FY 2015 Final Budget Summary
At the start of the 2014 session, The Business Council set business tax reform as our top legislative priority.
That was accomplished in a final budget agreement that will provide nearly $600 million in annual business tax savings while keeping the overall growth in state spending under 2 percent for the fourth consecutive year.
The broad-based tax reductions and reforms included in the budget — the most significant New York has seen in decades -- will improve our tax climate relative to other states and promote investment and jobs in key economic sectors throughout the state. Key reforms include modernizing and restructuring the corporate franchise tax, reforming bank taxation, reducing the corporate franchise tax rate to 6.5 percent, adopting the 20 percent real property tax credit for manufacturers, and others.
Significant reforms to the state's estate tax law, including an increased exemption that will match the federal exemption, will eliminate estate tax liability for many small business and farm owners, as well as homeowners and other state residents.
In addition, the budget included significant new economic development and public infrastructure funding, as well as fund to support the state's tourism industry.
And, although the budget makes adjustments to the implementation of the Common Core, The Business Council was pleased to see it preserves the new, more rigorous standards that are crucial to ensuring students graduate college and career ready.
The final budget agreement contained some disappointments, including a significantly scaled back reduction of business energy assessments, a new out-of-network coverage mandate and a compensation methodology for OON providers that increase the cost of health insurance, and the failure to extend and update the state's valuable brownfield credit.
Overall, this was a good budget for the state's business community, and for the state.
The following compares key Executive Budget proposals and their outcome in the final budget agreement.
We welcome your questions or comments.
- Executive Budget proposal: Make “design-build” contract authorization permanent and extend its authorized use to local governments on non-Wicks Law projects. The Executive's 30 day amendments shortened the authorization period, removed the local governments' authorized use and added a Project labor Agreement requirement for any design-build projects over $10 million.
- These proposals were not included in the adopted budget.
- Executive Budget proposal: Service-Disabled Veteran-Owned Business Act.
- The version that passed the Senate and Assembly last week, Governor's Program Bill #35 [S.6865 (Ball)/A.9135 (Ortiz)] is slightly different than the version originally introduced with the Executive Budget. The version that passed sets a state contracting goal with certified service-disabled veteran-owned business enterprises of 6%. Details on the Act can be found here
- Executive Budget proposal: Local governments would be authorized to access the State's data center and other IT services (PPGG, S.6355-B/A.8555-B, Part F).
- Approved, effective immediately.
- Executive Budget proposal: Provisions allowing the state to make aggregate energy purchases for state agencies, local governments, public authorities, public benefit corporations, and institutions are extended to 2020 (PPGG, S.6355-B/A8555-B, Part G).
- Approved, final agreement will extend provision to July 31, 2019.
- Executive Budget proposal: The Assembly budget proposal included language to require a cost comparison to be conducted for any contract worth more than $250,000 in a year for consulting services (PPGG, A.8555-C, Part O).
- Not included in final budget.
- Executive Budget proposal: An investment fund is created through Empire State Development Corporation to support minority- and women-owned business enterprises developing new and emerging ideas and products as well as to support their long-term financial performance. (Revenue, S.6359-D/A.8559-D, Part AA).
- Executive Budget proposal: The definition of “development centers” under Section 210 of the Economic Development Law is amended to include veterans to the list the business development centers will provide assistance to. Veterans are also listed as a group ESDC will provide various support to, including but not limited to new business ventures (Revenue, S.6359-D/A.8559-D, Part DD).
- Executive Budget proposal: Provides an additional $150 million in capital funding and $70 million in Excelsior Job tax credits to be disbursed through the ten regional economic development councils (extending current state support levels.)
- Executive Budget proposal: Provides $680 million in additional capital commitments under the “Buffalo Billion” program
Executive Budget proposal; Funding initiatives include:
- $180 million for equipment at Nano Utica
- $110 million for NYSUNY and CUNY 2020 grants
- $105 million to support the NY Genome Center and University of Buffalo
- Approved at $55.75 million.
- $50 million to continue the NY “Open for Business” marketing campaign
- No specific appropriation approved.
- $46 million for ongoing ESDC programs including the Economic Development Fund and M/WBE programs
- EDF funded at $31.18 million
- $31 million for NYSTAR programs
- $30 million for Onondaga Lake regional redevelopment
- $24 million for community redevelopment related to closure of an additional four corrections facilities
- Approved at $32 million.
- $12 million to support a Clarkson University/Trudeau Institute partnership
- Approved at $10 million.
- $5 million for competitive funding for tourism marketing plans
- $3.75 million to support the “Innovation Hot Spot” and state incubator programs
- An additional $225 million for transportation projects and $135 for environmental and parks projects under the New York Works program.
- Reforms several business tax credit programs, including the investment tax credit, brownfield remediation tax credit, and others.
- No changes to ITC were approved; no changes to the state brownfield program were approved. Several other tax credit programs were modified or adopted. See Tax section for details.
- Extend the Urban Development Corporation's authority to manage the Empire State Economic Development Fund through July 1, 2015. (S. 6357-D/A. 8557-D, Part AA)
- Extend the Urban Development Corporation's loan-making authority through July 1, 2015. (S. 6357-D/A. 8557-D, Part AA)
Additional provisions included in the final budget:
- Requires that SUNY issue an annual report on its economic development activities, including capital grants, SUNY 2020 program and Start-Up NY (S. 6356-D/A.8556-D, Part Z)
- Requires that the closed Butler, Chateaugay, Monterey and Mount McGregor correctional facilities be designated as strategic state assets under the Start-Up New York program (S.6355-D/A. 8555-D, Part BB)
- Executive Budget proposal: Increases school aid by $807 million over the 2014-15 level, $608 of which is provided as formula-based school aid.
- Increases school aid by $1.1 billion over 2014-15 school year; reduces the GEA by $620 million.
- Executive Budget proposal: Funds the Pathways in Technology Program at $5 million for additional public-private partnerships (S.6353-E/A.8553-E – Education Department, Reappropriations).
- Executive Budget proposal: Includes language for the Smart Schools Initiative, a $2 billion general obligation bond act, to be on the ballot in November; use of funds is restricted to certain technology upgrades and construction of pre-K classrooms and after-school program space as needed (S.6354-E / A.8554-E – Education Department, Capital Projects).
- Approved; includes language on Transportable Classroom Units.
- Executive Budget proposal: Commits $1.5 billion over 5 years for universal pre-k.
- Approved; allots $300 million/year for NYC.
- Executive Budget proposal: Creates the Teacher Excellence Fund to award highly effective teachers; eligible districts would submit an application to request funding; funding focused on schools with the greatest academic need, difficult-to-staff subject or certification areas and/or grade levels, and those at critical points in their career (S.6356-D/ A.8556-D, Part A)
- Executive Budget proposal: When two or more districts propose reorganization that would result in impacted school tax rates in the areas served by the districts, school districts' boards of education or trustees may opt to have the impact deferred for a one-year period and/or phased in over a period of up to 10 years (S.6356-D/ A.8556-D, Part A).
- Executive Budget proposal: The New York State Science, Technology, Engineering and Mathematics Incentive Program, a new financial assistance program for undergraduates matriculated in an approved undergraduate program leading to a career in STEM at a state public university, would provide full scholarships to those students graduating in the top 10 percent of their high school class who commit to work in a STEM field within New York State for 5 years after graduation from college. The program is funded at $8 million (S.6356-D/A.8556-D, Part G).
After school programs (S. 6353-E/A. 8553-E – Education Department Appropriations) funded through casino and gaming revenue fund
- Executive Budget proposal: Directs $720 million for the phase-in of a five-year plan to expand after-school programs.
- Approved; provides that the $81 million appropriated in the 2014-15 school year shall be payable on/or after April 1, 2015 as a portion of the GEA restoration in that year.
Additional provisions include in the final budget:
Common Core Reform Act (S.6356-D/A.8556-D, Part AA, Subparts A-L):
- Prohibits the administration of traditional standardized tests in pre-K
- Prohibits the use of traditional standardized tests in grade K-2
- Prohibits school districts or BOCES from including students' score on state administered ELA or math assessments in grades 3 through 8 from inclusion on a student's official transcript or permanent record and requires that a notice be sent to parents/guardians informing them of such
- Prohibits school districts from promoting or placing a student based solely or primarily on a student's performance on state-administered ELA and math assessments in grades 3 through 8; and requires school districts to notify parents/guardians of the district's grade promotion and placement policy along with an explanation of how such policy was developed
- Requires the Commissioner to issue regulations: allowing special needs students who are not eligible for the NYS alternate assessment and whose cognitive disabilities prevent them from participating in chronological grade level instruction to be assessed based on instructional level rather than chronological age, allowing ELLs to be assessed with a state-administered assessment that measures the English language development of students rather than the ELA exam for their first two years of enrollment, and ensures accountability for the performance of such students
- Requires that time devoted to state-administered assessments account for 1 percent or less of aggregate required annual instruction hours and that the time allotted for standardized test preparation for standardized assessments does not exceed 2 percent of required instructional hours
- Requires the Commissioner to expedite districts' or BOCES' plans related to reducing local assessments
- Requires the Commissioner to provide instructional tools for parents/families and teachers/principals on the Common Core Learning Standards
- Creates the position of Chief Privacy Officer, to be appointed by the Commissioner for a three-year term (which may be renewed) to provide services related to data management, conducting studies and/or evaluation of publicly funded programs
- Requires publication of a “Parents Bill of Rights” on each school district and BOCES website that will be included in every contract with a third party contractor that receives student/teacher/principal data
- Stipulates that the department must promote the “least intrusive” data collection policies practicable
- Requires the Commissioner and Chief Privacy Officer to develop at least one model policy for use by educational agencies
- Requires third party contractors to notify school districts/BOCES when there is a breach of security
- Directs the Chief Privacy Officer to investigate complaints indicating that an improper disclosure may have occurred and sets forth civil penalties for violations thereof
- Stipulates that a school district shall permit any charter school granted approval to co-locate and to use such services and facilities without cost (S.6356-D/A.8556-D, Part BB)
- Stipulates that charters in NYC that are approved by their charter entity to start instruction or expand grade levels in the 2014-2015 school year or thereafter and request co-location in a public school building to be provided access to such facilities (S.6356-D/A.8556-D, Part BB)
- Increases tuition funding for charter school students over three years; $250 per student the first year, $350 the second, and $500 in the third (S.6356-D/A.8556-D, Part BB)
- Enables charters to be eligible for pre-K funding (S.6356-D/A.8556-D, Part CC)
- Increases the max. benefit under TAP by $165 (from $5,000 to $5,165)
- Increases Community College Base aid by $75/ FTE (to $2,497)
- Executive Budget proposal: Reduce corporate and LLC contributions to an aggregate total of $1,000 per year.
- Not Included
- Executive Budget proposal: Reduce contribution receipt limits for candidates for all offices.
- Reductions included ONLY for candidates participating in the matching funds pilot program.
- Executive Budget proposal: Limit party transfers and direct campaign expenditures to candidates.
- Not Included
- Executive Budget proposal: Institute a voluntary matching funds system at a $6 to $1 rate for the first $175 of eligible contributions received. The system would be funded by a voluntary taxpayer check-off, from the abandoned property fund, private contributions from individuals and organizations, and transfers from the general fund.
- This was rejected but a pilot program for candidates running for NYS Comptroller will be created. This voluntary pilot program will be funded with money in the abandoned property fund and will provide a $6 to $1 match for the first $175 of eligible contributions received will be instituted. This pilot program will only be made available to candidates running for State Comptroller in this election year and is set to expire December 31, 2014.
- Executive Budget proposal: Require greater disclosure of independent expenditures.
- Executive Budget proposal: Create an independent enforcement board within the State Board of Elections, the Chief Enforcement Counsel of which will be appointed by the Governor.
- Adopted, but with the added provision that the Governor's appointment must be confirmed by a majority of members in both houses.
- Executive Budget proposal: Create new crime of corrupting the government and increase penalties for corruption, bribery and official misconduct.
- Executive Budget proposal: Increase required disclosure of outside business relationships, including client names and duties performed.
- Adopted; this will only be applicable to new clients or customers for services provided on or after January 1, 2015 or for new matters for existing clients or customers for services provided on or after January 15, 2015 and if the reporting individual receives $50,000 or more from employment or related activity. Any lobbyist or any client of a lobbyist who directly referred any business must also be reported. Reporting individuals can request an exemption of disclosing clients or customers for “good cause” including, but not limited to, where disclosure would reveal trade secrets or have a negative impact on a client's business interests, would cause embarrassment for the client, could reasonably result in retaliation against the client, or would tend to reveal non-pubic matters regarding a criminal investigation.
- Executive Budget proposal: $5.5 million in funding for a new Long Island Office of the Department of Public Service, with authority to review utility rates and operations including storm preparedness.
- Executive Budget proposal: Reduce the Public Service Law § 18-a(6) Temporary State Energy and Utility Service Conservation Assessment (Temporary Assessment) by a total of $200 million per year by immediately eliminating the assessment on industrial utility customers and accelerate the phase out for all other customers. First year assessment elimination for electric customers with a monthly peak demand of 1000 kW and gas customers of one hundred thousand dekatherms or more, and all customers of municipal electric and gas utilities and water works corporations. (TED S.6357/A8557 Part S)
- The final agreement provided across the board reductions to 18-a, reducing the current assessments from 2% to 1.63% for 2014, 1.00 for 2015, and .73% for 2016.
- Executive Budget proposal: Streamline the process for overseeing telephone corporations, reviewing violations of the shared meter law, and confirming cable franchises. The streamlining initiatives are intended to remove administrative burdens of the DPS without having a reduction in oversight. (TED S.6357/A8557 Part R)
- Streamlining was rejected and replaced with additional burdens on the transfer of current telecom and cable franchises.
Additional provisions include in the final budget:
- The PSC and NYSERDA shall review existing energy efficiency programs administered by utilities and/or NYSERDA and identify at least $15M in funding to assist installing any improvement to a heating or cooling system in residential and multi-family buildings which will increase efficiency by at least ten percent over the equipment currently installed or reduce fuel usage by at least ten percent over the equipment currently installed, and lead to a significant reduction in carbon emissions. (TED S. 6357 D/A.8557D Part EE)
- Executive Budget proposal: Amends the Agriculture and Markets Law to require that all retail gasoline outlets near I-87, I-90, I-84, I-88, I-86/State Route 17, I-81, I-390 and I-190 and evacuation routes be prewired for using a generator which is capable of providing adequate electricity for operations; authorize NYSERDA to provide grants for prewiring and access to a pool of generators administered by NYSERDA (TED S. 6357 D/A.8557D Part M).
- Amended to become a voluntary grant program.
- Executive Budget proposal: Makes permanent the current pesticide registration fees and the specific timeframes for the registration of pesticides (existing law sunsets 7/1/14; requires the reporting of all sales of each pesticide by county for the entire calendar year (TED S.6357/A8557 Part H).
- The final agreement rejected changes to pesticide reporting efficiencies and instead extends product registration fees and product review timelines from July 2014 to July 2017.
- Executive Budget proposal: Extends the Brownfield Cleanup Program for ten year, fairly consistent with the Business Council's requested amendments; tax credits remain as of right; remedial and the tangible property credits are bifurcated; a no-credit fast track is created, and would expand the program to include additional sites; to be eligible for the tangible property credits, a property must be vacant for at least 15 years or vacant and tax delinquent for 10 or more years, the value of the property must be less than the cleanup costs, and be an economic development project; sites will be removed from the program if in since June 2008 and cleanups are not complete by 12/31/15 or if in the program from June 2008 through July 1, 2014 with no complete cleanup by December 31, 2017. Exempt hazardous waste generated at certain sites from fees and special assessments. Brownfield Cleanup Program (REV S 6359 / A 8559 Part Q).
- Not Approved.
- Executive Budget proposal: Authorize the State to issue an additional $100M in bonds to provide funding for the State Superfund Program. Currently, the State Superfund program is being supported by prior year's bond authorization (PPGG S 6355 / A 8555 Part I).
- Not Approved.
- Executive Budget proposal: Authorize a payment of up to $913,000 from the NYSERDA for West Valley nuclear (TED S.6357/A8557 Part L).
- Executive Budget proposal: Authorize the NYSERDA to finance the Department of Environmental Conservation's climate change program, from an assessment on gas and electric corporations. This provision has been in the budget for multiple years (TED S.6357/A8557 Part K).
Additional provisions include in the final budget:
- "Rockland Bergen Flood Mitigation act" will establish a bi-state comprehensive plan to remediate existing and projected flood hazards, developed by a bi-state commission. The commission would be made up of 12 voting members with six (6) each from New York and New Jersey. Each voting member shall be resident voters of Rockland County, as well as Bergen, Essex or Hudson counties, respectively. Similar legislation has already been enacted in New Jersey last year when Governor Christie signed its own bi-state commission into law. Neither piece of legislation, in New York or New Jersey, can become law and properly be implemented until both Governors sign off on the design.
- A new provision will extend for one year the date upon which the any diesel powered heavy duty vehicle that is owned by, operated by or on behalf of, or leased by a state agency and state and regional public authority with more than half of its governing body appointed by the governor shall utilize the best available retrofit technology for reducing the emission of pollutants.
The Department of Financial Services will have under its purview new proposals to strengthen consumer protections in financial actions.
- Executive Budget proposal: Enhance consumer protection through no-fault automobile insurance fraud reform. This proposal gives the Superintendent of DFS the power to prohibit health providers from requesting payment for health services rendered after a determination of fraudulent activity on behalf of the provider and to levy fines of up to $10,000 per fraudulent offense. This provision also gives the Superintendent the authority to examine and audit health providers at any time. (TED S.6357/A8557 Part T).
- Not Approved.
- Executive Budget proposal: Establish new licensing requirements for title insurance agents, closers, and solicitors in New York State. These entities would be required to get licensed to practice in this state. The Superintendent of DFS would be empowered to revoke or suspend any license of any agent who violates the Insurance Law or is untrustworthy or incompetent. (TED S.6357-D/A8557-D Part V)
The following provides an overview of key provisions in health.
Out of Network (S.6357/A.8557 PART U)
- Executive Budget proposal: Expands some health insurance plan network adequacy requirements and requires insurers to provide access to out-of-network providers if there is not an in-network provider with appropriate training or experience or within a reasonable geographic area.
- Executive Budget proposal: Sets forth levels of reimbursement for plans that offer out-of-network coverage to 70% of UCR (the 80th percentile of FairHealth).
- Adopted as a mandate on plans that offer out-of-network coverage to offer at least one product with an 80% level of UCR (the 80th percentile of FairHealth) reimbursement for out-of-network treatment, effective 4/1/15. Additionally mandates that if there is no product available that reimburses out-of-network providers at 80% of UCR in a rating region, the Superintendent may require an insurer to make such a plan available. The Superintendent may waive this requirement if it is deemed that it would put undue hardship on the insurer.
- Executive Budget proposal: Requires multiple disclosures of anticipated costs for both insurers and provider. These include requiring insurers to disclose anticipated out-of-network costs for insured and prospective customers and requiring physicians to disclose real and anticipated costs when requested by patients.
- Executive Budget proposal: Establishes a dispute resolution process to adjudicate out-of-network claims disputes including balance billing and creates “hold harmless” protections for consumers where required disclosures are not made.
- Adopted and creates “hold harmless” protections for consumers who assigned benefits to out-of-network providers. Creates a “loser pays” dispute resolution process between insurer and provider, where one reimbursement amount (either that put forward by insurer or provider) is chosen. Allows for a 10-day negotiation period if it is deemed that it is likely to settle or that both positions are “unreasonable extremes.” Dispute resolution does not apply to claims under $600 and automatically applies in disputes over $1200.
Additional provision included in the final budget:
- Creates a nine-member out-of-network reimbursement rate workgroup, to include two physicians and two representatives of insurers, to review current out-of-network reimbursement rates and make recommendations regarding an alternative rate methodology.
Health Infrastructure Improvement
- Executive Budget proposal: Establishes a $1.2 billion capital bonding program over the next seven years for improvements to infrastructure such as primary care facilities, expands health facility restructuring loans for not-for-profit health centers and nursing homes and creates a pilot program authorizing up to five businesses to expand the use of private investment in health care projects. The budget language additionally streamlines the Certificate of Need processes for some providers of health care, authorizes limited services clinics within retail operations and defines the term “urgent care.” (S.6358/A.8558 PART A, Sections 8-22)
- Adopted without private investment pilot program.
- Executive Budget proposal: Extends HCRA taxes through 2017 and allows for the use of $65 million of the Covered Lives Assessment for the support of the Statewide Health Information Network (SHIN NY), so long as the assessment raises in excess of $1.045 billion through 1/31/17. (S.6358/A.8558 PART B, Section 17)
- Modified to put $65 in a HCRA resource fund so long as the assessment raises in excess of $1.045 billion through 1/31/17 and convenes a workgroup to study and report on the effectiveness of a Health Information Network (SHIN NY).
- Executive Budget proposal: Eliminates “prescriber prevails” provisions in Medicaid fee-for-service and manages care programs. (S.6358/A.8558 PART C, Sections 1-3)
- Not Approved.
- Executive Budget proposal: Authorizes the Commissioner to require further supplemental rebates from name-brand drug manufacturers that provide for Medicaid fee-for-service pharmacy programs. (S.6358/A.8558 PART C, Section 7)
- Not Approved
Additional provision included in the final budget:
- Adopted a provision prohibiting Average Acquisition Cost (AAC), as determined by Department of Health surveys, from being used by DOH as a method for establishing a maximum acquisition cost for pharmacy reimbursement.
- Executive Budget proposal: For higher income State Retirees, the State will eliminate reimbursement of Supplemental Medicare Part B premiums but will continue reimbursement of the regular Medicare Part B premiums of $104.90 per month in 2014.
- Not Approved.
- Executive Budget proposal: While not included in the Executive budget, the Senate Budget proposal contained a 6 week Paid Family Leave mandate on private and public employers with 25 or more employees through the state's disability system while significantly increasing the current maximum disability benefit from the current $170/wk to over $700/wk in just over 3 years.
- Paid Family Leave mandates and disability increases were not included in the adopted budget.
- Executive Budget proposal: Extend Monticello VLT rates, certain Pari-Mutuel Tax Rates and Simulcast provisions, and video lottery gaming vendor's capital awards program for one year (Revenue, S.6359-D/A.8559-D, Parts AA & BB).
- Executive Budget proposal: Increase the regulatory racing surcharge on handles 0.5% to 0.6% to cover the cost of regulation (Revenue, S.6359-B/A.8559-B, Part D).
- Not Approved.
- Executive Budget proposal: The Catskill regional Off-Track Betting Corporation to operate in New York City (TED, A.8557-C, Part HH)
- Not Approved.
- Executive Budget proposal: One percent of the gross purse enhancement will be paid to the Gaming Commission to promote and ensure equine health and safety. Additionally, one and a half percent of the gross purse enhancement at a thoroughbred track will be paid to an account to provide health insurance for jockeys. (Revenue, S.6359-D/A.8559-D, Part OO) Adopted
Enhance the current 10% free play allowance to 15% for race-track gaming facilities. (Revenue, A.8559-C, Part PP)
- Not Approved.
- Executive Budget proposal: Allow VLTS at International airports located in a city of one million or more (Revenue, S.6359-C, Part HHH).
- Not approved.
- Executive Budget proposal: Allow VLT facilities to operate at 6AM but no more than twenty hours per day; increase the free play percentage from 10 to 15%; and increase the number of VLTs allowed at Nassau and Suffolk OTB to 2,000. (Revenue, S.6359-C, Part CCC) Excluded
Increase the marketing allowance from 10-12.5% for VLT gaming facility located within a zone of Native American exclusivity. (Revenue, S.6359-C,Part DDD)
- Not Approved.
Corporate Tax Reform (Part A)
The following provides an overview of key provisions of these corporate franchise tax and other business tax reform provisions.
- Executive Budget proposal: The Article 32 Bank Tax is repealed, with Article 32 taxpayers becoming subject to the corporate franchise tax.
- Approved, effective 1/1/15.
- Executive Budget proposal: The ENI rate is reduced to 6.5% effective 1/1/16; the capital base cap is increased to $5 million for all non-manufacturing taxpayers; the 1.5% alternative minimum tax is repealed; and a new fixed dollar minimum tax schedule is adopted for sub-C taxpayers, with a maximum payment of $200,000, and for “qualified NY manufacture” taxpayers with a top payment of $4,500.
- Rate reduction is adopted; AMT is repealed; the new $5 million cap for non-manufacturers is adopted; in addition, a the capital base tax is phased down to zero for all Article 9-A taxpayers by 2021.
- Executive Budget proposal: Combined reports are required to include: businesses with more than 50% stock ownership and engagement in a unitary business; captive REITs/RICs not combined under Article 33; and certain alien corporations treated as domestic corporations under the IRC. Taxpayers are allowed a seven year non-revocable election to combine based on ownership only.
- Approved with limited language changes.
- Executive Budget proposal: The current subsidiary capital exemption is replaced with an exempt investment income/taxable business income regime.
- Executive Budget proposal: An economic nexus standard is imposed for the corporate franchise tax and the MTA surcharge.
- Executive Budget proposal: Article 9-A single sales factor apportionment method is adopted for determining the MTA surcharge.
- Article 9-A surcharge is amended to apply a 25.6% rate for 2015, with future rates set by the Tax Commissioner; surcharge to be based on pre-credit tax liability; while the current three-factor apportionment standard is retained.
- Executive Budget proposal: Pre-reform net operating losses are converted into credits to be applied against ENI-based tax liability, with a 20 year carry forward.
- Pre-reform NOLs are converted to “NOL conversion deductions; 1/10th of such subtractions can be applied in any tax year, however, taxpayer is provided election to use up to one-half of such subtractions in two consecutive tax years 2015 and 2016.
ITC and Manufacturers' Credit (Part R)
- Executive Budget proposal: Defines “manufacturer” as a taxpayer or combined group with more than 50% of gross receipts from the sale of goods produced by manufacturing; excludes power generation and distribution, natural gas extraction and distribution, co-generated steam, film/TV/commercial production and fuel blending.
- Most proposed changes to the Article 9A definition of “manufacture” were not accepted; however “qualified emerging technology companies” are excluded for purpose of the new 0% net income-based tax rate.
- Executive Budget proposal: Defines “qualified New York manufacturer” as a taxpayer or combined group that is a manufacturer with either at least $10 million or 100% of its manufacturing property in NYS; or a taxpayer with 2,500 manufacturing employees and $100 million in manufacturing property in-state.
- Approved, however the $10 million threshold was rejected and the current $1 million in-state capital threshold is retained.
- Executive Budget proposal: Limits the Article 9-A investment tax credit to “qualified NY manufacturers” and to qualified agri- and mining business;” defines qualified agri-business and mining as taxpayer/combined group with at least 50% of gross receipts from such in-state activity; eliminates the ITC for air and water pollution control equipment, security broker/dealers, investment advisory services, and film production; prohibits the ITC for property that had already served as the basis for the ITC or EZ-ITC.
- Proposed changes to ITC eligibility were not adopted.
- Executive Budget proposal: Creates a new refundable credit under Articles 9A and 22 equal to 20% of real property taxes paid by a qualified NY manufacturer; excludes PILOT payments, any RPTs deducted from ENI or federal AGI calculations, and RPTs used to calculate another tax credit. Recaptures credits if RPTs are subsequently lowered after a legal challenge or other actions.
- Approved as a non-refundable credit under Article 9-A and as a refundable credit under Article 22.
- Executive Budget proposal: Reduces the Article 9-A entire net income tax rate to zero, effective 1/1/14, for a qualified NY manufacturers that have a MTCD surcharge apportionment factor of zero (the bill also proposes the adoption of single sales factor apportionment for purposes of the MTCD surcharge.)
- The budget adopts an Article 9-A 0% net income-based tax rate for manufacturers that applies statewide; it also adopts a phase-down to 0% of the capital based 9-A tax calculation for all taxpayers.
Estate Tax Reform
- Executive Budget proposal: Increases the Estate Tax exclusion threshold to $5.25 million (and future indexing); phases down the tax rate to 10% by FY 2017; subjects certain gifts to be added back for estate tax purposes (Part X).
- Adopts the $5.25 million exclusion; after 1/1/19 effectively matches the federal exclusion for future tax years; does not include a rate reduction.
- Executive Budget proposal: The bill also closes the so-called “resident trust loophole,” to impose state income taxes on distributions from certain non-resident and exempt trusts (Part I).
- Executive Budget proposal: Extends the 20% credit for TV commercial production through 12/31/16; it is currently set to expire at the end of 2014 (Part O).
- Executive Budget proposal: Extends and reforms the Brownfield Cleanup Program and its redevelopment tax credit. Tax credit changes include: limits tangible property credit eligibility to vacant or tax delinquent properties and other “priority” sites and limits the availability of the credit to five years after completion of cleanups; terminates sites in program not completed on a timely basis; repeals the environmental insurance credit. Other reform issues discussed under “Environment” above. (Part Q).
- Brownfield-related provisions were not included in the final budget agreement.
- Executive Budget proposal: Amends the Excelsior Jobs credit program to provide participants with a credit against their payment of telecommunications excise tax (Part T).
- Executive Budget proposal: Conforms Tax Law provisions to recent Labor Law amendments to the Youth Works Tax Credit; provides an additional credit(s) for extended employment of eligible youth (Part U).
Additional provision included the final budget:
- Extends several New York City-specific tax credits; adopts a new “qualified musical and theatrical production credit”
- Expands the temporary film post-production credit to include Albany and Schenectady counties; and creates a new “workers with disability” tax credit.
- Executive Budget proposal: Allows for the continuous consolidation of information technology staff and services within the Office of Information Technology Services (ITS). (PPGG S.6355-D / A.8555-D Part F) Partially adopted.
- Adopts the provision allowing ITS to have technology service agreements with external government entities and extends ITS's cyber-security functions until September 30, 2015.
- Executive Budget proposal: Allows the PSC to forgo application of certain regulatory provisions to telephone corporations if such provisions are not necessary to ensure just and reasonable rates, charges and practices. Such provisions include the requirements to: post rates and schedule with PSC; PSC approval to construct telephone lines; PSC permission for company reorganization; and PSC permission to own and issue telephone company stock PSC streamlining of telecommunications regulation. (TED S.6357/A8557 Part R).
- Not Approved.
- Executive Budget proposal: Reduces the punitive assessment on landlords where a shared metering condition follows a customer complaint or is discovered by a utility. Reduces the additional assessment to 25% of the charges for service measured by the shared meter for 12 months. (TED S.6357/A.8557 Part R).
- Not Approved.
- Executive Budget proposal: Streamlines the confirmation of cable franchises and renewals by establishing a process that subjects franchises to the PSC's minimum franchising standards, rather than requiring PSC approval. (TED S.6357-D/A8557-D Part R).
- Adopts with changes. Franchise renewals or amendments must still get Commission approval and Commission will not approve the transfer of a cable franchise unless the transferee and cable television system meet Commission standards, transfer does not violate the law and is in the public's interest.
- Executive Budget proposal: New York E-911 surcharge on prepaid wireless phone services. Imposes $1.20 state rate and $.35 local rate at local option ($1.00 in NYC). (S.6359-C).
- Not Approved.
- Executive Budget proposal: Directs the Public Service Commission to undertake a comprehensive examination of telecommunication services in New York State. PSC will issue a report on its findings, conclusions and recommendations. (TED S.6357-C Part ZZ).
- Not Approved.
- Executive Budget proposal: Funding for local highway and bridge programs under the Consolidated Highway Improvement Program (CHIPS) and Marchiselli program is maintained at last year's level of $477.8 million.
- Executive Budget proposal: DOT interstate commerce vehicle registration fees and the railroad safety fees will now be deposited into the special reserve and obligation account of the dedicated bridge and highway trust fund.
- Executive Budget proposal: For the NYS Thruway Authority, continuation of $86 million in funding for the financing of Troop T that patrols the Thruway, offsetting the need for a commercial toll increase.
- Executive Budget proposal: Provides $155 million in new state funding under the New York Works Program to fast track highway and bridge projects; $45 million for essential project engineering and $25 million to enhance transit, rail and aviation programs.
- Approved with some allocation differences.
- Executive Budget proposal: MTA operating support to increase by $85 million to $4.3 billion; Non-MTA transit systems' operating support to increase by $7.9 million to $761 million.
- Executive Budget proposal: Appropriate $2.5 million for feasibility study of the Northern Tier Expressway (Route 98) between Watertown and Plattsburgh.
- Executive Budget proposal: Market-NY program to provide competitive grants for regional promotion of events and tourism would receive $5 million (S.6353-E/A.8553-E Aid to Localities, Department of Economic Development)
- Executive Budget proposal: Taste-NY which, in 2012, was funded under the Market-NY program to help market NYS food and food products, would receive $1.1 million (S.6353-E/A.8553-E Aid to Localities, Department of Agriculture and Markets)
- Executive Budget proposal: New York Wine and Grape Foundation's funding is the same as last year, $713,000 (S.6353-E/A.8553-E Aid to Localities, Department of Agriculture and Markets).
- The final budget increases the level of funding from last year by $287,000 for a total of $1,000,000.
- Executive Budget proposal: Implement the “Open for Fishing and Hunting II” initiative which would create a NYS Adventure License for things such as lifetime hunting and fishing licenses, and boating certifications as well as for the Empire Pass. Provisions in the Executive budget would also create new 3 and 5 year hunting, fishing and trapping licenses, reduce the cost of 7-day fishing licenses and allow promotional discounts on designated days and six additional free fishing days (TED, S.6357-B/A.8557-B, Part I)
- “Open for Fishing and Hunting II” was not included in the budget as initially proposed but DEC made some changes and reductions to hunting & fishing licenses and other like-permits. More information can be found here.
- Executive Budget proposal: Limit liability of landowners who make open their properties for public recreation (TED, S.6357-B/A.8557-B, Part I)
- Not Approved.
- Executive Budget proposal: Repeal the boxing and wrestling exhibitions tax (Revenue, S.6359-B/A.8559-B, Part Y).
- Not Approved
- Executive Budget proposal: Division of Tourism/I Love NY $2.5 million (State Operations, S.6350-S/A. 8550-E)
- Executive Budget proposal: County Matching Funds Program $3.815 million (Aid to Localities, S.6353-E/A.8553-E)
- Executive Budget proposal: Finger Lakes Tourism Alliance $100,000 (Aid to Localities, S.6353-E/A.8553-E)
- Executive Budget proposal: Catskill Association of Tourism Services $100,000 (Aid to Localities, S.6353-E/A.8553-E)
- Executive Budget proposal: Queens Tourism Council $100,000 (Aid to Localities, S.6353-E/A.8553-E)