New State Budget Makes Property Tax Cap Permanent

Governor Cuomo and the State Legislature passed a new state budget for fiscal year 2019-2020. The $175.5 billion spending plan is a mixed bag for Buffalo Niagara employers. While it permanently caps property taxes, it also creates taxes and fees to cover new spending and close a deficit.

The Buffalo Niagara Partnership advocated aggressively on several issues impacting our members and the regional economy. Here are the highlights of the new state budget:

 

Permanent Property Tax Cap

One of the Partnership’s top priorities for 2019, the state’s 2% real property tax cap is now permanent. Since its enactment, the property tax cap has saved homeowners and business owners in New York State billions of dollars and taxpayers have seen some of the lowest property tax growth rates in decades. Now permanent, the cap works by holding local governments and school districts to responsible spending and helps curb New York’s heavy tax burden. While making the property tax cap permanent is a significant ‘win’ for state taxpayers, Albany must do much more to address the fundamental reasons why New York remains on the highest taxed states in the nation.

In addition to making the tax cap permanent, the budget continues to phase in the already agreed to middle class income tax cuts for households earning less than approximately $320,000.

 

No Prevailing Wage Expansion

The budget agreement does not expand prevailing wage to private construction projects receiving public support. This outcome is significant given the fact that both the Governor and legislative leaders publicly supported such an expansion and issue is the sole legislative priority of New York’s construction unions. The Partnership worked in coordination with organizations across New York State to fight this proposal. But this fight is far from over. This issue is sure to dominate session discussions post-budget.

Most private development in Buffalo Niagara requires some form of public support to be financially viable given our oppressive tax environment, higher than average construction costs, and lower than average residential and commercial rents. Mandating prevailing wage on private projects will drive up construction costs by approximately 20 percent in our region, overtaking the value of any public incentive. As a result, most private development will come to a standstill, stalling Buffalo Niagara’s momentum and blunting private investment and job creation throughout Upstate.

The Buffalo News editorialized in support of our position.

 

Plastic Bag Ban

The budget bans plastic bags across the state starting in March 2020. Counties will have the opportunity to opt-in to a 5-cent fee on paper bags at the point of sale. There are a number of exemptions to the ban, including plastic bags used for uncooked meat/poultry/fish, deli meat, and bulk foods, as well as plastic garbage, garment, restaurant takeout and newspaper delivery bags. On a related note, an effort to expand the state’s current bottle bill failed.

 

No Deal to Legalize Recreational Marijuana

In the end, the Governor and lawmakers could not agree on the details of how to legalize the adult recreational use of marijuana. This issue has broad support among Albany decision makers, but negotiations stalled over the specifics of the regulations and the resulting criminal justice issues. This issue will likely be addressed in the post-budget legislative session.

 

New Taxes, Fees and Mandates

Unfortunately, no new state budget in New York gets passed without new taxes, fees and mandates. This budget increases state spending and closes a $2.3 billion project deficit through a host of new ‘revenue generators’ the rest of call tax increases.

  • An in vitro fertilization (IVF) coverage mandate for employers purchasing policies covering 100 or more full-time employees.
  • A mandate that all employers—both public and private—provide employees with three hours of paid time off on election days.
  • Repeal of the Energy Service Companies (ESCO) sales tax exemption.
  • A tax on fiber optic utilities for use and occupancy of DOT right of ways.
  • A tax on opioid manufactures and distributors.
  • A 6% surcharge on rental cars in Upstate with funds going to support Upstate transit systems.
  • An internet ‘fairness’ tax for the collection of sales taxes by internet marketplace providers.
  • A commission charged with advancing binding recommendations by year’s end to establish a public campaign financing system in New York.

 

Economic Development

The new state budget continues several of the Governor’s signature economic development initiatives, including:

  • Round 9 of Regional Economic Development Councils at $750 million.
  • Round 4 of the Downtown Revitalization Initiative at $100 million.
  • East Side of Buffalo Revitalization at $50 million.
  • Funding to create a database of the Cuomo administration’s economic development deals, far short of the transparency measures the Legislature was seeking.

 

Transportation Infrastructure Funding

The Niagara Frontier Transportation Authority (NFTA) received a nearly 10% increase in operating assistance. In addition, while not officially part of the budget, the Governor and Legislature agreed to provide the NFTA with $100 million more in capital over five years for the Metro Rail, as well as $6 million for the next step in the planned Metro Rail expansion into Amherst. This funding is expected to be part of a statewide capital plan voted on later this year.

 

Higher Education

The budget did not increase Tuition Assistance Program (TAP) awards or income eligibility for students and families. The effort to restore funding to the Higher Education Capital Matching Grant program failed, although there is hope this issue will be addressed later this session as part of a capital plan.

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About Grant Loomis

Vice President, Government Affairs