded eligibility criteria; and set-asides for upstate facilities, economic development projects and small business/not-for-profits. It also includes a 5 year energy efficiency program to be offered through NYPA or NYSERDA directed at upstate residential ratepayers. (S.2810-C/A.4010-C, part CC).

Legislature approved $130.5 million appropriation for capital funds to be distributed through regional councils, saying that the funds will be available during Fiscal years 2012 and 2013, and will be distributed “based in part” on a competitive selection process  among the regional councils, but will be awarded at the discretion of the Urban Development Corporation. (S.2804-D/A.4004-D, page 595).

Extends the investment tax credit for certain financial services activities (without changes) under the corporate franchise, bank, insurance and personal income tax until October 1, 2015. (S.2811-C/A.4011-C, Part E).

The Urban Development Authority's ability to make economic development loans was extended by one year, to 7/1/12. (S.2810-C/A4010-C, Part G).

Extends the state's “Linked Deposit Program” for four years; increases the business-specific cap on aggregate loans from $1 million to $2 million. The program has unused loan capacity of $192 million. (S.2810-C/A4010-C, Part H).

Repeals the so-called “state cost recovery” assessment on IDAs as of April 1, 2009; increases the cap on total state recoveries on public benefit corporations from $55 to $60 million per year. (S.2810-C/A4010-C,  Part J).

A new tax credit program, including investment, job creation, job training, real property and sale tax credits and/or abatement is created to assist communities impacted by prison closings and consolidations. Credits are available to businesses that locate near a closed prison or youth detention facility and create at least 5 new, full-time jobs. New businesses are eligible for credits for a five year period. (S.2811-C/A.4011-C, part V).

Merges the Foundation for Science, Technology and Innovation (NYSTAR) and the existing high technology and research and development programs to the Department of Economic Development. (S.2812-C/A.4012-C, Part D).

Requires the Urban Development Corporation to develop and submit to the Division of Budget, legislature and state comptroller comprehensive financial plans for the corporation and all subsidiaries; modifies UDC's fund structure; and places restrictions on UDC interfund transfers (S.2810-C/A.4010-C, Part DD).

Creates the Empire State New Markets Corporation within UDC to perform community development projects and receive allocations of federal “new markets tax credits.”  (S.2810-C/A.4010-C, Part EE).

ENERGY

Creates “Recharge NY,” a permanent replacement for Power for Jobs and related NYPA energy costs savings programs; with 910 MW in blended NYPA hydro and purchased power; contracts up to 7 years duration; expanded eligibility criteria; and set-asides for upstate facilities, economic development projects and small business/not for profits. Initially introduced as a stand alone program bill, Recharge NY was adopted as part of the final budget. The bill was adopted as proposed by the Governor, except that it includes a five year energy efficiency program to be implemented by NYPA and/or NYSERDA targeting former upstate recipients of “rural and domestic” NYPA power. (S.2810-C/A.4010-C, part CC).

Extends motor fuel, petroleum business, fuel use and state and local sales tax exemptions for E85, compressed natural gas, hydrogen and biodiesel (B20) until 9/1/12. (S.2811-C/A.4011-C, Part L). 

Extends for one year the authority to fund NYSERDA's research, development and planning programs, and the Department of Environmental Conservation's climate change programs through assessments under Section 18-a of the Public Service Law; funded by an assessment of 1 cent per 1000 cu ft of gas, and 0.010 cent/kwh of electric power. (S.2810-C/A.4010-C, Part Q).

ENVIRONMENT

The final budget contains no significant environmental regulatory initiatives. Key funding provisions include:

FINANCIAL SERVICES

Creates new sections of Financial Services Law and establishes the Department of Financial Services (DFS) by consolidating the Departments of Insurance and Banking. (S.2812-C/A.4012-C – Chapter 18-A of the Consolidated Laws). The Department is funded by two appropriations $329,430,823 (A.2800-E/A.4000-E) and $225,566,000 (S.2803-E/A. 4003-E) totaling $554,996,823. Details include:  

Provisions Opposed by The Business Council Not Included in the final bill

GOVERNMENT REFORM & REORGANIZATION

Dissolves the Governor's Office of Regulatory Reform, which was created under Executive Order 20 in 1995; and most recently extended under Executive Order 2 of 2011. (A. 4010-C/S. 2810-C, Part O).

Requires that all reappropriations (state and local) with the exception of reappropriations for capital projects and federal purposes, lapse five years after the close of the fiscal year in which they were appropriated. (A. 4007-C/S. 2807-C, Part M).

Repeals the Community Projects Fund, the vehicle through which most member items, some capital projects and grants for not-for-profits were channeled. (A. 4007-C/S. 2807-C, Part 0).

HEALTH CARE / HEALTH INSURANCE

The only modification to the Early Intervention program, which serves pre-school children with certain developmental delays, was an across-the-board 5% reduction in EI rates.  Proposals to shift costs to commercial carriers without program design changes were rejected.  (S. 2809-D/A. 4009-D, Part A).

Delinks the funding for the Empire State Stem Cell Fund authorized by the Health Care Reform Act from any potential conversions proceeds to allow for spending from current HCRA resources.   (S.2809-D/A.4009-D, Part A, Section 16).

Extends the Health Care Reform Act through March 31, 2014, including extension of the authorization for the collection of the Covered Lives Assessment through the same timeframe. (S.2809-D/A.4009-D, Part C).

Part H (Medicaid Redesign Components of the Health Article VII)

The final budget largely accepts the recommendations made by the Medicaid Redesign Team.  This includes the:

A number of the recommendations were revised, rejected, clarified, or newly added including:

LABOR / HUMAN RESOURCES

The Legislature accepted the Governor's budget of $9.2 billion in All Funds for the Labor Department. This is a decrease of $1.6 billion in All Funds or -14.9 percent from the 2010-11 budget, reflecting the nonrecurrence of one-time Federal American Recovery and Reinvestment Act (ARRA) appropriations. This includes $3.3 billion in new appropriations and $158.8 million in reappropriation authority to allow the department to fully disburse ARRA-related Workforce Investment Act and unemployment insurance program funding. In addition, federal grant funding received by DOL will support the department's unemployment insurance computer systems modernization efforts and appropriations totaling $6.8 million are recommended for this project. For the 2011-2012 fiscal year, an increase in overall staff of 28 will bring the new total headcount to 3,977. (S.2800-E/A.4000-E, p. 411).

The final budget includes $21.3 million in All Funds for the Human Rights Division. This is a decrease of $1.5 million or 6.4 percent from the 2010-11 budget. (S.2800-E/A.4000-E, p. 390).

TAXATION

Tax Credits
Enhances and extends the Excelsior Jobs program tax credits program as proposed in the Executive Budget (S.2811/A.4011, Part G), except that: (1) The cap on total available Excelsior tax credits is reduced by $50 million/year in 2016 through 2020, to reflect that first year Excelsior recipients will not be eligible for 10 year benefits and (2) Excelsior is expanded to include businesses subject to Section 185 of the Tax Law, applicable to agricultural cooperatives.

Extends the investment tax credit for certain financial services activities (without changes) under the corporate franchise, bank, insurance and personal income tax until October 1, 2015. (S.2811/A.4011, Part E).

Extends motor fuel, petroleum business, fuel use and state and local sales tax exemptions for E85, compressed natural gas, hydrogen and biodiesel (B20) until 9/1/12 (See S.2811/A.4011, Part L). 

Tax Compliance and Enforcement

The Governor's proposals to implement the "Tax Modernization Project" were not included as part of the final budget. However, the final budget includes provisions (S.2811-C/A.4011-C, part U) which:

Extends through July 1, 2015 shelter disclosure and penalty provisions adopted in 2005. (S.2811-C/A.4011-C, Part B).

Conforms excess line premium tax and tax on independently procured insurance with federal “Dodd-Frank” legislation; allows New York to participate in national compact to collect excess lines insurance tax. (S.2811-C/A.4011-C, Part I). 

Adopts language to extend both state and New York City transitional provisions regarding federal Gramm-Leach-Bliley Act until 12/31/2012; and make permanent the 1985 restructuring of, and subsequent amendments to, the Article 32 Bank Tax. 

Updates provisions of the state's motor fuel, petroleum business and sales taxes to reflect federal “dyeing” rules and to restore intended tax treatment of on-road and non-road diesel fuel. (S.2811-C/A.4011-C, Part K). 

Legislative Tax Proposals Not Adopted

Senate

Assembly

TRANSPORTATION

Capital program and funding levels remain constrained by a number of key factors including the lack of a new multi-year Federal transportation act, the phase-out of funding from the 2005 Bond Act, and the Trust Fund's continued reliance on General Fund subsidies.

The budget will decrease spending for state agency operations by 10 percent. It provides operating support to transit systems totaling $4.2 billion. The MTA will receive $3.8 billion and other transit systems will receive $401 million. Cash support for both MTA and non-MTA programs will increase year-to-year.

The budget supports the adopted two-year DOT transportation capital plan that balances core infrastructure preservation with fiscal necessity and continues prior year funding levels for the core transportation programs supported by the Dedicated Highway and Bridge Trust Fund, including:  

Transportation spending from all sources will total $8.5 billion under this budget.

Transportation related Revenue and Programs

Simplifies the distribution of Motor Vehicle fees. (S.2811-C/A.4011-C, Part M).

Permanently extends Department of Transportation Single Audit Program. (S.2810-C/A.4010-C, Part B).

Permanently extends suspension of drivers' licenses for certain alcohol-related charges. (S.2810-C/A.4010-C, Part C).

Permanently extends suspension/revocation of drivers' licenses for certain drug related offenses. (S.2810-C/A.4010-C, Part D).

Makes permanent provisions relating to the Motor Vehicle Financial Security Act. (S.2810-C/A.4010-C, Part E).

UNEMPLOYMENT INSURANCE

Extends through December 31, 2013 the authorization for the Unemployment Insurance Interest Assessment Surcharge. (S.2808-D/A.4008-D, Part W).

WORKERS' COMPENSATION

A permanent delinking of workers' compensation and no fault insurance rates from the Medicaid inpatient hospital rates was approved as part of the Health Article VII bill. (S. 2809-D/A. 4009-D, Part H, section 32).

Sets new standards for continuance of group self-insured trusts, including standards by which full funding will be determined; and standards around security deposits on behalf of the members of the group trust.  (S.2807-C/A.4007-C, Part G).

Eliminates Workers Comp Board assessments (other than Section 50-5 assessments) on inactive self-insured groups effective January 1, 2011. (S.2807-C/A.4007-C, Part G).

For members of insolvent group trusts, defined as insolvent at the time the group was closed, includes language which provides for specific one-time assessment on members of insolvent group trusts except for those members who:  have entered into a settlement agreement or payment plan with the Board under which they have agreed to resolve all liabilities from the membership in the trust; or are members of a group trust that transferred all liabilities via a loss portfolio transfer; or have paid all moneys billed them by the Board at the time such one-time assessment is due.  (S. 2807-C/A. 4007-C, Part G).