The Business Council opposes this legislation that would impose a sunset on unspecified provisions of state Tax Law related to fossil fuels, based on a future report to be issued by the Governor. As such, it is an unworkable, and likely unconstitutional, delegation of legislative authority.
This bill has two major provisions.
We have no objection to its first provision, which is to require that the state’s annual tax expenditure report identify and provide additional information on which tax expenditures apply to the production, transmission, distribution, transportation, storage, sale, purchase or delivery of fossil fuels fossil fuels, and to assess their impact on economic growth, jobs, individual’s cost of living and fossil fuel emissions. The report would also be required to include recommendations regarding the continuation, modification or repeal of any such tax expenditures. While the data cited above is already included in the tax expenditure report, this mandate would require that it be compiled and presented in a more straightforward format. Fair enough. In particular, we welcome the Administration’s assessment of the full range of impacts of these provisions of the Tax Law. These assessments will inform state decision-makers at a time when New York is working on a massive transition in its energy sector.
However, we have significant concerns regarding the second major provision of this bill, which would require all “fossil fuel related tax expenditures” identified in the state’s tax expenditure report to sunset five years after the effective date of this bill, and that any fossil fuel tax expenditure adopted in the future also have a five year sunset.
A major concern is whether it is constitutional for the legislature to effectuate the repeal of provisions of statute on the basis of an as-yet-to-be written report by the Administrative branch. If the legislature finds that certain tax credits or exemptions no longer serve a significant public purpose, it should propose legislation that specifically modifies or repeals such provisions.
A second concern is a practical one. While the sponsor’s memo only mentions two specific tax provisions of concern, advocates have raised concerns about some broadly accessible tax credits, such as that for research and development expenditures, that are used by the fossil fuel industry. Would this legislation mandate the repeal of the entire R&D credit, or just its use by this one ill-defined sector? The bill language is unclear at best on how its mandate would be reflected in statute.
A third concern is that the bill’s mandatory sunset would apply regardless of the Administration’s findings as to a tax expenditure’s impact on jobs, the economy or individual’s cost of living. In fact, the sponsor’s memo recognizes that the bill would impose a mandatory sunset on measures such as heating assistance for low-income New Yorkers that the legislature would likely continue to support. Again, if the legislature finds that specific provisions of the tax code require revisiting, they should propose amendments based on the merits or demerits of those specific provisions, rather than take this “meat cleaver” approach.
This legislation is more a political statement than a practical, thoughtful approach to assessing tax expenditures. We believe it is an unworkable approach and represents a poor way to develop public policy. For these reasons, we oppose approval of S.2649-C (Krueger) / A.257-C (Cahill).