Extraordinary Legislative Session Results and Implications

On Wednesday, Governor Cuomo called the Legislature back to Albany for an Extraordinary Session to approve legislation that would overhaul the state’s tax code and create new economic development initiatives.  The package that was approved in both houses of the legislature was negotiated largely behind closed doors. The final package included: changes to the tax code; elimination of the Metropolitan Transportation Authority (MTA) payroll tax for small businesses and schools; tax relief for eligible New York manufacturers; a tax credit program to incentivize businesses to hire at risk youth; funding for a number of workforce programs; tax credits for businesses impacted by natural disasters; a Hurricane Irene and Tropical Storm Lee flood recovery grant program; property tax relief initiatives for flood-affected areas and amendments to the SUNY 2020 challenge grant program created last year.  One notable piece missing from the final package is an infrastructure fund.  Prior to extraordinary session, there had been discussions that a new public/private infrastructure fund that would raise funds from pension funds and private investment would be created. The final package does include “Design-Build” legislation that will expedite the design and construction of infrastructure projects.

The tax package deal will generate an estimated $2.3 billion in revenue for the state coffers. Roughly $700 million of that revenue went to middle class tax relief. The Division of Budget has slated $1.6 billion of the revenue generated to provide budget relief for the next fiscal year (FY 2012-2013). The remaining $400 million in revenue was used in part to restore funding to programs including some higher education and workforce programs. However, not all of the $400 million in revenue has been allocated yet. It is possible that funding could be used for additional budget relief or to restore programs in the upcoming budget.

With an estimated budget deficit of $3.5 billion for FY 2012-13, once the $1.6 billion is applied, there is a remaining deficit of approximately $1.9 billion. According to the Governor’s Office, this year’s deficit of approximately $350 million will be taken care of administratively.  It is anticipated that the Governor will move forward with the scheduled 4% increases in education and Medicaid spending for next year.  This means that all the other programs – such as human services and public health – will most likely take the brunt of the remaining $1.9 billion in cuts needed to close the deficit.

-Jaime Venditti, 12/9/11