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Government Affairs Albany Update

May 11, 2001

Marcellino and Schimminger to Appear Before GAC

Senator Carl Marcellino and Assemblyman Robin Schimminger will be the guest speakers at the Monday, May 14 meeting of the Government Affairs Council. Business Council staff will also provide highlights of the Senate's Tax Package, the state's energy picture, and the Business Council's involvement in education policy.

Please remember that the meeting is being held in the Empire State Plaza in Meeting Rooms 2-3. The meeting begins at 10:00 a.m. and should adjourn at approximately 11:45 a.m. No advance registration is necessary.

Senate Superfund Refinancing Proposal

The Business Council's proposal for refinancing state superfund was included in the comprehensive tax reform legislation introduced this week in the State Senate – S.4 (Bruno et al). The bill, which is expected to pass the Senate early next week, will provide $75 million per year to the state's remediation fund, with the monies coming from existing corporate franchise tax revenues. According to the Senate, this proposal reinforces their goal of refinancing the superfund program without any new business taxes, fees or surcharges. Importantly, this bill only establishes the new financing mechanism. New spending authority is expected to be part of comprehensive superfund/brownfield reform legislation.

If you are interested in looking at the actual bill text, click here, follow the link to S.4 bill text, go to page 32, lines 8 through 18.

School Budget Proposals Would Raise Property Taxes at Twice the Rate of Inflation, PPI Study Finds

School budgets appearing on ballots across New York State next week would increase property taxes by twice the projected rate of inflation, a new "School Tax Watch" study by The Public Policy Institute finds.

School tax levies statewide would increase by a total of more than $740 million, or an average of 7.4 percent, according to data school districts submitted to the state Education Department in advance of the May 15 statewide voting day. That figure is some $300 million above the amount that districts would need to keep pace with enrollment and inflation trends.

"By raising property taxes at twice the inflation rate, school districts are effectively taking back millions of dollars that homeowners are entitled to receive under the STAR program," said Daniel B. Walsh, President/CEO of The Business Council.

Click here for details, including tables showing proposed tax and spending increases in individual school districts throughout New York State.

Distributive Generation

The Department of Environmental Conservation has adopted an emergency rule that will apply to "distributed generators" that may be used to help meet electric power demands this summer. This is part of the state's "Emergency Demand Response Program." Click here for a copy of the rule text.

The rule will allow emergency generators to operate for up to 200 hours per year when requested to do so by the New York Independent System Operator in order to avoid the need for load shedding (or rolling blackouts.) The rule also requires that, for any diesel generators participating in this program, any additional fuel purchased for these units as of May 1, 2001 must have a sulfur content less than 30 parts per million.

Importantly, if the generating unit is also operated as an exempt emergency generator, the 200 hours of operation allowed under this rule would count against the 500 hours of annual operation currently allowed under state regulations for such exempt units.

The DEC also announced that it will be developing a permanent rule regarding emission limits and emission control requirements for distributed generation units. These would probably be in place for the 2002 peak load season.

New Power Plant proposed on Long Island

KeySpan and the Long Island Power Authority (LIPA) have announced plans for a 250 MW, $300 million natural-gas-fired plant near Melville on Long Island. Melville is located near the Nassau-Suffolk border. Estimated date for the plant to come on line is the summer of 2004. The plant, to be named the Spagnoli Road Energy Center, will be part of LIPA's plan to add 700 megawatts of power to its electric capacity in the next three to four years. KeySpan would build, own and operate the Melville plant, while LIPA would contract to buy at least half the plant's generated power. KeySpan would sell the rest to Long Island residents and merchants. The project is touted as 10 to 20 times cleaner than a conventional gas-fired unit and 30 to 40 times cleaner than a conventional oil-fired unit. The proposed site is near LIPA power transmission lines, natural gas lines and one of its major substations.

Long Island is considered a load pocket meaning it has severe limitations on the amount of power it can have transported into its territory. Therefore it is very dependent on power generated in its immediate vicinity. According to New York's Independent System Operator (NYISO), Long Island must have 98% of its peak demand capability located on the island. Reliability requirements, as determined by the New York State Reliability Council (NYSRC), are 18% above expected peak. Therefore Long Island, being in a load pocket, must secure enough reserve power to cover an extreme peak demand forecast of 5023 MW. LIPA is projecting a base peak demand of 4,516 Megawatts (MW) assuming a normal Long Island summer. Resources available to LIPA from both on- and off-Island sources amount to 5293 MW of installed capacity, if all generating systems and electric tie lines operate without any problems.

Senate Majority Tax Package Now in Print

The Senate Majority printed its 2001 tax package this week (S.4 and S.2B). The tax package contains one major item not included in the Senate's March announcement of the package, namely, repeal of State Sales and Use Tax (SUT) applicability to gasoline and diesel purchases, as well as authorization for localities to do likewise or reduce their rates.

Major items in the package are:

Bank Tax

Corporation and Utility Tax (Article 9)

Corporation Franchise Tax (Article 9-A)

Insurance Tax (Article 33)

Personal Income Tax (Article 22)

Petroleum Business Tax (Article 13-A)

Sales and Use Tax (Article 28 - State; Article 29 - Local)

Omnibus Provisions