TAX NEWS - June 2010
NYC Tax: Besides Budget, Still Lots to Do in New York Legislature
As state lawmakers look to wrap up the legislative session this month, a variety of legislative issues remain unresolved, from property-tax relief and regulations for natural gas drilling to ethics reform.
Many of the issues may be tied to how lawmakers decide to close the state's $9.2 billion budget deficit for the 2010-11 fiscal year, which started April 1. A budget deal could come as soon as Monday or Tuesday, some lawmakers have predicted. Some legislators, particularly in the Senate, are hoping to tie a budget deal to property-tax relief, or at least a cap on property taxes. The ending of the session - it is officially set to end Monday but will go until a budget deal is reached -- has led to a flurry of activity on bills before lawmakers head home for their re-election campaigns. All 212 seats in the Legislature are up for election in November.
Some watchdog groups have panned the legislative session so far. "The state faces two crises, one fiscal and one ethical, and they haven't successfully addressed either one," said Blair Horner, legislative director for the New York Public Interest Research Group.
Republicans have ripped Democrats in control of the Legislature as neglecting upstate. In recent days, lawmakers announced a deal to revamp the state's economic-development tool, the Empire Zone program, which upstate leaders and business groups say will diminish tax breaks to upstate companies. "The session has just been overwhelmed by the fiscal crisis and therefore there hasn't been any monumental movement in any particular area," said Sen. George Winner, R-Elmira, who is retiring at year's end.
But Democrats point to a number of achievements this year. They passed an ethics bill to clean up the scandal-scarred Capitol, but it was vetoed by Gov. David Paterson, and they agreed, after much wrangling, to increase the number of charter schools in the state in hopes of winning up to $700 million in federal aid.
Senate Democrats, who hold a slim 32-30 seat majority, have passed legislation to enact a property-tax cap and tying property taxes to household incomes, passed a no-fault divorce law consistent with laws in other states, and passed mandate relief for local governments. But the measures haven't passed the Assembly.
Travis Proulx, a spokesman for the Senate Democrats, said, "Since coming into the majority last year our members have legislated with a determined focus, delivering for the taxpayers and putting New Yorkers back to work."
New York has among the highest property taxes in the nation, and property-tax relief has been seen as a key component of the legislative session. But with the state's fiscal woes, lawmakers have been leery of adopting tax relief that comes with a big price tag. "I'm for a cap," said Assemblywoman Sandra Galef, D-Ossining, Westchester County. "I think it's hard in this house."
Here's a look at key issues facing the state Legislature before session ends:
Budget
Paterson and lawmakers are hopeful they will get a deal in the next few days because the state has been without a budget for the 2010-11 fiscal year, which started April 1. They have to close a $9.2 billion deficit, but business groups fear it will be closed with higher taxes and borrowing. Paterson has ruled out borrowing, but on Friday proposed a $1.60 per-pack increase in cigarette taxes -- the highest in the nation -- and to collect cigarette taxes on Indian reservations. A main sticking point is Paterson's proposed cut of $1.4 billion to schools; lawmakers are expected to restore some of it.
Economic Development
The Empire Zone program is set to be turned into the Excelsior program, which will provide more targeted tax breaks mainly to high-tech companies at a lower cost to taxpayers. Business groups said it might drive companies out of the state, particularly upstate. Business groups pointed out that while the program is being cut, the state is increasing by 20 percent, or $85 million, the funding for a film tax-credit program, which mainly benefits New York City. Brian Sampson, executive director of Unshackle Upstate, a business group, said he hopes lawmakers won't add new taxes and fees in the budget. Lawmakers added about $8 billion in new taxes and fees to close last year's nearly $18 billion budget gap. But businesses said they have been successful in beating back proposals supported by unions that would have established increased rights and benefits for farmworkers and required publicly funded projects to pay prevailing wages. Unions said they will continue to fight for both pieces of legislation.
Environment
Environmental groups are hoping to get at least a one-year moratorium on natural gas drilling in the state that deals with hydrofracking, which is the controversial method of using chemicals and water to break up rock to extract gas. Sponsors in the Senate and Assembly said they are hopeful the measure can pass before the session ends. Environmental groups are also pushing for legislation that would cap greenhouse gas emissions with a goal of lowering them 80 percent by 2050. Senate Environmental Conservation Committee Chairman Antoine Thompson, D-Buffalo, said the measure is his top priority this session.
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