The Governor and State Legislature have reached an agreement on the State Budget and, in doing so, have turned their backs on New York employers and doubled down on the state’s well-earned reputation as the most unfriendly place in the country to own and operate a business. The employer mandates contained in this budget are unprecedented and will continue to hold back the Upstate economy.
As bad as this budget is for employers, it could have been much worse if it were not for the aggressive and coordinated advocacy efforts of the Buffalo Niagara Partnership, Unshackle Upstate, the Minimum Wage Reality Check Coalition, and dozens of employer organizations who collectively stood up for New York’s job creators.
Here are the details:
The minimum wage in Upstate will steady grow to $12.50 by the end of 2020. The increases will begin at the end of this year with a minimum wage hike to $9.70 and will continue to increase .70 each year until reaching $12.50. At that point, the increases will continue on an indexed schedule to be established by the NYS Division of Budget. There are no carve outs for certain business classifications.
As you know, the Governor and many in the Legislature wanted $15 all across the state. An increase to $12.50 over time will cause less pain, but real pain nonetheless. A study conducted by the former head of the Congressional Budget Office determined that a $12.00 minimum wage would, at a minimum, cost Western New York 5,700 jobs.
Beginning in 2019, the state will conduct an annual economic analysis to determine whether a temporary suspension of the scheduled increases is necessary. That analysis is submitted to the Department of Labor by the Division of Budget. Given the Department of Labor recently determined a $15 minimum wage would have no negative impact on our economy, this safety value provision is not leaving many feeling very safe.
Paid Family Leave
The budget agreement also includes the longest and most comprehensive paid family leave program in the nation. When fully phased-in, employees will be eligible for 12-weeks of paid family leave when caring for an infant, a family member with a serious health condition or to relieve family pressures when someone is called to active military service. Benefits will be phased-in beginning in 2018 at 50 percent of an employee’s average weekly wage, capped to 50 percent of the statewide average weekly wage, and fully implemented in 2021 at 67 percent of their average weekly wage, capped to 67 percent of the statewide average weekly wage. This program will be funded through a payroll deduction on employees. Employers, though, will certainly feel the impact through additional HR, administration, training, and lost productivity costs.
Employees are eligible to participate after having worked for their employer for six months. The Governor’s original plan allowed employees to receive the benefit after only four weeks of employment, something the Partnership and our allies were successful in pushing back.
The burden of these new mandates is magnified knowing the difficult business environment that already exists in New York. The Tax Foundation recently ranked New York as the 49th worst business tax climate in the nation for 2016.
Middle Class Tax Cuts
The budget lowers Personal Income Tax rates for middle class New Yorkers by building upon the cuts that were agreed to in 2012. Under the new plan, the rate will eventually drop to 5.5 percent when the cuts are fully phased-in several years from now. The Governor says these rates will be the lowest for middle class taxpayers in more than 70 years, benefiting more than six million filers when fully phased in, saving taxpayers more than $4.2 billion by 2025.
The budget does contain historic investments in Upstate infrastructure with $27 billion for State Department of Transportation (DOT) and Thruway programs. Importantly, after aggressive advocacy, the budget also aligns the capital programs of the DOT and downstate Metropolitan Transportation Authority (MTA) after years of unbalance favoring the MTA. Of the funding allocated to the DOT, more than $21 billion is dedicated for capital improvement of highways, bridges, rail, aviation infrastructure, Upstate transit systems (such as NFTA), and DOT facilities throughout the state.