Government Affairs Albany Update
March 5, 2010

PPI Energy Tax Report

This week our Public Policy Institute released a report on state and local taxes, fees and assessments imposed on the electric power industry, which showed a total burden of $6.4 billion, a 26 percent add-on to electric power prices. In 2009, the power industry paid an estimated $6.367 billion in state and local taxes, assessments and fees. The figure is $853 million higher than the total the industry paid in 2008 – a 15 percent increase. Recent tax and fee increase have more than offset the 18 percent drop in wholesale electricity costs since 2000.

Among other things, the report called on the Governor and Legislature to reject a tripling of city and state utility gross receipts taxes proposed in the Executive Budget.

The press release and full report is available here.

Council Supports Procurement Legislation

The Business Council is backing legislation that would amend and extend the state’s procurement lobbying statute to July 31, 2014; see S.6924-B (Kruger)/A.9949-A (Destito). The bill has passed the Assembly, and is on the Senate Finance Committee agenda.

In 2005, the Procurement Lobbying Law was enacted by the State Legislature with the goals of bringing reform, consistency and transparency to the government procurement lobbying process in New York State. Provisions of the law have been subsequently extended for various duration periods. The current provisions have a sunset expiration date of March 10, 2010.

The amendments proposed within this bill offer clarity on what types of communications are not subject to the restricted contact provisions within the law, and provide a clearer definition of when the restricted contact period begins. These amendments will ensure the integrity of the procurement lobbying law is maintained, without compromising the ability of governmental agencies and vendors to engage in legitimate business communications.

Our memo in support is available here.

Council Opposes Tax Hike on COLI Policies

The Business Council is opposing a bill (S.6236-A/S.9439) which would impose a fifty-percent franchise tax on business-owned life insurance benefits. Many businesses purchase what is commonly known as corporate owned life insurance (COLI) on their most highly compensated employees for a variety of reasons. The purpose of COLI is to protect businesses from the loss of an owner or key employee whose talents are essential to the success of the company. The benefits from the life insurance policy assist the business to meet its future obligations including retirees' health care benefits, retirement plans and other costs. The bill amends the tax law and adds a new section 182-b that proposes a fifty-percent tax upon every company receiving benefits from life insurance policies it has obtained on its employees. Additionally, the bill requires that every company subject to tax under this section shall keep records of its business for a minimum of three years in such form as the commissioner may require. The Council's memo in opposition is available here.

“Street-cutter” Prevailing Wage Bill Held

Utility representatives and Council staff joined forces in opposing legislation that would have imposed public works “prevailing wages” on utility projects requiring a street opening permit (S.632-A (Fuschillo)/A.404-A). The bill was pulled off the Assembly Codes Committee last week. Our opposition memo on this bill is available here. As the first of several prevailing wage mandate bills likely to be considered this session, we saw this bill as an expensive and unnecessary extension of public works prevailing wage standards into private sector activity.

Corporate Tax Reform Proposal

The Department of Taxation and Finance has issued draft legislation that would integrate the state’s current Corporate Franchise Tax (Tax Law Article 9-A) and Bank Tax (Article 32). The bill text is available here; the bill overview is available here.

The following is an outline of the most significant proposals in this bill:

The Department is seeking formal input on this draft legislation by April 9th. We hope that you can participate in the upcoming Tax Committee meeting. If not, please feel free to contact us at your convenience to discuss this proposal and provide us with your reaction.

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