Government Affairs Albany UpdateApril 30, 2004
- Bonacic/Parment Introduce Real Property Tax Certiorari Venue Bill
- Permanent Replacement Bill
- "Breach of Security" Bills Pending Before Legislature
- Empire Zone Testimonials
Legislation to transfer the jurisdictional venue of real property
tax certiorari trial proceedings for non-residential parcels
valued over one million dollars from state supreme court to
the division of tax appeals has been introduced by Senator
John Bonacic and Assembly Member William Parment.
S.7179/A.11000 -- a 2004 Priority Issue of The Business Council
-- is designed to build upon the expertise and track record
established by the division of tax appeals since its inception
in 1986. The division has proven to provide a consistent,
expeditious, non-discriminatory, and equitable forum for the
resolution of (non-reality) tax disputes.
Empowering the division's tax tribunal and administrative law judges to ascertain the value of non-residential real property, rather than relying upon the current article 7 certiorari proceeding, will alleviate uncertainties on behalf of local governments and taxpayers, reduce and shorten judicial challenges and appeals -- which, at present, reach final determination as to value thereof years later, well after the initial year of imposition -- reduce the burden on the supreme court judiciary, and develop expertise and consistency in real property tax assessment reviews.
As they did last year, the state Senate again passed Senator Marcellino's S.772, which prohibits employers from granting permanent status to replacement workers hired during a lawful strike or lockout. The same as bill, A.8231 (John) remains in the Assembly Labor Committee.
The Business Council argued that this bill would interfere with the collective bargaining balance between management and labor and would encourage surface bargaining by unions.
It should be noted that even if this bill became law, it would not trump the federal National Labor Relations Act; thus, most businesses in New York State would not be subject to it.
There are three bills currently before the Legislature dealing with breaching the security of a computerized information system or database.
The first bill, S.6517 (Fuschillo)/A.9184-A (Klein), amends the state technology and general business laws, to require that notification be made to all persons when "personal information" contained in a business' database is acquired by an unauthorized person. The bill requires that notification shall be made in the most expedient time possible and without unreasonable delay. The bill provides a number of options for methods of notification. Additionally, the bill allows for a class action lawsuit for violations of the article. If the plaintiff receives a favorable decision, then the defendant is liable to the entire class for not less than $500 per person, (plus costs, disbursements and reasonable attorney fees) regardless of the amount of actual damages.
The second bill, S.6739 (Rath)/A.11012 (Rules/Stringer), basically provides for notification to all persons whose personal information may be compromised by a security breach, but does not include the class action lawsuit provision.
The final bill, A.10295 (Nolan)/S.7121 (Farley) is very similar to the Rath/Stringer bill, but applies only to "banking institution[s]".
The Assembly Ways & Means, Economic Development and Labor Committees held a joint hearing this week on the Empire Zone program. The hearing focused primarily on issues of program costs, administration, and focus.
Key issues addressed by Gargano included:
- 257,000 persons were employed at zone certified businesses in 2002, for a per job program cost of $1200; 87 percent of these were full-time jobs with average wages over $30,000 (note: in 2002, the average statewide wage for private and public employment was $47,000).
- Between 1993 and 2002, zone certified businesses have created more than 56,000 new jobs, 87 percent of which are full-time.
- in 2002, zone certified businesses made $4 billion in investments in plant, equipment and technology (a figure reported as $1.2 billion in the ESD press release).
- between 2000 and 2002, as national employment fell by 2%, employment by certified businesses increased by 11%.
- in response to Comptroller Hevesi's recent program audit, he stressed that zone benefits are based on actual job growth, not projected job growth, and that the Empire Zone law does not require the decertifying of businesses which lose jobs during an economic downturn.
- he also emphasized provisions of the Governor's zone reform package included in the Executive Budget, including provisions that would reconfigure existing zones, require development of local development plans to guide implementation of the zone program, and creation of zone report cards that would measure the performance of local zones. He also stressed the Governor's "flex zone acreage" proposal as a short term alternative to establishing zones in the current 11 "have not" counties.
Tax and Finance Commissioner Andrew Eristoff Testimony: Commissioner Eristoff's brief testimony focused on T&F's role in administering zone benefits. Key comments included:
- T&F's role in the Empire Zone program is to certify eligibility of taxpayers for QEZE sales tax exemption, and to process and audit returns that include zone-related refund applications or credit claims.
- the Department reviews all EZ/QEZE credits that generate a refund, focusing on employment data and credit calculations included in the taxpayer's income tax return. These claims are also subject to a final review by the Office of State Comptroller.
- all EZ/QEZE taxpayers are subject to selection for full field audit and additional desk audit reviews as part of the normal audit cycle.
Legislative Questioning - Gargano and Eristoff testified together at the beginning of the hearing. Their formal presentations, and legislative questioning, lasted about 2 ½ hours. Highlights of the Q&A session include the following:
- Assemblyman Brodsky offered an alterative cost estimate of $262,000 per new job created, and asked the Commissioner to defend the difference between that cost and the $30,000 average salary.
- Brodsky and Assemblywoman John challenged both the appropriateness and legality of approving Monroe County zone amendments to include a number of vacant buildings. Issues include the timing of the approvals, the appropriateness of including buildings in suburban settings within the zone, and the fact that several of the property owners had made contributions to Monroe County GOP committees. In response, Gargano said that it was ESD's policy that, if the proposed zone amendments were consistent with statutory requirements, ESD would not override the local zone administrator's proposal on zone boundaries.
- Assemblymen Schimminger and Towns both questioned whether the proposed 1 job = 1% of maximum benefit test proposed in the Executive Budget would have an adverse impact on small business participants in the zones program.
- Brodsky, Towns and Assemblyman Farrell all questioned the coordination between ESD and Tax and Finance in assuring that job growth claims and tax credit filings were accurate. Farrell suggested that the program be amended to require participants to waive confidentiality of tax filings to allow sharing of that company specific data with ESD and the legislature. At one point, Gargano said he would not object to that proposal; Eristoff did not express an opinion.
- Brodsky asked about ESD's inquiry into businesses that had earned Empire Zone credits by reincorporating their business, with no significant job creation or investments. ESD said that while they do not have the ability to identify these businesses, the 2002 amendments closed this loophole to new participants, and the Executive Budget proposal reduces benefits to such businesses already in the program.
Comptroller Hevesi's Testimony: The Comptroller's testimony, and a new report on Empire Zone program effectiveness and reform proposals, are available on line at: www.osc.state.ny.us/press/releases/apr04/042604.htm
Key comments include:
- Using Division of Budget and T&F data, Empire Zone program costs were calculated at $291 million for 2004.
- ESD does not have sufficient data to support its claims regarding program success, and that the lack of sufficient accountability of the Empire Zone program dates back to the program inception.
- major reforms recommended by the Comptroller include:
- establish a new Empire Zone oversight and designation board to be responsible for monitoring zone effectiveness, developing performance standards, decertify non-complying zones and businesses, and recouping benefits given to businesses that do not meet new standards.
- Require Business Annual Reports to include data on wages of newly created jobs, number of "targeted employees" hired, number of jobs lost during the reporting year, estimated future tax credits to be claimed, and more.
- Improve data reliability and oversight by requiring participating businesses to waive their rights to privacy of tax information submitted to T&F, with safeguards to protect against disclosure of non-aggregated data and proprietary information.
- Require ESD to prepare an annual report on the Empire Zone program, with both statewide data and data on each individual zone.
- The Comptroller also had the general recommendation to refocus the program on job creation in "impoverished" areas of the state, to restrict the recertification of businesses that do not conform with "fair labor practices," and to incorporate environmental compliance and provision of health care benefits as criteria for business certification.
The Comptroller also supported the Governor's proposal to limit QEZE benefits to ten years.