Government Affairs Albany Update
December 9, 2011

Regional Councils/CFA Funding

Governor Cuomo announced both regional competitive awards and round one of “consolidated funding application” awards yesterday. In all, the announcements included $785 million in funding and tax credits, for nearly 1,000 separate projects and programs overall. The “winners” of the regional council/strategic plan competition are Western New York, Central New York, Adirondacks and Long Island, with each region receiving combined awards of about $103 million. Five of the six remaining regions received total awards in the $60 to $70 million range, with the Southern Tier receiving about $50 million. The press release summarizing yesterday’s awards is available here. An overview of all project awards is available here.

Tax Legislation

The legislature quickly approved legislation introduced by Governor Cuomo that restructures the state’s personal income tax rates to generate a net increase of about $1.8 billion in PIT revenues. The text of the legislation is available here. Highlights include the following:

Personal Income Tax. New personal income tax rates will apply to tax years 2012 through 2014, inclusive, and include four new brackets starting at $40,000 for couples filing jointly. The top rate of 8.82% will apply to incomes over $2 million. The income tax will revert to a top rate of 6.85% for tax years 2015 and beyond. For tax years 2015 and later, the standard deduction will be adjusted for increases in the consumer price index.

Income Level

Previous Tax Rate

New Tax Rate

$40,000 to $150,000



$150,000 to $300,000



$300,000 to $2 million

7.85% - 8.97%


Over $2 million



Corporate Franchise Tax.
Temporary reductions in the corporate franchise tax will be made available to certain manufacturing taxpayers, who will be designated individually for this benefit at the discretion of the Commissioner of Taxation and Finance, based on “guidelines and criteria” to be established by the Commissioner, which may include factors such as unemployment rates in the region the business is located, the economic impact of the business on the community in which it is located; and median income and population loss is the local community. Tax benefits would be limited to tax years 2012 through 2014, inclusive, and include a reduction of the entire net income rate from 6.5% to 3.25%, a reduction in the alternative minimum tax from 1.5% to 0.75%, and a fifty percent reduction in the applicable fixed dollar minimum tax. The total value of tax reduction benefits to be awarded is to be limited to $25 million per tax year.

MTA Payroll Tax.
Many small businesses will now be exempt from the MTA payroll tax, which will now be applicable to business with quarterly payroll expense of $312,000 (up from $2,500 per quarter.) In addition, rates will be reduced for employers with quarterly payrolls of less than $437,000, to either $0.11 per $100 of payroll for businesses with quarterly payrolls of less than $375,000, and $0.23 per $100 for business with quarterly payrolls between $375,000 and $437,500. Also, self-employed individuals with earnings in the MTA region of less than $50,000 will also be exempt from the tax. It is estimated that 415,00 businesses and sole proprietors will have their MTA payroll tax reduced or eliminated, for a total annual savings of $250 million.

“At Risk Youth” Tax Credit.
The legislation creates a new refundable tax credit for employment of “at risk youth” residing in the state’s ten largest cities and towns. The credit is $500 per month for up to six months for full time employees, and $250 per month for part time employees. An additional credit of $1,000 for full time employees and $500 for part time employees is available if employment extends another six months. Employees would have to be hired between January 1 and June 1, 2012. Credit is available under the corporate franchise and personal income tax. Additional details on this credit are available here.

Jobs Retention Program.
The legislation included a jobs retention credit for business in disaster areas resulting from this summer’s floods. To be eligible, an employer must have at least 100 employees in the affected county and retain at least that number of jobs in the state; demonstrate substantial physical damage and economic harm resulting from the natural disaster; be taxable under the corporate franchise, personal income, bank or insurance tax; be either a financial service data center, manufacturer, software developer, research and development firm, in “agriculture,” provide back office operations, or be a distribution center; be in compliance with all worker protection and environmental laws and owe no back taxes, “and permanently decertify from Empire Zone benefits for that facility. The credit is a refundable credit of 6.85% of “gross payroll,” and is available for up to ten years, The credits under this program count against the annual credit cap on Excelsior Jobs tax credit program.

Property Tax Relief.
The legislation included language allowing for reductions in property assessments for real property damaged by Hurricane Irene or Tropical Storm Lee, where damage has resulted in the property losing 50 percent or more of its value. This applies to affected counties, cities, towns, villages and school districts.

Tax Commission.
The Governor will be issuing an executive order to create a thirteen person “New York State Tax Reform and Fairness Commission” to address long term changes to the tax system to promote create economic growth. Its charge will be to “conduct a comprehensive and objective review of the State's taxation policy, including corporate, sales and personal income taxation and make revenue-neutral policy recommendations to improve the current tax system. In its review, the Commission will consider ways to eliminate tax loopholes, promote administration efficiency and enhance tax collection and enforcement.” The Executive Order has yet to be released, so we do not yet know the timetable for its review and recommendations.

Infrastructure Investment Act

Part F of this week’s tax bill enacts the “Infrastructure Investment Act,” and temporarily suspends current restrictions on the use of “design-build” project delivery methods. Citing ”the potential to achieve projects delivered on guaranteed or accelerated schedules, lower costs and risk shifting to the private sector generally retained in conventional design-bid-build projects as well as to accelerate capital investments throughout the state,” the bill authorizes several state agencies and authorities, including the Department of Transportation and the Thruway Authority, to utilize this alternative delivery method for a wide variety of capital projects related to building, repairing and extending the life of the state’s physical infrastructure. It will apply to authorized state agency projects with a total cost of more than $1.2 million while having no minimum project cost requirement for authorized state authorities.

The bill includes a two-step selection process for contractors. Step one involves the creation of a list of firms “…that have demonstrated the general capability to perform the design-build contract.” Capability criteria are outlined in the bill. Step two calls for the selection of the proposal which is the ”… best value…” to the state. These criteria are also outlined in the bill.

The current design-build restrictions are the only temporary relief contained in the bill. There is specific wording in the bill that designates all work as “public work,” making it subject to current prevailing wage mandates. In addition, projects under this bill will carry all of the Wicks law obligations under section 135 of the state’s finance law, Project Labor Agreement requirements of section 222 of the state’s labor law and the objectives and goals of minority and women-owned business enterprises (MWBE) under Article 15-A of the state’s executive law.

Part F contains no provisions for the financing of these projects.

Testimony on Chemical Registry

On December 5, 2011, The Business Council provided testimony at a Public Hearing held jointly by the Assembly Committee on Environmental Conservation, Health, and Consumer Affairs and Protection. The hearing was to examine issues related to the regulation of toxic chemicals in children's products. The Business Council testimony recommended that “States should be cautious in their approach to the regulation of chemicals. Hasty approaches to the regulation of chemicals in New York are likely to prove costly, provided limited value, and create deadweight loss.”