Healthcare Taxes Central to Governor’s Budget Proposal

HealthcareGovernor Cuomo’s Executive Budget proposal looks to close the state’s $4.4 billion deficit with a series of revenue actions – government speak for new taxes and fees.  The majority of these new taxes fall on the healthcare industry, continuing New York State’s long history of taxing healthcare to pay for healthcare.  This reliance on healthcare taxes is one of the main reasons New Yorkers pay some of the highest healthcare premiums in the country and why Buffalo Niagara employers identify healthcare costs as a growing pain point.

Specifically, the Governor is proposing to:

  • Tax non-profit health insurers who seek to transition to for-profit entities
  • Tax health insurers underwriting profits derived from federal tax reform
  • Tax opioid drug sales

Other new taxes and fees include:

  • Internet Fairness Tax – expanding the existing ‘Amazon tax’ to cover products sold by third party sellers
  • Deferring corporate tax credits worth more than $2 million
  • Highway Right of Way fee – allowing the state’s Department of Transportation to charge a fiber optic utility for use and occupancy of a DOT right of way
  • New driver’s license fee
  • Vehicle safety inspection fee for motor coaches and other for-profit passenger carriers

Governor Cuomo’s budget plan preserves the ‘middle class’ tax cuts passed back in 2016 that begin to phase-in this year, as well as maintains basic and enhanced STAR exemptions.  The Executive Budget also includes funding for:

  • Round 8 of the Regional Economic Development Councils (REDC)
  • Targeted workforce development spending through REDC
  • Expansion of cashless tolling
  • Upgrades to the Niagara Falls Wastewater Treatment Facility – site of recent discharge incidents

New York State Capitol BuildingThe New York State budget is always more than just dollars and cents.  This year, the Governor is advancing a series of policies related to combatting sexual harassment, proposing a study to examine legalizing recreational marijuana and pushing ‘good government’ reforms, including:

  • Limiting outside income of legislators
  • Establishing same day voter registration
  • Establishing term limits

In response to federal tax reform, the Governor wants the State Legislature to work with him to modify the state’s tax code.  While the Governor has not advanced a specific plan to the Legislature yet, several proposals are being discussed.  Many of them look to convert all or part of the state’s current income tax to a payroll tax.  There are significant unknowns in all of these proposals and employers understandably have a lot of questions about the timing, cost and feasibility of such a switch.

The Partnership will continue to follow this debate and provide updates.

  • The Governor’s full Executive Budget proposal can be found here
  • The State Senate’s analysis can be found here
  • The State Assembly’s analysis can be found here
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About Grant Loomis

Vice President, Government Affairs