Government Affairs Albany Update
September 10, 2010
- Business Council Voters' Guide
- "Excelsior" Program Regulations and Application
- Comptroller Review of FY 2011 State Budget
- Senate Sales Tax Report
The Business Council has issued its legislative voters’ guide for the 2009 and 2010 legislative sessions. It ranks all Senate and Assembly members on their voting record on key business and economic climate legislation, including those affecting budget and taxes, economic development programs, labor issues and others. The Business Council’s Voters' Guide is based on sponsorship and floor votes of 14 specific two-house bills that were voted on in at least one house. Individual legislators were given a percentage ranking based on the bills on which they cast votes and/or were a primary sponsor.
The Voters' Guide shows a dramatic difference in the two major parties on business issues, with a significant majority of Senate and Assembly Republicans casting votes to reject new economic burdens and to support private sector investment and jobs creation, while only two Democrats sided with the Business Council's pro-jobs agenda in more than half their votes.
In addition, the Council has announced that for the first time it will be making endorsements in select legislative races for this November.
Empire State Development Corporation has issued emergency rules to implement the recently enacted “Excelsior” program, as well as program application material. Under the state’s rulemaking procedures, these Emergency Rules take effect immediately; they will be published in an upcoming State Register, and will be subject to a formal public review and comment period prior to being adopted on a permanent basis.
Most provisions of the emergency rule are drawn directly from the statute (see S.6609-A/A.9709-C, Part MM). Significant new language includes:
- Additional criteria for evaluating program applications, including whether the project uses previously developed property, the energy efficiency of the project, its consistency with “smart growth” principles (the rule contains a new definition of “smart growth”), the likelihood that the project would have been located outside New York without state or local incentives, and others. (Note that the statute gave ESDC general authority to adopt regulations establishing eligibility criteria.)
- A new definition of “significant capital investment,” which will have the effect of imposing additional requirements for qualifying as a “regionally significant project.”)
- A new definition of “high value-added products” that will help define assembly operations that meeting the Excelsior programs eligibility criteria for “manufacturing.”
ESDC recommends that interested businesses contact ESD regional office regarding their plans for expansion or growth, and to help determine Excelsior program eligibility and the maximum tax credits that may be available.
The Business Council will be developing comment son these Excelsior program regulations, and welcome your input.
Budget – State Comptroller Tom DiNapoli has issued his office’s Report on the State Fiscal Year 2010-11 Enacted Budget, and it presents a dismal view of the state’s financial conditions.
Overall state spending increased by $9 billion or 7.1 percent to $136 billion, driven in part by a $4 billion increase in federal stimulus funds. When adjusted for payments delayed from the prior fiscal years, the spending increases is “just” $4.9 billion or 3.8 percent – still more than three times the current inflation rate.
While the legislature adopted a “balanced” budget for FY 2011, the Comptroller has identified $3.4 billion in revenues and savings that are unlikely to fully materialize. Moreover, the report calculates the current budget includes nearly $17 billion in temporary or nonrecurring resources – the bulk of which are federal stimulus funds ($6.0 billion) and the state’s temporary personal income tax increases ($5.7 billion).
Looking forward, the Comptroller is projecting a structural $8.3 billion gap for the Fiscal 2012 budget, and an aggregate budget gap of more than $37 billion over the next three budgets.
Senator Liz Krueger has issued a new report on reforming the state’s sales tax, based in part on input from a roundtable discussion sponsored by her Select Committee on Budget and Tax Reform in June. Its “conclusions” were that New York:
- Needs to simplify its sales tax system, and consider the national “Streamlined Sales and Use Tax Agreement.”
- Should extend the state sales tax to some additional categories of services, at least including those covered by the New York City sales tax (including credit rating/reporting services and a number of personal care services.)
- Makes the state sales tax “more progressive.” While it contains no specific recommendations on how to do so, the report states that recently enacted sale tax exemptions have favored higher income households and “non-core industries.”
Moreover, the report laments the current array of sales tax exemptions, saying that they cost the state $6.5 billion in lost revenues this year.
No legislation has yet been introduced to implement the reports’ conclusions.
Note that New York was "authorized and directed" to enter into the streamlined sales tax agreement by legislation adopted in 2003 (see Article 28-A of the Tax Laws); however, the state has not done so. The Council has not addressed this issue in recent years, and we welcome member input into the streamlined sales tax issue.