State Budget Passes – What’s In & What’s Out

It’s a wrap on another year of state budget negotiations with the Governor and State Legislature reaching agreement before the April 1 deadline.

The Buffalo Niagara Partnership advocated aggressively on several issues impacting Western New York employers and our regional economy.

Here are the highlights of the $168B 2018-19 State Budget:

Taxes & Spending 

The final budget agreement rejects many of the Governor’s proposed taxes or ‘revenue generators’ including:

  • Deferring key economic development tax credits for three years.   This proposal would have impacted several tax credits – including Brownfield, Historic Rehabilitation, Manufacturer’s Real Property, and Investment Tax Credits – the Partnership has long championed as effective tools in spurring growth and private investment. The final budget also extends the historic tax credit for an additional five years.
  • Taxing fiber optic utilities for use and occupancy of DOT right of ways.  This industry specific tax would have slowed the deployment of broadband service throughout the state.
  • Repealing Energy Service Companies (ESCO) sales tax exemption.  Such a move would certainly increase costs for employers/businesses purchasing energy from ESCOs.
  • Mandating sales tax collection on all online purchases.
  • Taxing the savings for-profit health insurers will receive from federal tax reform.  This proposal continued the state’s long history of taxing healthcare to pay for healthcare.

 

The budget does create:

  • An optional payroll tax system allowing firms to transition from an income tax-based system to maintain optimal state and local tax deductions at the federal level.  This plan is targeted toward downstate financial and professional service firms.
  • A tax on opioid manufacturers with a portion of the funding going toward dealing with the ongoing opioid addiction crisis.

 

A Pay Raise, Maybe

The budget establishes a commission to study the possibility of a pay raise for members of the State Legislature.  A politically radioactive subject, especially in an election year, members of the State Legislature last raised their pay in 1999 and currently earn a base salary of $79,500. The commission will also study a pay raise for executive staff. New York State Flag

Transit Funding

The budget includes millions more for the downstate MTA funded in part by new surcharges for taxi cab and ride sharing services in sections of New York City.  There was a push to add a $1 fee to these services in Upstate, but it was rejected following significant pushback.  Upstate transit systems will also receive a funding boost.

Bundy Aid

The final budget restores Bundy Aid to independent colleges and universities.  The Governor had proposed eliminating the historic funding used to provide financial aid and academic support for students.

Education Spending 

The Governor and State Legislature agreed to increase school aid by more than $1B bringing the total to nearly $27B (the most of any state in the nation).  The new spending comes with a requirement on districts to report on allocations to specific schools.

Union Dues Protection Plan

The budget includes a provision forcing members of public employee unions to pay union dues.  This is seen as a pre-emptive effort to block the impact of an anticipated U.S. Supreme Court decision that will allow union members to opt out of such payments.

No Expansion of Prevailing Wage

The Partnership worked successfully with Unshackle Upstate and several other employer organizations to ensure an expansion of the state’s prevailing wage mandate did not become a part of the state budget.  There is a growing effort in Albany to mandate prevailing wage on private projects receiving any form of public support (local IDA incentive, etc.).  This proposal – which is supported by majority members in both the Senate and Assembly and has been identified as the only legislative priority of the Building Trades in 2018 – would be a death blow to private development and investment in Upstate New York.  While not included in the 2018-19 State Budget, expanding prevailing wage to private projects will certainly be discussed again later this legislative session and our advocacy against it will not only continue, but intensify. NYS Capitol Building

Other Policy Debates

The New York state budget is historically a vehicle to advance major public policy. Breaking tradition, most policy issues fell off the negotiating table this year.  The budget does include a one-year extension of the controversial Minority Women Business Enterprise (MWBE) state contract participation targets, as well as bi-partisan legislation aimed at curbing sexual harassment in the workplace.  Agreements were not reached on a variety of policy debates including the long-stalled Child Victims Act, changes intended at bringing more transparency to the Regional Economic Development Council process and a proposal to end cash bail for lower-level crimes.

Regulatory Reform

Despite some optimism as budget talks heated up earlier this week, the final budget package does not include the regulatory reform the Partnership and many others had been pushing for.

 

Grant Loomis Headshot

About Grant Loomis

Vice President, Government Affairs