08/21/2008
Legislature returns to Albany to trim state budget
The Senate and Assembly convened this week for a special session called by Gov. David Paterson to address New York's growing budget deficit which has put New York in fiscal crisis. Legislators agreed on $427 million in budget cuts, including reductions in "member items," which, combined with cuts the governor has already instituted, will slash state spending by $1.5 billion this year. This will bring the rate of increase of this year's budget over last year in line with the consumer price index. Gov. Paterson continues to earn high marks from the business community -- including NFIB -- for his strong and determined leadership in pushing for fiscal conservatism, as well as his insistence that the problem be remedied by spending cuts, not tax hikes.
We opposed one particular component of Gov. Paterson's cost-cutting plan, a proposal to increase what is known as the Covered Lives Assessment by $120 million. This would amount to a tax increase on health insurance premiums -- a cost that would be passed on from insurance companies directly to consumers like you. You may recall that we fought back a similar proposal included in former Gov. Spitzer's budget proposal, succeeding in getting it substantially reduced after NFIB members spoke to legislators during "Small Business Day" about how skyrocketing health insurance costs are negatively impacting them.
We reminded legislators that with healthcare identified as the most significant issue faced by NFIB members, this increased tax through the Covered Lives Assessment will mean higher health insurance premiums for businesses and individuals at a time when many employers and their workers are already struggling to continue health coverage. We are pleased to report that this proposal was not included in the package of budgetary changes the Legislature agreed to this week, a win for small business.
Assembly passes property tax "circuit breaker" and income tax increase
During this week's special session, the Assembly passed legislation which would create a property tax "circuit breaker," funded by an increase in New York's personal income tax, without taking any steps to curtail property tax increases. The circuit breaker is intended to provide a tax credit to individuals whose property tax burden exceeds a certain percentage of their income. The legislation passed 118-24, with the following Assembly members voting no: Amedore, Bacalles, Barclay, Boyle, Burling, Cole, Conte, Crouch, Errigo, Finch, Fitzpatrick, Giglio, Hawley, Hayes, Kolb, Lopez, Morelle, Oaks, O'Mara, Quinn, Reilich, Schimminger, Tedisco, and Tobacco.
NFIB opposed this proposal because we believe it is flawed on many fronts. Without a cap on property tax rates, a circuit breaker will provide absolutely no downward pressure on property taxes and will leave them free to continue to increase at rates that are completely unsustainable. A circuit breaker without a tax cap is simply a cost shift, nothing more, and does nothing to address the underlying problems of New York's crushing property tax burden. A property tax circuit breaker alone would also not provide property tax relief for small businesses.
A circuit breaker will leave tax bills free to increase year after year at rates that home owners and business owners -- and, with the circuit breaker paid for with tax dollars, the state of New York -- simply cannot afford.
This proposal would be financed by a so-called "millionaires' tax," an increase in personal income tax rates on those earning more than $1 million. As many as 75 percent of small business owners report their business income through the personal income tax. $1 million in business income does not necessarily make a small business owner a millionaire, particularly as small business owners are being squeezed with rising food, energy and healthcare costs. Raising taxes in any manner is simply the wrong policy for New York, which already has the nation's highest tax burden, and is a sure-fire way to continue to drive people, jobs and opportunity from our state. Furthermore, the income tax increase contained in this proposal would generate revenue $1 billion in excess of the cost of the proposal -- revenue that no doubt would be used to fuel more state spending.
We believe that dealing with New York's property tax crisis requires a multi-faceted approach. A property tax cap, which we support and which the Senate has passed, is an important first step, but also is not in and of itself the solution. Other measures, such as mandate relief and reform of local governments and school districts to increase efficiency and decrease costs, are needed. A circuit breaker alone is not the solution either; it will simply pass outrageous tax bills on to someone else to pay, leaving the powerful interests that oppose a tax cap and benefit from New York's horrible property tax burden free to keep running up the tab.
We will continue to make the case to the Assembly that they should follow the Senate's lead and act on Gov. Paterson's property tax cap proposal.
NFIB presses for legislation to ensure collection of taxes on cigarettes sold by Native Americans
NFIB is urging lawmakers to take action on legislation that would require wholesale distributors to prepay the state's excise tax on cigarettes, with a mechanism for reimbursement for Native Americans making purchases on reservations. This would make certain that required taxes are collected on sales to non-Native Americans.
Allowing these Native American businesses to operate at such an unfair competitive advantage by evading tax collection is simply wrong and completely unfair to small business owners who play by the rules, follow the law and collect the taxes the state requires. At a time when New York is facing a significant fiscal crisis, it is also an important financial issue for the state, as hundreds of millions of dollars, even billions by some projections, of revenue have been lost. Plain and simple, these taxes should be collected and the state should use every available resource to ensure that they are.
We will keep fighting to level the playing field for retailers who have been negatively impacted by this issue for far too long.
NFIB/New York names 2008 "Guardians of Small Business"
Eight legislators were honored this week by NFIB/New York as the 2008 "Guardians of Small Business." This award recognizes these lawmakers strong support for small business, as evidenced by their voting records, and their leadership on key issues of importance to New York's entrepreneurs and job creators.
This year's honorees are:
Sen. Jim Alesi Sen. Frank Padavan Sen. Dean Skelos Sen. George Winner Assemblyman George Amedore Assemblyman Joe Morelle Assemblyman Robin Schimminger Sen. Jim Seward
