New State Budget Passes Amid Pandemic

In unprecedented times, as the state continues to roil from the ongoing COVID-19 pandemic, the Governor and State Legislature did enact a new state budget for FY2021.  Given the events swirling around us, the fact that the budget was passed after the April first deadline seemed inconsequential.

However, there are several parts of this new budget that are anything but inconsequential and employers need to take note.  Any thought that this budget would be a bare-bones fiscal document given New York is in the middle of the COVID-19 pandemic was off base.  As in a normal year, the new budget includes plenty of policy that will have far reaching impacts on Buffalo Niagara employers and our regional economy.

Most troubling, the budget includes an expansion of prevailing wage to private construction projects and creates a permanent paid sick leave program.  At a time of great economic uncertainty, this budget is increasing costs on employers and raising the price on new investment in our community.  Here is a summary:

Prevailing Wage Expansion

Despite opposition from every corner of New York State, the budget includes a significant expansion of the state’s prevailing wage mandate to include private construction projects receiving some form of public incentive.  Certain private projects over $5 million which receive 30% or more of construction costs from public sources (tax credits, abatements, PILOTs, capital grants, etc.) will have to pay prevailing wages starting in January of 2022.  Some projects are exempt, such as historic rehabilitation and affordable housing.  It is estimated this move will drive up construction costs in the Buffalo metro area by at least 20 percent.  More details on the expansion of prevailing wage can be found here.

Permanent Paid Sick Leave – Unrelated to COVID-19

The budget includes a permanent paid sick leave program taking effect this coming fall.  This was in Governor Cuomo’s budget proposal and took on new urgency for lawmakers following passage of a sick leave program for people sickened with COVID-19.

Businesses will need to provide a certain amount of paid sick leave depending on their size.  The leave will accrue like traditional paid time off and employees will be able to carry paid sick leave through to the following year.  Employers with pre-established sick leave policies that meet or exceed the requirements in the new law will not be required to provide additional leave.  Details about the new policy and what employers need to know can be found here.

Rollback of Expanded Paid Time Off for Voting

The budget restores the original two hours of PTO for voting only if an employee can demonstrate insufficient time to vote before or after his/her shift.  This policy was the law prior to the expansion passed in 2019.  An employee must notify an employer between 10 and two days prior to any election.  Last year’s expanded PTO for voting was clearly an overreach given expanded voter access programs also passed last year, including several weeks of early voting.

Restore Mother Nature Bond Act

The budget includes a $3 billion bond act to address shoreline restoration, flood mitigation and water infrastructure.  The bond act will require voter approval as part of November’s ballot.

Ban on Polystyrene (Styrofoam)

The new budget bans food service providers from selling or distributing disposable polystyrene containers starting in January 2022.  It also bans any manufacturer or store from selling or distributing polystyrene loose fill packaging material in New York State.

New York State Buy American Law

The existing New York State Buy American Law was made permanent as part of the budget, but thankfully no new products or materials were added to the law.  The Partnership advocated against expanding the list given our vital supply chain integration with Canada.

Campaign Finance Reform

Consistent with the recommendation of the Campaign Finance Commission that was recently thrown out in court, the budget creates a publicly financed political campaign program.  The section of the budget also includes language restricting the state’s minor parties.

Renewable Siting Fast Tracked

The budget allows construction of large solar and wind projects to be fast tracked across the state by limiting local community input and setting a firm one-year deadline for the projects to be approved or rejected.   The changes are directly tied to the state’s ambitious climate goals of significantly reducing carbon emissions and producing mass amounts of renewable electricity over the next decade.

Small Business Tax Cuts

The Governor’s proposed budget called for cutting the tax rate for some of the state’s small businesses.  This proposal – while modest in context of the tax burden on state businesses– was clearly an unfortunate casualty of Albany’s growing revenue challenge given COVID-19.

Cannabis Regulation and Taxation Act

Efforts to legalize recreational marijuana again failed to cross the finish line as part of the final state budget.

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About Grant Loomis

Vice President, Government Affairs