Government Affairs Albany Update
December 22, 2010

Legislative Update

  • Federal Tax Reform – As you know, the so called “Reid Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010” was passed by Congress and approved by President Obama last week.  A good overview of the legislation, by the U.S. Senate Finance Committee, is posted on our Tax Committee web page here.   While much of the changes address personal income tax, the bill has significant advantages for business; for example, over 70 percent of U.S. manufacturers file as S-corporations or other pass-through entities. These companies would be significantly and adversely impacted by the higher tax rates if the extension had not passed. The Congressional Budget Office estimates that fully extending the 2001/2003 rates would add between 600,000 and 1.4 million jobs in 2011 and between 900,000 and 2.7 million jobs in 2012.  While New York businesses will benefit on their federal tax returns from the extension of the bonus depreciation and the temporary 100 percent expensing provision, these changes will not produce state-level benefits in New York.  Both changes are in Section 168K of the US Code, and while New York generally bases its state business taxes on the federal code’s definition of “entire net income,” New York has already “decoupled” from these provisions of federal tax law (see NYS Tax Law Section 209(9)(b)(17)).  Staff contact: Ken Pokalsky
  • Senate Race Final
    The State Court of Appeals unanimously rejected, by a 6-0 decision, Sen. Craig Johnson's (D-Nassau) appeal to order a full hand recount in his election loss to Senator-elect Jack Martins, in the 7th Senate District on Long Island.  This officially gives the Senate Republicans a Majority of 32-30 over the Democrats and returns control of the Upper House to the GOP.  The text of the decision is available here.  
  • Prevailing Wage
    Calling it “an unprecedented broadening of the scope of the state’s public sector prevailing wage requirements,” The Business Council has called for a gubernatorial veto of S.8379/A.10257-C, the so-called utility service worker bill, and S. 8454/A.11672, a chapter amendment to S.8379.  The main bill passed the legislature in July, but was only sent up to the Governor’s office last week.  The chapter amendment was finalized during December’s special session.  In short, this bill would impose public sector prevailing wage mandates on private sector utility service workers, and impose criminal penalties for violations.  A press release from the coalition opposing this legislation is available here.  Staff contact: Heather Briccetti
  • Wage Enforcement
    Governor Paterson has approved A.11726/S.8380, over the Council’s objections.  This legislation will significantly increase penalties for failure to pay required wages, and impose significant new wage notice requirements on most employers.  Bill text, and our memo in opposition, is available here.  Staff contact: Tom Minnick

Budget Watch

  • November Cash Flow Report – State Comptroller Thomas DiNapoli warned that while state revenues are showing some growth, significant tax revenue growth is needed in the final four months of the current fiscal year in order to meet current year-end projections.  “There is some positive news,” DiNapoli said. “But the Financial Plan’s revenue growth expectations for the remainder of the fiscal year may be difficult to achieve. All Governmental Funds tax collections over the first eight months of the fiscal year have increased 4.2 percent over last year, but the pace of growth will need to double in the last four months to meet year-end projections. There are already indications that certain revenues will not materialize.”  The Comptroller’s full report is available here.

Regulatory Update

  • Excelsior jobs program
    Empire State Development Corporation has issued its proposal to adopt permanent rules implementing the Excelsior job creation program.  The proposal was published in the December 1, 2010 State Register, and the public comment period will rune through the close of business January 17, 2011.  These regulations were initially adopted on an emergency basis on September 29, and were extended on an emergency basis on December 1.  The emergency and proposed rules, as well as Excelsior program application material, is available online here.   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 comments on these Excelsior program regulations, and welcome your input.  Staff contact: Ken Pokalsky

  • MWBE Rules Finalized
    Empire State Development has adopted final regulations, with minimal amendments, implementing the 2010 “Business Diversification Act.”  The notice of final rulemaking, along with a summary of the rule and the Department’s assessment of public comment, is available online here.  (See pp. 10 through 14).  This final rule will impose significant new reporting by businesses wishing to compete for state contracts, expand minority and women owned businesses state contract procurement opportunities through increased set-asides and establish statewide sector standards for contracting with certified MWBEs.  Additionally, state agencies will have new compliance and audit enforcement authority specifically related to the MWBE language. The agency reported receiving 113 comments on the proposed regulations; 72 were positive with no substantive comments; 40 contained questions and recommendations.  Ultimately, the agency has made minor changes to the draft regulations published for comment on September 29, 2010, including clarification on certain definitions, consistency on the use of certain terms throughout the regulations, adjusting of timeframes for the posting of waivers of compliance or modifications to utilization plans, and an adjustment to reporting timeframes. ESD anticipates doing training on the statute and the regulations in the new year.  Staff contact: Lev Ginsburg
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