Legislature Passes Major Tax Bill

Major Tax Provisions in S.1406B/A.2106B

Part G3 (p.569) - extends Article 32 Bank Tax for an additional two years and the grand-fathered right to continue to file under Articles 32 and 9-A for an additional one year

Part H3 (p.577) - adopts the Governor's Executive Budget proposed Article 33 Insurance Tax restructuring as amended by the Governor in his 30-day amendments

Part I3 (p.591) - reimposes the State's Sales Tax on clothing costing under $110; revokes authorization for counties to exempt clothing costing under $110; adopts two seven-day Sales Tax holidays for clothing costing under $110; authorizes counties to adopt matching seven-day Sales Tax holidays for clothing costing under $110

Part J3 (p.594) - adopts Governor's Executive Budget proposed increase in filing fees imposed on limited liability corporations and limited liability partnerships

Part K3 (p.595) - adopts Governor's Executive Budget proposed decoupling of expensing of Sport Utility Vehicles except for SUVs used in farming

Part L3 (p.595) - adopts Governor's Executive Budget proposed enhancement of estimated tax payments by out-of-State partners, members, and shareholders

Part N2 - assesses Unemployment Compensation taxable employers (but not reimbursable employers) for the interest incurred by the State of New York for Federal advances of funds to pay UC claimants. The assessment amount is left to the discretion, within specified parameters, of the Commissioner of Labor.

Part O3 (p.600) - decouples New York tax law from the March 2002-enacted Federal Economic Recovery accelerated first-year depreciation (except for investments in the New York Liberty Zone).

Part R3 (p.605) - places additional lines on Personal Income Tax forms requiring taxpayers to declare Use Tax.

Part S3 - directs the Commissioner of Taxation & Finance to participate in the Streamlined Sales Tax Project (SSTP) -- a collective effort of states and taxpayers to: 1) standardize sales tax laws across the Nation and 2) provide groundwork for increased collection requirements on out-of-state vendors, including Internet sales.

Part T3 (p.609) - adds to the Tax Law to impose taxes on non-native American persons who make purchases on native American nation or tribal land.

Part U3 (p.610) - amends Article 9-A Corporation Franchise Tax to delineate related member expenses, income exclusions, and add-backs [broadly addresses the "Toys-R-Us" corporate structure; language can be found on The Business Council website under Committee on Taxation].

Part X3 (p.615) - increases the State's Sales and Use Tax from 4% to 4.25%.

Part Y3 (p.618) - adopts a two-tier, three-year (2003 - 2005) Personal Income Tax surcharge which sets the higher surcharge at 7.7% on Taxable Income over $500,000 and the lower surcharge on Taxable Income between $150,000 and $500,000 at 7.5% (2003), 7.375% (2004), and 7.25% (2005).


Part C (pp.10-25) - increases a number of civil and criminal penalties for violations of the Environmental Conservation Law. These include:

  • Article 19 (air permits, other than hazardous waste incineration), minimum penalties for initial violations increase from $250 to $375 per day, maximum penalties increase from $10,000 to $15,000 per day; for subsequent violations, maximum penalty increases from $15,000 to $22,500 per day. Maximum fines for criminal convictions go up to same levels as for civil violations.

  • Hazardous waste incinerator permits, maximum penalties for initial violations increase from $25,000 to $37,500 per day of violation; maximum penalties for subsequent violations increase from $50,000 to $75,000 per day. Fines for criminal convictions go up to a like amount.

  • Article 27, Titles 3 and 7 (regulated waste transporter permits and solid waste management facilities), maximum civil penalties increase from $5,000 to $7,500 for an initial violation, and maximum penalty for additional days of a continuing violation increase from $1,000 to $1,500. Maximum penalties for violations resulting in the release of solid wastes into the environment increase to as high as $22,500 per day for releases of more than 10 cubic yards. Criminal fines increase to the same levels. Civil penalties for violations relating to construction and demolition debris disposal sites increase from $10,000 to $15,000 per day.

  • Article 27, Titles 9 and 13 (hazardous waste management and remediation), maximum civil penalties for violating statutory/regulatory provisions or enforcement orders relating to the management of hazardous waste or the remediation of inactive hazardous waste sites increase from $25,000 to $37,500 per day for initial violations, and from $50,000 to $75,000 for subsequent violations. Criminal fines go up to the same levels.

  • Maximum criminal penalties for unlawful dealing with hazardous wastes increase as follows: for violations classified as a C felony, from $200,000 to $300,000; for D felonies, from $150,000 to $250,000; for E felonies, from $100,000 to $150,000; for Class A misdemeanors. $25,000 to $37,5000; and class B misdemeanors, from $10,000 to $15,000.

  • Article 71 - Bulk Storage of Liquids. Maximum penalties for releases of from liquid bulk storage facilities (greater than 1,100 gallons, see Section 17-1743) are increased from $2,500 to $3,750 for the initial incident, and penalties for each continuing day of a violation increasing from $500 to $750. Likewise, maximum penalties for failure to notify DEC of such releases increase from $2,500 to $3,750.

Note that these penalty increases were initially proposed as part of Governor Pataki's Executive Budget.

Part T1 (p.135) - A 25 percent increase in SPDES (wastewater) permit fees. New fee structure ranges from $475 to $47,5000 for industrial facilities (compared to current fees of $375 to $37,5000). Fee for powerplants increases from $40,000 to $50,000. Net annual increase in income is about $1 million.

Part V1 (pp.139-145) - Adopts the "Waste Tire Management & Recycling Act." Imposes $2.50 fee per new tire sold and mandates retailers take back old tires from customers (on one-to-one basis.) Requires abatement of unpermitted tire dumps; establishes a hierarchy for waste tire recycling & reuse (including energy recovery).

Part S1 (p.131+) - Appropriates funding from the Environmental Protection Fund for a variety of projects, including $1.3 million for the state's ongoing assessment of Hudson River natural resource damages.

Part X1 (p.147) - Reduces the duration of pesticide applicator certifications from 5 to 1 year; existing certification fees are also reduced proportionately.

Part O1 (p.129) - Increases mined land reclamation program fees by between 25 and 100 percent. Maximum fee is $4000 for sites over 30 acres.

Part R1 (p.130) - Increases fees for oil, gas and solution mining, with the fee range of $190 to $3,800.

Economic Development

Part C1 (p.112-113) - Authorizes transfer from the Power Authority to General Fund sufficient funding to support the Power for Jobs program for FY 2003-04.

Part M1 (pp.121-123) - Requires the Empire State Development Corporation to notify state legislators of funding applications within their districts; submit to the legislature quarterly reports on its commitment and distribution of funds by area of the state, information on the number of jobs created and retained, and other information.

Part L1 (p.120) - Extends $50 million in UDC bonding authority for downtown Buffalo development projects.


Part S (p.36) - Effective 2005, requires bienniel rather than annual registrations for lobbyists receiving, or expecting to receive, more than $2,000 in annual compensation. Effective for 2004, the lobbyist registration fee increases from $50 to $100; effective in 2005, the biennial registration fee is $200.

(p.414) - Creates an interest assessment surcharge fund to consist of money collected from employers to pay advances from the federal unemployment account.


Part B (pp.9-10) - License Plate fees for Motor Vehicles will increase in 2003 to $15.00.

Part C (pp.11-23) - Increases fines for violations of Vehicle & Traffic Law.

Part I (pp.45-46) - Requires hazardous material license holders to undergo a criminal history background check

Part Q (pp.79-81) - Amends the Insurance Law by increasing the annual fee on motor vehicles from $1 to $5 per insured vehicle registered.

Part A1 (pp.109-112) - Allocates funding for, and amends certain laws of 1991 and 2000 relating to, the dedicated highway and bridge trust fund and allocations under the state's five-year transportation plan.

Part B1 (p.112) - Changes the effective date for the state's lower blood alcohol level threshold for the determination of intoxication to July 1, 2003.

Part U1 (pp.135-139) - Increase a number of DMV fees for services, applications and permits (e.g. titles, DMV searches).


Part N1 (pp.127-129) - Allocates utility assessment funds to various state agencies.

Part P1 (pp.129-130) - Transfers monies from NYSERDA and various NYSERDA accounts to the state general fund.

Part Q1 (p.130) - Provides additional provisions for the utility assessment funds collected by NYSERDA to be deposited in the state treasury.


Part Y (pp.105-108) - Delineates "expedited deployment funding" for wireless 911 costs [estimated to be incurred by] local public safety answering points and localities; establishes funding allocations and other provisions.

Part H1 (pp.114-115) - Establishes the NY telecommunications relay service center in Syracuse.

Small Business

Part J (p.64) - Small claims filing fee increased from $10 to $15 for claims in the amount of $1000 or less and increased from $15 to $20 for claims in the amount of more than $1000.

Part J (p.65) - Filing fee for Commercial claims are increased from $20 to $25.

Part I1 (p.118) - Defines food warehouse to mean any food establishment in which food is held for commercial distribution. Licensing fee shall be one hundred dollars provided, however, that food warehouses shall pay a licensing fee of two hundred dollars. Exempt are those establishments registered, permitted or licensed by the department pursuant to other provisions of the chapter, under permit and inspection by the state department of health or by a local health agency which maintains a program certified and approved by the state commissioner of health, or subject to inspection by the United States department of agriculture pursuant to the federal meat, poultry or egg inspection programs.


Part B3 (p.514-517) - The legislative budget does not include Governor Pataki's original proposal to mandate early intervention costs on health insurance policies. It requires the Commissioner of Health to collect data, by municipality, on the early intervention program, including the number and ages of children enrolled in early intervention, the percentage of children by service type and other information.

Part Z2 (p.432) - The legislature rejects the Governor's proposal to create a pharmaceutical prior authorization. The language states that a prior authorization program "shall not be expanded to cover any prescription drug not already covered except pursuant to legislation enacted after this section becomes law".

Part Z2 (p.457+) - Increases HCRA surcharges as recommended by the Governor in his original budget. The Bad debt/charity care surcharge will rise from 8.18% to 8.85% and the covered lives surcharge (used for graduate medical education) will be set to raise $725 million (it currently raises $690 million). There is no language in the bill that deals with the ability of not-for-profit health insurers to convert to for-profit status.


The Legislature added approximately $1.1 billion in school aid and related programs on a school year basis, producing a 2003-04 fiscal year increase of more than $750 million. The Legislature rejected recommendations to restructure the State Education Department and the Board of Regents, cap increases in school spending and provide mandate relief to school districts. Changes in special education, BOCES funding and building aid were also rejected by the Legislature. Funding was eliminated for Charter Schools, character education, school safety and school evaluation services.

Higher Education

The Tuition Assistance Program changes were rejected and $122 million was restored to the program. $19 million in Bundy Aid was also restored. Tuition increases at SUNY and CUNY were limited to $950 for in-state residents, but allows tuition for out-of-state students to be raised to $4,800 at SUNY and $4,000 at CUNY. No new capital appropriations were included for SUNY or CUNY senior colleges.

Created May 2, 2003