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Government Affairs Albany Update
February 26, 2010

Economic Development Power Proposal

Assemblyman Kevin Cahill, chair of the Assembly Energy Committee, has announced the first proposal this session for a long term replacement of the Power for Jobs and Economic Development Power programs.

The bill (no bill number yet) is the first proposal that would redeploy so-called “rural and domestic” hydro power for economic development purposes. R&D power is hydropower produced at the Niagara plant, whose default use is for residential rate subsidies within the three upstate utilities. The bill would shift this power from R&D purposes to a new economic development power program by 2014.

The bill would extend the current PfJ and EDP programs through the end of this year (they are currently set to expire May 15, 2010), with the new program beginning January 1, 2011.

Criteria for the new program will include: the significance of energy costs to a business' competitiveness; the business' commitment to creation and/or retention of jobs, capital investments and investments in efficiency; size of payroll and local economic significance; and others. Participating businesses may be subject to NYPA-provided energy audits, and be required to commit to additional efficiency investments. The bill envisions a program providing benefits covering up to 950 megawatts of energy demand, with set asides for high load factor businesses and small business.

The bill also would require NYPA to create an energy efficiency program directed at upstate residential consumers to help offset any adverse impact of this redeployment of hydropower.

The Business Council has been working closely with the legislature and the Administration on this issue; while we support key components of the Cahill bill, we do no support the proposal as is, and are providing the Assemblyman with proposed changes on the redeployment, residential offset and efficiency audit provisions. We will post the final legislative proposal on our web site as soon as it is available.

Staff contact: ken.pokalsky@bcnys.org

Legislative Revenue Forecasts

Both the state Senate and Assembly released their respective economic and revenue projections for the new fiscal year this week. While the Administration, Senate and Assembly all project renewed economic growth and overall increases in state tax revenues compared with the current year, both the Senate and Assembly projected Fiscal 2011 revenues below the levels forecasted by the Division of the Budget, interjecting additional uncertainty into the budget negotiation process.

The Assembly projects “all funds” tax revenues for the FY 2011, at $62.6 billion, to be $1.2 billion below the level forecasted by the Executive Budget. The Senate's numbers are just $300 million below the Administration’s forecast.

All three forecasts project a rebound in personal income growth in the 4 percent range, increases in personal income tax revenues (projections range from 5.8 percent to 9 percent), and significant increases in sales tax revenues of more than 10 percent.

All three also forecast another year of declining business tax receipts, but differ sharply on the components. The Executive and Senate are projecting $300 million, or nearly 10 percent, increase in corporate franchise tax revenues, while the Assembly projects a 2.5 percent decline. All three project significant declines in bank tax revenues, with falloffs projected at between 15 and 20 percent.

Detailed comparisons of these projections are provided in the tables below.

Access to the Senate's economic and revenue forecasts is available here.

Access to the Assembly's revenue and economic projections is available here.

Staff contact: ken.pokalsky@bcnys.org

CALENDAR YEAR 2010 EONOMIC ASSUMPTIONS (% CHANGE)

  Exec Budget Senate Assembly
Real GDP 2.8 2.7 2.9
GSP   4.0  
NY Personal Income 3.8 4.4 4.0
NY Employment -0.4 -0.7 -0.4
Retail sales   6.2  
Unemployment Rate 9.2% 8.9%  

 

REVENUE PROJECTIONS ($ MILLIONS)


ALL TAXES
FY 2010 FY 2011
Exec Budget
FY 2011 Senate FY 2011
Assembly
PIT $34,380 $37,443 $37,136 $36,389
Sales/Use 13,994 15,563 15,577 15,424
Business 7,823 7,760 7,796 7,578
Other 1,408 1,425 1,421 1,583
Payroll 1,173 1,577 1,544 1,588
Total 58,778 63,768 63,474 62,562
BUSINESS TAXES        
9-A 2,961 3,277 3,304 2,885
9 968 922 934 925
Insurance 1,412 1,400 1,407 1,511
Bank 1,363 1,076 1,055 1,172
Petroleum 1,119 1,085 1,096 1,085

PROJECTED CHANGE ($ million)

ALL TAXES
FY 2011
Exec Budget
FY 2011 Senate FY 2011
Assembly
PIT $3,063 $2,756 $2,009
Sales/Use $1,569 $1,583 $1,430
Business ($63) ($27) ($245)
Other $17 $13 $175
Payroll $404 $371 $415
Total $4,990 $4,696 $3,784
BUSINESS TAXES      
9-A $316 $343 ($76)
9 ($46) ($34) ($43)
Insurance ($12) ($5) $99
Bank ($287) ($308) ($191)
Petroleum ($34) ($23) ($34)

PROJECTED % CHANGE


ALL TAXES
FY 2011
Exec Budget
FY 2011 Senate FY 2011
Assembly
PIT 8.91% 8.02% 5.84%
Sales/Use 11.21% 11.31% 10.22%
Business -0.81% -0.35% -3.13%
Other 1.21% 0.92% 12.43%
Payroll 34.44% 31.63% 35.38%
Total 8.49% 7.99% 6.44%
BUSINESS TAXES      
9-A 10.67% 11.58% -2.57%
9 -4.75% -3.51% -4.44%
Insurance -0.85% -0.35% 7.01%
Bank -21.06% -22.60% -14.01%
Petroleum -3.04% -2.06% -3.04%

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