Citing New York”™s four-year string of fiscally responsible spending and improved business climate under Gov. Andrew Cuomo, business leaders in Westchester County and Albany largely supported spending provisions and reform measures included in the recently adopted state budget for 2014-2015.
The approximately $138 billion budget approved by state legislators March 31 “is overwhelmingly positive for the state”™s economic climate,” said Heather C. Briccetti, president and CEO of The Business Council of New York State, in a written statement. She said broad-based tax reductions and reforms in the spending plan “will improve our tax climate relative to other states and promote investment and jobs in key economic sectors throughout the state.”
The state”™s corporate franchise tax rate will be reduced from 7.1 percent to 6.5 percent this year, the lowest rate since 1968, according to the governor”™s office.
State officials said the new budget begins a six-year phase-out of the capital base tax that corporations pay on assets owned in New York. Officials said the tax discourages corporations from placing capital in the state.
The budget establishes a 20 percent real property tax credit for manufacturers who own or lease property. Cuomo in January said the credit would provide $136 million in relief to manufacturers.
The new budget also eliminates the 5.9 percent income tax rate for all manufacturers in 2014.
Marsha Gordon, president and CEO of The Business Council of Westchester, in a written statement on the adopted budget said the Business Council successfully lobbied for Westchester manufacturers to be included in the zero income tax provision, which initially was proposed only for upstate manufacturers.
Briccetti said the budget”™s package of tax reform measures for businesses will save employers approximately $560 million that can be reinvested in the economy.
State legislators also agreed to accelerate the phase-out of a temporary surcharge on utility bills, saving commercial and residential customers $600 million over the next three years, according to the governor”™s office.
Gordon noted the budget allocates $150 million in new capital and economic development funding and $70 million in tax credits awarded to companies for job-creating and job-retaining projects through the state”™s regional economic development councils. Gordon serves on the Mid-Hudson Regional Economic Development Council.
“Lowering taxes on manufacturers, phasing out the temporary utility tax and setting aside hundreds of millions of dollars for regional economic development councils are all sound strategies for improving the economy in New York,” she said.
The adopted budget also includes reforms to the state”™s estate tax law proposed by Cuomo. Estates valued at up to $5.25 million will be tax-exempt. The exemption had previously applied only to estates valued at less than $1 million. Cuomo in January said the change would exempt nearly 90 percent of estates from the tax.
Briccetti said raising New York”™s estate tax exemption level to eventually match the federal exemption “will eliminate the estate tax for many small businesses, farm owners and homeowners alike, avoiding business disruptions and reducing the incentive to migrate out of New York.”
Mike Durant, state director of the National Federation of Independent Business in New York, also applauded Cuomo and lawmakers for estate tax reform that he said provides “essential financial peace of mind for our family-owned small businesses and farms.”
Durant said though the NFIB largely supports the additional tax reforms in the new budget agreement, “We once again are forced to remind Albany that a corporate-only approach largely ignores the tax struggles for small businesses.”
Durant said the NFIB is strongly opposed to one of Cuomo”™s most vaunted tax break measures this year, a new real property tax credit program that the governor has said will save taxpayers more than $1.5 billion over three years.
The credit will be given only to homeowners whose local governments stay within the state”™s 2 percent property tax cap. State officials said the program is designed to spur municipalities and school districts to share services and reduce their financial burden on taxpayers.
Durant said the property tax freeze for homeowners “fails to effectively address the structural deficiencies caused by unfunded mandates which are plaguing our schools and communities.”
