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Proposed Legislative Changes to 2012 Executive Budget

Both the State Senate and Assembly have introduced amended versions of the Governor's $132.9 billion Executive Budget proposal, and have adopted one house budget “resolutions” that set the stage for formal negotiations on a final budget for the 2011-12 state fiscal year.

OVERVIEW

Senate

The Senate's proposed budget included $132.5 billion in total spending, about $400 million, or 0.5% less than the Executive Budget. The Senate Republicans accept the Governor's recommended caps on future Medicaid and education spending, which is in line with previous Senate Republican calls for passage of a State spending cap.

The Senate budget makes $280 million in school aid restorations, and by their calculation, adopts $2.755 billion of the $2.9 billion in reductions and reforms recommended of the Governor's Medicaid Redesign Team. It also would give counties the authority to opt out of optional Medicaid services. The Senate has not accepted the Governor's Excelsior program reforms, and continues to work on alternative economic development proposals.

The Senate also proposes several significant tax and fee reforms, including: permitting deferred business tax credits earned from 2010 to 2012 to be treated as refundable overpayments in 2013; accelerating the sunset of $700 million per year in “Section 18-a” energy assessments by two years; and proposing a package of tax credits targeting communities affected by correctional facility closures.

The Senate's press release on their budget package is available here.

The Senate's detailed summary of its proposed budget changes is available here.

Assembly

The Assembly's proposed budget includes $133.0 billion in total spending, virtually the same level as proposed in the Executive Budget.

It restores $467 million in education aid for the 2011-12 school year, including $200 million for general support to public schools. It accepts most of the Executive Medicaid Redesign Team recommendations for hospitals, nursing home, home care and pharmacy but rejects the medical malpractice reforms as proposed by the Team.

The most significant change proposed to the Governor's budget is the Assembly's proposal for a one year extension and modification of the upper income personal income tax surcharge, affecting taxpayers with taxable income over $1 million for the 2012 tax year. This is expected to raise $700 million in Fiscal 2012 and $2.6 billion in Fiscal 2013.

It generally accepts the Governor's proposed amendments to the Excelsior Jobs program, and the Executive Budget's capital funding to be directed by the proposed regional economic development councils.

The Assembly's press release on the budget package is available here.

The Assembly's detailed summary of its proposed budget changes is available here.

CONTRACT PROCUREMENT

Provides SUNY & CUNY with enhanced discretion in the areas of procurement (S.2808-B/A4008-B), participation in public-private partnerships and the leasing and transferring of state lands.

Senate

Assembly

ECONOMIC DEVELOPMENT

Staff Contact: Ken Pokalsky

Modifies the Excelsior Jobs program (S.2811/A.4011, Part G) by extending the program by five years, extending the eligibility period for all Excelsior tax credits from to 10 years, modifying the real property, jobs and investment tax credits, and making additional changes.

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.

Authorizes $200 million in competitive grants to newly created regional economic development councils, including $130 million in capital funding from reprioritizing existing economic development funds; and $70 million in tax credits from the enhanced Excelsior Jobs Program. Regional councils are to be established by Executive Order.

Clarifies that taxpayers remain eligible for Empire Zone tax credits past the program's 6/30/10 expiration date unless they are decertified by ESDC. (S.2811/A.4011, Part C). 7,500 businesses remain eligible for Empire Zone tax credits.

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).

Makes permanent the Urban Development Authority's ability to make economic development loans; this supports other proposed changes to convert state grants programs to loan programs. (S.2810/A4010 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/A4010, Part H).

Repeals the so-called “state cost recovery” assessment on IDAs as of April 1, 2011; increases the cap on total state recoveries on public benefit corporations from $55 to $60 million per year. (S.2810/A4010,  Part J).

Provides $100 million in targeted economic development funding for communities impacted by prison closings and consolidations.

Merges the Foundation for Science, Technology and Innovation (NYSTAR) and the existing high technology and research and development programs to the Empire State Development Corporation. (S.2812/A.4012, Part D).

ENERGY

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. (Article VII budget bill, not yet introduced.)

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/A.4011, 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/A.4010, Part Q).

Additional Legislative Energy Proposals

ENVIRONMENT

The Executive Budget contains no significant environmental regulatory initiatives.

FINANCIAL SERVICES

Staff Contact: Ken Pokalsky

Establishes the Department of Financial Regulation (DFR) by consolidating the Insurance and Banking Departments and the Consumer Protection Board. (S.2812/A.4102).

HEALTH CARE / HEALTH INSURANCE

S 2809-C (Health Article VII Bill)

S. 2809-C, Part H (which reflects the incorporation of the Governor's Medicaid Redesign Team's recommendations):

Senate

Assembly

TAXATION

Staff Contact: Ken Pokalsky

Tax Credits

Enhances and extends the Excelsior Jobs program tax credits (for details, see Economic Development section above).

Clarifies that taxpayers remain eligible for Empire Zone tax credits past the program's 6/30/10 expiration date unless they are decertified by ESDC. (see S.2811/A.4011, Part C). 7,500 businesses remain eligible for Empire Zone tax credits.

Extends the investment tax credit for eligible financial services activities (without changes) under the corporate franchise, bank, insurance and personal income tax until October 1, 2015. (See 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

Includes a number of amendments to implement the “Tax Modernization Project,” (See S.2810/A.4010, Part Z), including: authority for electronic filing of documents and electronic RPT tax payments; requires localities to maintain electronic assessment inventories and assessment roles; and creates a central DT&F database of all local assessment records and web-based software for assessment management to be made available to all local assessing units; allows DT&F to enter into agreements with taxpayers to use electronic communications for any documents now required to be mailed; extends e-filing mandate to all personal income tax payers using software to prepare returns; increases related penalties; extends the date for filing fee returns for LLS to the 60th day after then end of the tax year.

Makes permanent tax shelter disclosure and penalty provisions adopted in 2005 (currently scheduled to expire 7/1/11). (S.2811/A.4011, Part B).

Other Issues

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/A.4011, Part I).

Extends both state and New York City transitional provisions regarding federal Gramm-Leach-Bliley Act until 12/31/2012; and makes permanent the 1985 restructuring of, and subsequent amendments to, the Article 32 Bank Tax. (S.2811/A.4011, Part J).

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/A.4011, Part K).

Additional Legislative Tax Proposals

UNEMPLOYMENT INSURANCE

Makes permanent the authorization for the Unemployment Insurance Interest Assessment Surcharge. This language makes permanent both the establishment of a specific interest assessment surcharge fund to receive the assessed surcharges, and provides the authorization to the Department of Labor to collect the surcharge from employers when interest on federal loans must be paid. (S.2808/A.4008, Part W).

WORKERS' COMPENSATION

Implements the major recommendations of the Task Force on Group Self-Insurance. Eliminates, except under certain limited circumstances, the provisions of workers' compensation coverage for private employers by group self-insured trusts. (S.2807/A.4007, Part G).