If you believe the governor, state spending increased by 2% over last year, if you don’t, it increased by 4%. And everyone is being truthful or almost nearly so. The ambiguity is resolved by how spending is defined: off budget, on budget, GAAP rules, one-shots. Then it all makes sense (or not).
Because of expenditures it is obligated to spend in out-years, NY is always facing a deficit not necessarily covered by expected revenues that may be insufficient under the best estimates that depend on the economic performance and other revenues like those one-shots that usually derive from “settlements” with miscreants in the private sector: Banks, insurance companies, health companies, pharmaceuticals, etc.
It is difficult to know what tax collections look like in the booming economy but one suspects revenues may have been under estimated or obfuscated as the governor and the house play for position in the 2018 election and the great beyond when it sounds better for a candidate for president to point to a coherent, clean fiscal situation in his home state. This suggests a special session after the election to re-examine the fiscal landscape.
Below is a summary from the Business Council of NY of issues in the final budget agreement germane to the industry.
- Most tax increases proposed by the Governor and Assembly were rejected, thanks to the Senate Majority’s resistance. Adopted were: a $100 million per year tax (dubbed a “stewardship payment”) on manufacturers and distributors of opioids, with funds going to support addiction treatment; and a new tax on ride sharing and other transportation services in the NYC “congestion zone” to fund mass transit spending. The Business Council led the effort to reject new and increased taxes on the state’s business community, including: increased sales tax on ESCO services; deferral of business tax credits; a “windfall profit” tax on health plans; across the board surcharge on business tax liability; and others.
- The state adopted several measures to avoid increased state personal income tax liability on individual taxpayers due to federal tax changes; these “decoupling” measures avoid an estimated $1 to $1.5 billion increase in state tax liability.
- Absent additional reforms this session, many businesses will see an increase in their state tax liability due to federal reforms, especially those with foreign subsidiaries. The budget did confirm an exemption for “transition,” or “deemed repatriated” income under the state and city corporate franchise taxes and the state insurance tax; but proposals to exempt “GILTI” (or “global intangible low tax”) income from state taxation and to decouple from the new federal cap on business interest deductions were not approved. A more complete federal tax conformity package to avoid these backdoor, unintended business tax increases, will be a Business Council priority.
BILLS OF INTEREST
S8110 RITCHIE No Same as
Departmental Bill # 153
Department of Agriculture and Markets (Internal # 1 – 2018)
ON FILE: 03/30/18 Agriculture and Markets Law
TITLE….Relates to the posting of prices for motor fuel and diesel fuel grade posting requirements
THIS BILL CHANGES THE PRICE SIGN REQUIREMENTS FOR MOTOR FUEL DISPENSING DEVICES.
S8177 COMRIE No Same as
ON FILE: 04/16/18 Commissions
REFERRED TO TRANSPORTATION
TITLE….Directs the metropolitan transportation authority to identify flammable or hazardous materials near above-ground and grade level tracks
THE SPONSOR’S MEMO REFERS TO A RAILROAD SIDE ACCIDENT IN QUEENS INVOLVING LITHIUM BATTERIES STORED IN PROPERLY. THE BILL CALLS FOR STUDY TO EVALUATE SUCH RISKS ALONG THE RIGHT OF WAY OFTHE LIRR AT GRADE. THERE IS NO MENTION OF SHORT LINE RAILROADS OR SIDINGS. AS YOU CAN SEE THE [BILL HAS NO ASSEMBLY COMPANION AND WAS NOT INTRODUCED AT THE REQUEST OF THE DEPT. OF TRANSPORTATION.]