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April 16, 2002

Council urges lawmakers to make ITC for financial sector permanent

New York State should make the investment tax credit (ITC) for its securities industry permanent to help this industry recover from job losses in 2001, The Business Council has told lawmakers.

New York's ITC for the financial sector is due to expire in September 2003. Bills to make it permanent are already being considered in the Senate (S.6605-Alesi) and Assembly (A.10712-Schimminger).

Business Council President Daniel B. Walsh outlined the case for making it permanent in an April 12 letter to Governor George Pataki and legislative leaders. The letter was also signed by Keith Utsey, vice president and managing director for state government affairs of the Securities Industry Association (SIA).

The state's economic-development vision and historic tax cuts helped move securities-industry employment to an all-time high of 206,800 jobs in August 2000, the letter said. But in 2001, the industry lost 25,000 in the nationwide recession, and job losses were worsened by the tumult caused by the Sept. 11 terrorism.

Given the longstanding importance of this industry to New York's economy, New York more than ever needs to make permanent the ITC now available to securities brokers and dealers and to qualified banks.

"It is important that New York send an unambiguous message to this core business that New York intends to remain a competitive place to do business now and over the longer term," the letter said.

Background on the investment tax credit for the financial sector: New York's powerful ITC has encouraged many businesses to invest in New York State. In 1998, lawmakers expanded the ITC to cover investments to securities firms, banks, insurers, and others in the financial sector in capital improvements and equipment used to conduct business.

This ITC has been effective in encouraging investment in the financial sector, which is a critical part of New York's economy. Encouraging and rewarding this investment is especially important now as the financial sector in lower Manhattan faces major investment decisions about where and how to rebuild after the Sept. 11 terrorism.

The Council is also urging lawmakers to act promptly to make this ITC permanent. Major capital investment decisions are planned and debated for many months before they are made. Uncertainty about the future of this ITC could affect decisions about where to make capital investments.