Tax Committee Update
March 12, 2010
Staff Contact: Ken Pokalsky
The Business Council is opposing legislation, S.6236/A.9439, which would impose a fifty-percent franchise tax on corporate-owned life insurance benefits. The bill is on the Senate Investigations/Governmental Operations Committee agenda for next Tuesday. Enactment of this bill, proposed primarily as a state revenue-raiser, would threaten the long-term financial security of small and large companies, which purchase life insurance to compensate against loss of an owner or key employee, as well as, short-term and long-term obligations. Please let us know if this issue is of concern to your business, as we are encouraging additional businesses to weigh in on this proposal.
In response to the state's growing budget gaps, Lt. Governor Richard Ravitch and State Comptroller Thomas DiNapoli both released broad fiscal reform proposals this week.
Ravitch issued a five year plan to address the state's structural imbalance. The press release is available here; the full report is available here. Its key features include $6 billion in new, short term, PIT-backed borrowing over the next three years, creation of as state Financial Control Board, new gubernatorial authority to take action to make mid-year budget adjustments, a shift to GAAP accounting and a shift in start of the state's fiscal year to July 1. The Business Council's analysis of the Ravitch plan is available here.
Comptroller DiNapoli's fiscal reform package would require multi-year budget planning, mandate increases in the state's financial reserves, prohibit the use of non-recurring revenues to fund state operating expenses, and seek a constitutional amendment to further restrict state borrowing.
Unfortunately, neither proposal includes specific recommendations on necessary spending cuts – including in big ticket programs like Medicaid and school aid - that would be necessary to close the current and out year budget gaps.
The Business Council continues to stress the need for significant additional spending cuts to balance this year's budget and close an estimated $40 billion structural budget gap over the next three fiscal years.
James H. Tully, former State Tax Commissioner under Governor Hugh Carey, has been nominated as chair of the State Tax Appeals Tribunal. His appointment is set to be approved next Tuesday by the Senate Finance Committee, to be followed by approval by the full Senate. Since 1985, Tully has been a partner with the Albany-based firm of DeGraff, Foy & Kunz, LLP.