What's New

Zack Hutchins
Director of Communications

(October 18, 2007)

Governor Spitzer's budget director sends business mixed signals on taxes in next year's budget

Governor Eliot Spitzer's budget director Thursday sent New York's business community mixed signals about the prospect of a heavier tax burden next year.

"Governor Spitzer has been very clear that he does not intend to raise taxes," Paul Francis, director of the state Division of the Budget, said in response to a reporter's question during a presentation at the Rockefeller Institute in Albany.

Later, in response to the same question, Francis said the Spitzer administration expects to propose "closing corporate loopholes."

"We will continue to look at the tax code," Francis said. "It's almost a duty of a chief financial officer to take advantage of tax planning to reduce tax liability. But it's not understood by the state how little tax many of the largest corporations in the state pay. There is an issue of fairness."

Addressing a question about the possible movement of financial-sector jobs beyond the state borders, Francis also downplayed the importance of taxes as a factor in attracting job growth in this sector.

"What I don't believe is the case is that our taxes are a big disincentive [for New York City's financial services sector]," he said. "Our taxes and our costs of living are very competitive."

Francis also said that "it is likely" that the Division of the Budget will project a larger budget gap than it did in its first-quarter update. He blamed struggles in the real estate sector and, in particular, on Wall Street, which Francis said generates about 20 percent of the state's revenues.

Earlier this year, Governor Spitzer proposed a series of "loophole closings" that The Business Council characterized as tax increases and strongly opposed because they would increase the tax burden on business.

In the budget that was approved, some but not all of the Governor's proposed "loophole closings" were enacted. That budget also included a reduction in the overall business tax rate, which The Business Council strongly praised.

In reviewing the Spitzer administration's hopes for the 2008-2009 budget process, Francis said the Spitzer administration's focus will be on "consolidating gains" from last year's budget and budget process. For example: