Economic Development Committee
June 18, 2010
Staff Contact: Ken Pokalsky
The Administration, Senate and Assembly have agreed to a modified version of the Governor’s proposed Excelsior job creation program. This proposal – S.6609-B/A.9709-C, Part MM – passed the Assembly today. A summary of key components is provided below.
We have been urging the legislature – especially Upstate members - to push for a higher annual cap on available Excelsior tax credits, which would accommodate additional projects, support additional capital investment and job creation, and allow for increased credits, especially higher RPT credits.
This limited program, coupled with pending proposals to defer the use of already-earned business tax credits and the lack of progress on a new economic development power program, will leave state with few significant economic development incentives to support investment and retention projects.
Key Components of the revised Excelsior program include:
- 5 year program, $1.25 billion total commitment.
- Certified companies would be eligible for tax credits for up to five years; a $50 million per year cap is applied to aggregate tax credits available to all businesses certified in each of the next five years (e.g., a business certified in 2011 would be eligible for credits from a $250 million pool spread out equally over a five year period; a business certified in 2012 would be eligible for credits from another $250 million pool spread out equally over the next five year period; no new certifications under this program after 2015.)
- Eligible businesses will include businesses within “innovation zones” (current census tract-based Empire Zone “investment zones”); businesses that meet job creation thresholds (which range from 10 to 150 jobs, depending on the industry category); and/or businesses that have a combination of new payroll and capital investment that is at least a 10:1 ratio compared to Excelsior tax credits for which they are eligible ($12 million per year would be set aside for businesses qualifying under this investment only criteria; businesses certified based on investment only would not be eligible credits other than the ITC). Businesses must be in target industries (manufacturing, “technology,” agribusiness, financial service back office, regional distribution and regionally significant projects.) Businesses would have 24 months after certification to meet job creation/investment targets. ESDC will retain discretion in certifying businesses and setting tax credits for individual companies.
- Refundable tax credits will include:
- a 2% investment tax credit;
- a wage credit for new jobs (tiered benefits from $2,500 to $5,000 based on level of salary/benefits for each new job);
- a research and development credit of 10% of taxpayer’s federal R&D credits attributed to New York investments; and
- a real property tax credit of 50% in year one, phasing down to 40%, 30%, 20% and 10% over the next four years.
Overall, we believe this is a very limited allocation of economic development resources for a statewide, multi-sector program (in contrast, the state’s film production credit is being increased to more than $500 million for each of the next five years, for a total commitment of $2.1 billion). Likewise, we believe the RPT credit will be inadequate to offset the adverse impact of high property taxes on potential development projects. We also disagree with tying R&D tax credits to job creation. We generally support the agreement’s targeting of industrial sectors, and we strongly support the inclusion of capital investment-based eligibility criteria.
Staff contact: firstname.lastname@example.org