approximately $154 billion, and holds spending growth to below 2% for the 6th consecutive year.

Transcription

1 2016 Budget Review

2 Introduction Governor Cuomo and legislative leaders finalized negotiations on the New York State budget into the late hours of Thursday, March 31 and both houses completed voting on budget bills by April 1 the start of the fiscal year. Lawmakers have agreed upon a new state budget that will total approximately $154 billion, and holds spending growth to below 2% for the 6th consecutive year. A number of provisions of the budget proved difficult, especially major proposals in the Governor s original Executive Budget plan to increase the state s minimum Minimum Wage Increase wage and enact paid family leave. This documents details important highlights of the budget, and Unshackle Upstate s engagement on key issues. After much debate, the Legislature and Governor Cuomo agreed to raise the minimum wage. But the reality of the state s minimum wage increase is somewhat more complicated, as the new wage mandate will go into effect on a different timeline in New York City; in Westchester, Nassau and Suffolk counties; and in the rest of the state. The chart below illustrates how the state s minimum wage will change from the end of this year through the end of New York State s Minimum Wage Increase Schedule Increases go into effect on December 31 of the year listed NYC fast food jobs $12 $13.50 $ Other large NYC employers (more than 11 employees) Other large NYC employers (10 or fewer employees) $11 $13 $ $10.50 $12 $13.50 $ Fast food jobs outside NYC $10.75 $11.75 $12.75 $13.75 $15 -- Nassau, Westchester, Suffolk (non-fast food jobs) Rest of New York State (non-fast food jobs) $10 $11 $12 $13 $14 $15 $9.70 $10.40 $11.10 $11.80 $12.50 TBD Tipped Workers The minimum wage for tipped workers is set at two-thirds of the minimum wage rates above, rounded to the nearest five cents or $7.50, whichever is higher. Farm Workforce Retention Tax Credit Beginning in 2017 eligible agriculture employers can claim a tax credit equal to the product of the total number of eligible employees and $250. Possible Suspension of Minimum Wage Increases On and after January 1, 2019 until such time as the minimum wage is fifteen dollars (cont. on next page)

3 in all areas of the state, the Division of the Budget shall conduct an analysis of the state of the economy in each region, and the effect of the minimum wage increases listed in this section, to determine whether there should be a temporary suspension or delay in any scheduled increases. Upstate NY Wage 2021 and Beyond The NYS Division of Budget in consultation with the NYS Department of Labor will be required to devise a formula for future increases to $15 set by Oct. 1, states currently employ an indexing mechanism of some nature to determine their wages. The vast majority Paid Family Leave Program use inflation tied to CPI or some derivative thereof. Department of Labor Wage Boards The determination of the DOL s Fast Food Wage Board remains in effect. The ability of the Governor to convene new DOL wage boards has largely been curtailed through The enacted budget includes a paid family leave program, to be paid for by employee deductions. The program will begin in 2018, and will be fully phased in by Under this program, employees will be entitled to paid leave to bond with a newborn or adopted child, to care for a seriously-ill family member or as a result of another qualifying exigency under the Family Medical Leave Act (FMLA). All employees eligible for Short Term Disability Benefits will be eligible for benefits under the Paid Family Leave program. Employees must be employed by the covered employer for six months to be eligible for the benefit. Similar to the FMLA, New York s program contains antiretaliation provisions as well as rules regarding the use of other statutory and employer provided benefits simultaneous with any leave pursuant to the Act. The language directs the state Department of Financial Services (DFS), on June 1, 2017 and annually thereafter, to set the maximum employee contribution. It also provides that no employer shall be required to fund any portion of the family leave benefit. The employee s weekly contribution cannot exceed.5% of their weekly wage and not in excess of $0.60 a week. The benefits are to be phased in as follows: 2018 Employees will be entitled to 8 weeks of paid leave at 50% of their average weekly wage (capped at 50% of the state s weekly wage) Employees will be entitled to 10 weeks of paid leave at 55% of their average weekly wage (capped at 55% of the state s weekly wage) Employees will be entitled to 10 weeks of paid leave at 60% of their average weekly wage (capped at 60% of the state s weekly wage) Upon full phase-in, employees will be entitled to 12 weeks of paid leave at 67% of their average weekly wage (capped at 67% of the state s weekly wage). The New York State Department of Financial Services (DFS) has discretion to delay the increases in the family leave benefit level provided above. A transfer of $10 million was authorized from the state workers compensation board to DFS for costs associated with the implantation of paid family leave act.

4 Middle Class Tax Cut The budget reduces Personal Income Tax (PIT) rates for middle class New Yorkers beginning in The state will lower PIT rates for those earning between $40,000 and $300,000 annually. Infrastructure According to Gov. Cuomo, These new lower tax rates will save middle class New Yorkers nearly $6.6 billion in just the first four years, with annual savings reaching $4.2 billion by As the new rates phase in, they will be the state s lowest middle class tax rates in more than 70 years. When the tax cuts begin, they will benefit 4.4 million filers, growing to 6 million filers when fully phased in. According to the Governor, the budget contains the largest state transportation plan ever approved, with over $55 billion of transportation investments statewide, including $27.14 billion for State Department of Transportation and Thruway programs and $27.98 billion for Metropolitan Transportation Authority (MTA) programs over the next five years. The $27 billion Department of Transportation (DOT) capital program includes: $21.1 billion for capital improvement of highways, bridges, rail, aviation infrastructure, non-mta transit, and DOT facilities throughout the state. This includes the launch of three new initiatives BRIDGE NY, PAVE NY, and the Extreme Weather Infrastructure Hardening Program to further improve conditions on state and local roads and bridges, as well as provide resiliency to roadways that are particularly susceptible to weather events. It also includes $4 billion for capital investment for a sixth year, and $2 billion in Thruway Stabilization funding that will support capital improvements on the entire Thruway system and the New New York Bridge (Tappan Zee), allowing the Authority to freeze tolls on the system until at least The $27 billion MTA Capital Program includes: $26.6 billion for improvement of capital facilities operated by the New York City Transit Authority, Long Island Rail Road, Metro- North Railroad and MTA Bus and major initiatives including $1.5 billion for Phase II of the Second Avenue Subway. Airports More than 70 airports in upstate New York are eligible to compete for a share of $200 million in state funds divided up among the airports that submit the best plans for enhancing safety, improving service or reducing environmental impact. The cap on awards for the existing airport improvement and revitalization program was raised from $1 million to $1.5 million. Canal Corporation Transfer The budget transfers the Canal Corporation from the Thruway Authority to the Power Authority.

5 Economic Development Innovation Hot Spots and Incubators Program The budget includes $5 million for hot spots and incubators. This represents level funding from last year. Upstate Revitalization Fund The budget includes $200 million for additional awards to the four regions (North County, Capital District, Mohawk Valley and Mid-Hudson) that did not receive funding in The Downtown Revitalization Initiative Ten downtown neighborhoods will be selected based on specific criteria one by each of the state s Regional Economic Development Councils (REDCs) and will receive $10 million to invest in the downtown area. REDC Council Initiative The budget includes $150 million available during the and state fiscal years for services and expenses, loans and grants. Funding will be pursuant to a plan developed by the UDC and based in part on a competitive selection process among the REDC and will support initiatives based on anticipated economic development benefits. New York Works Economic Development Fund Program The budget includes $199 million for services and expenses, loans and grants related to the NY Works Economic Development Fund to provide capital grants to support projects that facilitate an employer s ability to create new, or retain existing jobs, or fund infrastructure investments necessary to attract new businesses or to expand existing businesses. This reflects an increase of $100 million over the Governor s proposed budget. NYSUNY and CUNY 2020 The budget freezes tuition at SUNY and CUNY for one year. SUNY and CUNY will not be able to institute a rationale tuition plan but will have authority to increase out of state tuition. The budget also includes $110 million for another round of SUNY 2020 ($55 million) and CUNY 2020 ($55 million) Challenge Grants. Funding will be awarded through a competitive process where campuses develop plans to improve academic outcomes, efficiencies, innovation and economic development. Over the last five years, Upstate regions have received $5.8 Billion in funding through the URI and REDC. Electric Generation Facility Cessation Mitigation Fund The budget authorizes up to $30 million for the electric generation facility cessation mitigation fund. This fund is for communities affected by the closure of electric power generating stations.

6 Health Care Medicaid Global Spending Cap The Medicaid cap is extended through (expiring March 31, 2018) and allows for continued growth within the Global Cap at the indexed rate of 3.4%, for a total cap of $18,778,512,000 for the fiscal year, an increase of approximately $58 million in the global cap. Minimum Wage The final budget includes approximately $58 million in additional funds within the Global Cap targeted for increasing Medicaid payments to offset the cost of the minimum wage increase. Health Republic Insurance of New York Fund Under the joint custody of DFS and the State Comptroller, the Additional Budget Items Health Republic Insurance of New York Fund will be funded by amounts collected from certain legal judgments and settlements obtained by the State and to be paid out at the discretion of the Superintendent of DFS only after all assets received in connection with Health Republic s liquidation are distributed. Makes the e-filing requirements permanent; imposes tax preparer penalties for tax underpayments Authorizes ESDC, the New York State Convention Center Development Corporation and their subsidiaries to utilize a design-build project delivery method for the Javits Convention Center, the Empire State Station Complex, the James A. Farley Building replacement and Penn Station redevelopment projects. This includes a mandatory Project Labor Agreement. Converts the STAR exemption into a Personal Income (PIT) tax credit for new home owners Extends the $2.50 Waste Tire Fee until December 31, 2019, which funds the abatement of waste tire sites and funds DEC staff involved in solid and hazardous waste cleanup activities Extends the credit for hiring a veteran for two years Includes a $2,000 statefunded rebate for the purchase of zero-emission vehicles Makes the non-custodial Earned Income Tax Credit permanent Extends the Tax Shelter Reporting provisions and its penalties for four years Extends the Clean Heating Fuel Credit for three years Extends the Excelsior Jobs Program for five years; allows un-awarded credits remaining to be re-allocated during tax years Makes technical changes to enacted corporate tax reform Conforms various corporate filing deadlines (3/15) and makes consistent with the newly enacted federal filing deadline (4/15) Extends the alternative fuels tax exemption for five years Reduces the highway use tax registration/decal fee from $19 to $1.50, effective April 1, 2016 Defers until December 31, 2017 provisions of a 2006 state law requiring government agencies and contractors to comply with a stringent emissions reduction standard that has proven problematic for state agencies and contractors. Expands eligibility for the Urban Youth Jobs Program Tax Credit, which is intended to encourage businesses to hire unemployed, disadvantaged youth, ages 16 to 24, living in the cities and towns with the highest poverty and unemployment rates. Extends the Empire State Commercial Production Tax Credit for two years. Makes clarifications to the real property tax credit for manufacturers relating to taxpayers engaged in farming and related activities

7 Rejected Budget Proposals Unshackle Upstate opposed the following budget proposals, none of which were in the enacted state budget. Provision on Foreign Construction Materials The final budget rejected efforts by both the Assembly and the Senate to include protectionist procurement mandates on steel, building materials and manufactured products sourced outside of the United States for projects supported by the Dedicated Infrastructure Investment Fund and other state subsidized programs. Health Insurance Guaranty Fund The final Budget rejected the health insurer guaranty fund but establishes the Health Republic Insurance of New York Fund to be funded by amounts collected from certain judgments and settlements obtained by the State between April 1, 2016 and March 31, Conclusion We are continuing to review the state budget in its entirety. Our organization is committed to educating Upstate taxpayers and we encourage you to share this document with your friends, family and colleagues. If you have any additional questions, please contact us at unshackleupstate.com/contact. State Office of Consumer Utility Advocate The budget rejected Assembly efforts to create the office of Consumer Utility Advocate which would only serve to create an additional layer of bureaucracy and add costs for New York State s overburdened ratepayers. Prevailing Wage Mandate for Public Works Assembly sought to mandate prevailing wage requirements on projects subsidized by programs that include but are not limited to: Upstate Revitalization Initiative; Transportation Capital Plan; Buffalo High Tech Manufacturing Innovation Hub; Water Infrastructure Improvement Act; the Downtown Revitalization Initiative, etc. MTA Capital Project Cost Shift The Executive s initial budget sought to allow the Metropolitan Transit Authority to enter in to public-private partnerships on capital projects and force private utilities to bear some of the cost burden for MTA owned and managed assets. The cost shift was rejected in the final budget. Private Activity Bond Allocation Act The Executive Budget sought to make local industrial development agency (IDA) tax-exempt PAB bonds subject to approval by the Public Authorities Control Board. This portion was rejected from the final budget.

8 Thanks To Our Partners The Buffalo Niagara Partnership is the privately-funded economic development organization and regional chamber of commerce for the Buffalo- Niagara Region. The Partnership is comprised of thousands of employer members, including dozens of major investors who are committed to growing private investment and jobs in the Buffalo-Niagara region. The Greater Rochester Chamber of Commerce is the chamber of commerce for the nine-county Rochester region, which includes Monroe, Genesee, Livingston, Ontario, Orleans, Seneca, Wayne, Wyoming and Yates counties. The chamber is a strong advocate and provides important services that help employers grow. The Greater Binghamton Chamber of Commerce serves as the premier resource for business development in the Greater Binghamton region. Its aim is to support the existing local business community and the attraction of new businesses through member-driven programs and services, the development of strategic community partnerships and effective political advocacy. The Empire State Chapter of Associated Builders and Contractors is the New York Chapter of ABC, a national construction trade association devoted to merit contractors. The Empire State Chapter serves close to 400 members throughout New York State from our central office in East Syracuse, and from branch offices in Albany, Buffalo, Rochester and Long Island/Metro NYC. The North Country Chamber of Commerce is a regional chamber serving Clinton, Essex, Franklin, Hamilton and northern Warren Counties in New York State and southern Quebec. With more than 4,000 members, it is the largest business and economic development alliance in northern New York and one of the five largest chambers in the state. LEARN MORE ABOUT OUR MISSION UNSHACKLE UPSTATE 150 STATE STREET, ROCHESTER, NEW YORK