State Tax Policy

Recommendations related to State Tax Policy

• The State should prioritize stabilizing the budget by reducing inefficient spending rather than enacting a pied-a-terre tax or raising other taxes.
• The State should add energy rebate funds to recessionary reserves that are currently less than half of what is needed.
• The State should relieve the City from the Class-Size Reduction Mandate to help stabilize the budget.

Key Data

• $5 billion — Amount added above the Executive proposal for fiscal year 2027, which likely grows future budget gaps.
• $1 billion — Amount allocated for energy rebate checks that could be better used for recessionary reserves.
• $268 billion — Total amount the State plans to spend in the upcoming budget.

Recommendations related to State Tax Policy

• State leaders should focus on enacting a smart, future-proofing budget that focuses on affordability and program quality, curbs ballooning spending growth, and holds the line on New York’s nation-leading taxes.
• The State should adopt the smart choices the Governor proposed to streamline SEQRA.
• The State should reduce auto insurance costs.
• The State should recalibrate the CLCPA.

Recommendations related to State Tax Policy

• The State should hold the line on taxes, as New York State and its local governments already collect the most taxes per person in the country.
• Policymakers should reject costly, unnecessary Tier 6 pension enhancements that may drive property tax increases or service cuts.
• The State should curb ballooning spending growth to avoid a self-inflicted fiscal crisis that weakens competitiveness.

Key Data

• $30 billion — Amount spending has increased more than inflation in the last decade.
• $5 billion — Amount the Legislature proposes to add to the budget next year.
• $12.8 billion — Size of the Executive Budget gaps in fiscal year 2030.
• $14 billion — Current amount in principle reserves.
• $1.2 billion — Potential savings for New York City if the class size mandate is relieved.

Recommendations related to State Tax Policy

• Reject proposed personal income, corporate income, unincorporated business, pass-through entity, and real property transfer tax increases to avoid harming New York's competitive position.
• Enact the lower-income tax credit for filers with dependents, supported by spending offsets, to provide relief to those with the greatest financial need.

Key Data

• 31 percent — The amount by which New York’s share of the nation’s millionaires plummeted between 2010 and 2022.
• $13 billion — Additional personal income tax revenue the State and City would have collected had New York’s share of millionaires stayed at 2010 levels.
• $211 million — Cost of the Assembly’s proposed tax credit that would eliminate New York State personal income tax liability for many filers with dependents.
• 21.37 percent — New York City’s nation-leading combined business tax rate under the proposed increases, which is nearly double New Jersey’s 11.5 percent top rate.

Recommendations related to State Tax Policy

• The State should spend less, not more, than the executive budget proposed.
• The State must ensure its own fiscal stability, and any one-time aid should serve as a bridge with the condition that the City is accountable for bringing spending in line with its current revenue base.
• Rather than sending checks to New Yorkers who may not need them, the State should be saving these resources as a hedge against the looming risks of economic uncertainty and federal cuts.
• The State should avoid hiking our nation-leading taxes, as making the State less competitive to prop up inefficient, often ineffective programs is the wrong prescription.

Key Data

• $20 billion — Structural budget gap facing the State.
• 78 percent — Amount more in taxes per capita collected by New York State and its localities than the national average.
• 40 percent — Amount more in taxes per capita collected by New York State and its localities than California.
• 37 percent — Amount more in taxes per capita collected by New York State and its localities than New Jersey.
• $500 — Proposed rebate check amount for households earning below $150,000.
• $300 — Proposed rebate check amount for households earning from $150,000 to $300,000.

Recommendations related to State Tax Policy

• The State and New York City should hold the line on taxes.
• Legislators should not include State or City tax increases in their one-house or the enacted budgets.
• The State and New York City should double down on getting the most out of their budgets by efficiently delivering high-quality services.

Key Data

• 14.776 percent — The combined top marginal personal income tax rate for New York City residents.
• 17.44 percent — The tax rate on business activity in New York City.
• $11 billion — The amount of additional State personal income tax receipts that would have been generated if the State had maintained its share of the nation's millionaires.
• 140,000 — The number of people who moved from New York State to other parts of the country in 2024.
• $29.5 billion — The amount by which State operating funds spending has increased more than inflation over the last 10 years.
• $76 billion — The potential savings if New York State and its localities spent like New Jersey.

Recommendations related to State Tax Policy

• The State should hold the line on taxes.
• The State should review and reduce burdensome regulations that do not serve New Yorkers’ interests.
• The State should curb the $5 billion in economic development tax breaks, capital spending, and programs that fail to deliver results.
• The State should shift funding from lower-impact programs to affordability and other priority needs.
• The State should drive service quality and efficiency improvements with performance data, accountability, and targeted programs.

Key Data

• 17.44% — Top combined corporate tax rate faced by New York City businesses.
• $19.7 billion — Statewide business tax collections in fiscal year 2025.
• $5 billion — Amount in economic development tax breaks, capital spending, and programs that fail to deliver results.
• $4.7 billion — Total Payroll Mobility Tax collections in 2026.
• $5.9 billion — NYS corporate franchise tax liability for roughly 319,000 C-corps.
• $4.0 billion — NYC business corporation tax liability for just over 185,000 C-corps.

Key Data

• $12,495 — Total state and local taxes collected per capita in New York, ranking as the highest of all states.
• $15,894 — Total state and local expenditures per capita in New York, which is 40 percent more than the national average.
• $153 — Total state and local taxes collected per $1,000 of personal income in New York, the second-highest rate in the nation.
• $18.4 — Corporate income tax revenue per $1,000 of state GDP in New York, the highest among all states.
• $3,454 — Local property tax collections per capita in New York, which were 71 percent higher than the national average.
• $2,890 — Sales tax revenue per capita in New York, which is higher than the collections in 42 other states.

Recommendations related to State Tax Policy

• The Governor and Legislature should hold the line on taxes to keep New York competitive for families and businesses.
• The State should scale back less impactful spending, including wasteful economic development programs and school aid to shrinking and wealthy districts.
• The Governor and Legislature should prioritize core programs and avoid adding unaffordable spending to improve New York State’s affordability.
• The State should add to the recessionary reserves rather than using them to offset recurring federal cuts.

Key Data

• 17.44% — The rate at which business activity in New York City will continue to be taxed.
• $5.1 billion — Total amount New York State spent on economic development in fiscal year 2025.
• $2.6 billion — Amount of education aid directed to districts that self-fund a sound basic education in school year 2026.
• $469 million — Amount of 'hold harmless' funds provided to districts with declining enrollment.

Recommendations related to State Tax Policy

• Governor Hochul is right to hold the line on taxes to continue to bolster New York’s competitiveness.
• The State should target new programs to those in greatest need, fund them sustainably, and stabilize New York’s precarious future finances.

Recommendations related to State Tax Policy

• Albany should hold the line on taxes because higher taxes risk dislocation and are unnecessary.
• The state should curb the $5 billion in economic development tax breaks and programs that fail to deliver results.
• State leaders should redirect $2.5 billion in state aid provided to wealthy districts that already self-fund a sound basic education.
• Albany should end aid increases to districts with declining enrollment to save $500 million annually.
• The state should protect and build Rainy Day reserves because they are currently insufficient to weather a recession.

Key Data

• $20 billion — The state faces a massive structural budget gap.
• 17.44% — The combined corporate tax rate in New York City, which overshadows New Jersey’s 11.5% rate.
• $10 billion — The amount of additional revenue the state would be collecting annually if its share of the nation’s millionaires had held steady since 2010.
• $5 billion — The amount of economic development tax breaks and programs that fail to deliver results.
• $500 million — The annual savings from ending aid increases to school districts with declining enrollment.
• $2.5 billion — The amount of state aid provided to wealthy districts that already self-fund a sound basic education.

Recommendations related to State Tax Policy

• State leaders should reduce the cost of doing business by letting the business tax surcharge expire.
• State leaders should leverage proven, cost-effective tax incentives to attract and retain businesses and shrink or eliminate tax incentives and economic programs that are not proven to create jobs or increase output.
• State leaders should hold the line on taxes to demonstrate a commitment to a competitive future.
• State leaders should prioritize phasing out ineffective economic development subsidies, such as the film tax and theatrical tax credits that a State study found have low return on investment.
• State leaders should focus on reforming tax incentives to make housing development financially feasible.

Key Data

• $258 billion — The fiscal year 2026 All Funds budget amount.
• $20 billion — The amount by which State recurring spending exceeds its recurring receipts annually, creating a structural budget gap.
• 12 percent — The growth rate of adjusted State operating funds spending this year.
• 80 percent — The amount by which New York State's per-capita Medicaid spending exceeds the national average.

Key Data

• 12.7 percent — New York's share of the nation's millionaires in 2010.
• 8.7 percent — New York's share of the nation's millionaires in 2022.
• $10.7 billion — Additional state personal income tax revenue New York would have collected in 2022 if it had maintained its 2010 share of millionaires.
• $2.5 billion — Additional city personal income tax revenue New York City would have collected in 2022 if it had maintained its 2010 share of millionaires.
• 14.776 percent — Top marginal personal income tax rate for New York City residents earning over $25 million annually.
• $34 billion — Personal income tax revenue contributed by millionaires to New York's tax base in 2022.

Recommendations related to State Tax Policy

• State leaders should preserve core programs that have the greatest impact.
• State leaders should shrink other programs despite their likely popularity.
• State leaders should protect recession-mitigating reserves.
• State leaders should hold the line on taxes to ensure New York’s competitiveness.

Key Data

• 12 percent — Increase in adjusted State Operating Funds spending, which is approximately four times the rate of inflation.
• $14 billion — Future annual budget gaps resulting from ballooning spending and lower projected receipts.
• $20 billion — Long-run imbalance between receipts and disbursements once reliance on non-recurring resources is removed.
• $49 billion — Amount the State spent before releasing the financial plan to inform New Yorkers how their money is being used.

Recommendations related to State Tax Policy

• Lawmakers should avoid sending small checks to nearly all New Yorkers, as it is a highly ineffective use of $2 billion.
• Lawmakers should reconsider raising the payroll mobility tax, as it concentrates the burden on large businesses rather than spreading it out more fairly.

Key Data

• $2 billion — The amount of funding used for small checks sent to nearly all New Yorkers, which is considered a highly ineffective use of resources.
• $254 billion — The total size of the State budget that ignores looming federal budget cuts and a possible recession.
• $20 billion — The approximate structural imbalance between future receipts and disbursements.
• 12 percent — The rate at which the budget increases State Operating Funds spending, which is four times the rate of inflation.

Recommendations related to State Tax Policy

• The budget should reject tax increases that risk the State’s competitiveness.
• The budget should set aside at least $2 billion to mitigate potential federal cuts.
• The budget should not spread $3 billion so thinly among taxpayers that it won’t help affordability.
• The budget should restrain exploding spending growth.
• The budget should fairly fund MTA capital investment.
• The State’s leaders should publish basic, multi-year financial plan tables with the enacted budget bills.

Key Data

• 10.9 percent and 13.8 percent — The range of the largest spending increase in recent State history featured in the Governor’s and Legislature’s proposals.
• $18.2 billion — The size of the structural gap left by the proposed spending increases.
• $2 billion — The minimum amount the budget should set aside to mitigate potential federal cuts.
• $3 billion — The amount that should not be spread so thinly among taxpayers that it fails to help affordability.

Recommendations related to State Tax Policy

• The State should not extend or increase personal income and business taxes.
• The State should redirect the $3 billion slated for Inflation Refund checks to more impactful uses.
• The State should target 'affordability' programs such as middle-class tax cuts and child tax credit enhancements to have a greater impact, offset by savings elsewhere.
• The State should use proceeds from the time-limited Managed Care Organization (MCO) tax for one-time health system improvements.

Key Data

• $18.2 billion — The amount of the structural budget gap left by the proposed budget.
• $3 billion — The total amount of 'Inflation Refund' checks sent to New Yorkers.
• $3.5 billion — The projected fiscal year 2025 surplus.
• $2 billion — The amount of the projected surplus that should be reserved as a contingency fund.
• 10.9 percent — The rate at which the Governor proposes to increase State Operating Funds (SOF) spending.
• 13.8 percent — The rate at which the Legislature proposes to increase State Operating Funds (SOF) spending.

Recommendations related to State Tax Policy

• Lawmakers should hold the line on spending, identify the most critical services and needs, and keep money aside to fund a transition path to a new, lower level of federal aid, if cuts materialize.
• Rainy Day reserves should be saved to weather recessions and time-limited emergencies, not depleted to temporarily plug recurring federal reductions.
• The state should avoid another round of new tax increases, as New York State and its localities already collect the most taxes in the nation.

Key Data

• $18.2 billion — structural gap in the State budget
• $4 billion — recurring spending added by the Assembly and Senate on top of the Governor’s proposal
• 13.7 percent — year-over-year adjusted State Operating Funds growth
• $11 billion — increase in State Operating Funds spending in the Assembly plan
• $7 billion — amount in the Assembly plan to pay off the State’s unemployment insurance trust liability

Recommendations related to State Tax Policy

• Lawmakers should find savings that restrain spending growth to allow temporary tax increases to sunset.
• The State should limit annual spending growth to 2.7 percent starting next fiscal year to close projected budget gaps and eliminate the structural imbalance.

Key Data

• $15.5 billion — The proposed increase in State Operating Funds spending for fiscal year 2026.
• 10.9 percent — The projected increase in State Operating Funds spending for fiscal year 2026.
• $11.0 billion — The projected budget gap for New York State in fiscal year 2029.
• $18.2 billion — The structural imbalance masked by temporary receipts.
• 2.7 percent — The annual spending growth rate required from fiscal year 2025 to fiscal year 2029 to close the structural imbalance.
• $3 billion — The cost of the proposed Inflation Refund checks included in the fiscal year 2026 budget.

Recommendations related to State Tax Policy

• The State should restrain spending elsewhere to afford proposals like the expanded child tax credit and middle-class tax cuts in the long run.
• The State should use the $3.7 billion from the MCO tax for a one-time investment in health system transformation rather than building it into the Medicaid spending base.
• The State should eliminate "hold harmless" provisions or redirect aid from wealthy districts that do not need it to fund a sound basic education.
• The State should use the $3 billion tax rebate to reduce ongoing costs by paying cash for roads, bridges, or MTA infrastructure instead of borrowing.

Key Data

• $11.0 billion — Projected budget gaps by fiscal year 2029.
• $18.5 billion — The State's structural imbalance.
• $252 billion — The total size of the Executive Budget.
• $100 billion — The increase in State spending over the last ten years.
• $2 billion — State aid sent to wealthy districts that do not need it for a sound basic education.
• $3 billion — The amount of the tax rebate that is spread too thinly to have a lasting impact.

Recommendations related to State Tax Policy

• The State cannot afford expanded child tax credit and middle-class tax cuts in the long run unless it restrains spending elsewhere.
• Major savings plans are needed to make Medicaid and education aid affordable so the State can sustain critical services.
• The State should use its surplus funds to restructure State government to be lower cost and higher quality, pay cash for capital projects, and further bolster reserves.

Key Data

• $15.6 billion — The amount of the State's current structural imbalance.
• $33 billion — The size of the funding hole in the MTA’s capital plan.

Recommendations related to State Tax Policy

• To improve the State’s competitiveness and affordability, recurring tax reductions are needed.
• The State should hold State Operating Funds (SOF) spending growth to under 3 percent annually to close the State’s structural gap over the next four years.
• The Governor should transfer the full balance of reserves to the Rainy Day Reserve (RDR), as well as add $1.9 billion from the closeout surplus.
• The State should address the Medicaid spending imbalance in the budget to provide recurring savings and reduce costs while preserving access to care.
• The Governor should propose a funding plan for the MTA that is sustainable—meaning it limits the need to raise taxes every five years.
• The Governor should use the one-time tax relief sum to bolster reserves or to invest in reducing the cost of government instead of spreading relief too thin.

Key Data

• $15.6 billion — The estimated structural imbalance by fiscal year 2028.
• $3 billion — The amount of the Governor's proposed one-time tax relief rebate.
• 7.5 percent — The slated annual growth rate for State Operating Funds (SOF) spending.
• $1.0 billion, $6.2 billion, and $7.1 billion — The projected budget gaps for fiscal years 2026 through 2028, respectively.
• $20 billion — The total amount of State reserves.
• $1.9 billion — The amount the Governor should add to the Rainy Day Reserve from the closeout surplus.

Key Data

• $15,368 — Total state and local expenditures per capita in New York, which is nearly $5,000 more than the national average.
• $12,751 — Total state and local taxes collected per capita in New York, the highest of all states.
• $169 — Total state and local taxes collected per $1,000 of personal income in New York, the highest in the nation.
• $59 — Personal income tax collected per $1,000 of personal income in New York, which is higher than all other states.
• $19 — Corporate income tax collected per $1,000 of state GDP in New York, which is higher than all other states.
• $3,319 — Local property tax collections per capita in New York, which were 70% higher than the national average.

Key Data

• $106,447 Million — Total tax receipts for New York State in fiscal year 2024.
• $110,505 Million — Taxes collected under governmental activities in fiscal year 2024.
• $84,458 Million — Medicaid grants to local governments in fiscal year 2024.
• $234,478 Million — Total receipts for New York State in fiscal year 2024.

Recommendations related to State Tax Policy

• New York should ensure that tax credit programs are designed in ways that reward actual performance in key sectors, rather than hiring or investment that would have happened anyway.
• The State should keep what works and amend, narrow, or eliminate programs that are ineffective to improve the cost-effectiveness of economic development.
• Lawmakers should waive tax secrecy provisions to grant evaluators access to the tax records needed to evaluate programs effectively.
• New York should amend its film tax credit program to target incentives to the segments of the film industry that are at risk, while reducing or eliminating incentives that generate little to no impact.
• The State should conduct regular in-depth evaluations of specific incentives and programs, perhaps on a rolling basis, using an impartial and independent evaluator.

Key Data

• $11 billion — Annual cost of economic development programs in New York State and its localities.
• 30-cent — Return on investment for every dollar of tax credits in some cases.
• $5.8 billion — Total amount spent by New York State on Film Production, Film Post-Production, and Commercial Production Tax Credit programs since 2007.
• $878 million — Foregone tax revenue cost of Georgia's film tax credit in fiscal year 2023.
• 17.6 percent — New York's share of national film production employment in 2022.
• 6.3 percent — Georgia's share of national film production employment in 2022.

Recommendations related to State Tax Policy

• Conduct and publicly release, before or with the draft rules, a more robust assessment of NYCI’s potential fiscal and economic impacts.
• Recalibrate the 2030 emissions reduction goal to be ambitious but feasible, so New York can leverage market-driven, cost-effective emissions reductions that are balanced with economic growth.
• Proceed with rulemaking only when comprehensive assessments are public and based on recalibrated targets.
• Present a detailed plan to use the program’s revenue—which could exceed $30 billion over the next 5 years.
• Permit banking of allowances from the start, instead of after the first compliance period.
• Allow limited use of rigorously verified offsets.
• Modify design elements to facilitate linkage with other systems and broaden coverage.
• Consider regulating co-pollutants separately from NYCI, rather than including firm-specific emissions caps or limitations on emissions trading.

Key Data

• $12 billion — Potential annual cost of the new emissions charge by 2030.
• $30 billion — Potential revenue generated by the program over the next 5 years.

Recommendations related to State Tax Policy

• The Governor should veto S9822/A10530 because it wrongly extends the Industrial and Commercial Abatement Program (ICAP) for four years without first assessing whether the program is necessary to promote economic growth.
• The Governor should sign a one-year extension, negotiated as a Chapter amendment, which would allow time to objectively evaluate whether an extension would be cost-effective.
• Policymakers should identify eligibility and benefit changes to improve ICAP’s cost-effectiveness rather than rushing a multi-year renewal.

Key Data

• 3.6 percent — of projects receiving ICAP benefits required the tax breaks to be financially feasible.
• $81.4 million — ICAP cost in fiscal year 2017.
• $506.3 million — ICAP cost in fiscal year 2024.
• $500 million — spent per year on the program without first determining that it is an effective use of public funds.
• Two-thirds — of ICAP recipients receive 25-year abatements, even though 10- to 15-year benefits were found to be sufficient for most projects.

Recommendations related to State Tax Policy

• The State should quickly phase out the hold harmless provision to align Foundation Aid with district enrollment and wealth.
• The State should revise the expected local contribution to be the higher of the district’s actual contribution or the district’s fiscal capacity.
• The State should update district poverty estimates and regional cost measures for a more accurate assessment of need.
• The State should reassess arbitrary floors and ceilings in formulas to ensure they are limited to extreme situations.
• The State should allocate library, textbook, and software aids based on wealth by modifying the formula or folding the funding into Foundation Aid.
• The State should eliminate High Tax Aid, which provides more aid per student to wealthy districts than below-average-wealth districts.
• The State should eliminate the School Tax Relief (STAR) program to better allocate State resources to where needed most.

Key Data

• $16 billion — Structural budget gap facing New York State.
• $38.6 billion — Total amount of education aid the State must wisely and appropriately use.
• $2 billion — Amount of State aid sent every year to districts that already spend enough local resources to provide a sound basic education.
• $3 billion — Annual cost of the School Tax Relief (STAR) program.
• $223 million — Total funding for High Tax Aid.
• $224 million — Funding for library, textbook, and software aids.

Key Data

• $16.1 billion — The projected structural budget gap driven by the enacted budget.
• $239 billion — Total All-Funds spending for fiscal year 2025.
• 7.8% — The increase in Adjusted State Operating Funds spending in fiscal year 2025.
• $2.9 billion — The amount of the structural imbalance masked by expiring tax increases.
• 4.1% — The projected average annual growth rate for Adjusted State Operating Funds spending through fiscal year 2028.
• $21.1 billion — The total amount of state reserves following a $1.5 billion addition.

Recommendations related to State Tax Policy

• All reserves should be deposited into the Rainy Day Reserve to protect them from potential squandering.
• Short-term funds should be used to restructure the Medicaid system to be more sustainable.
• State leaders should produce basic financial plan tables immediately.

Key Data

• $16 billion — The estimated future structural budget deficit.
• $237B — The total amount of spending approved in the state budget.
• $4 billion — The amount added to the State’s pension liabilities by Tier 6 retirement-plan sweeteners.
• $377 million — The cost of unnecessary expenses on state and local government budgets next year due to Tier 6 retirement-plan sweeteners.

Recommendations related to State Tax Policy

• The state should reject tax increases, as New York and its localities already collect more taxes per person than any other state.
• Lawmakers should restrain spending growth to reduce the structural budget gap that already exceeds $16 billion.
• The state should not include speculative, short-term federal money derived from a Medicaid/MCO tax to pay for ongoing costs.
• The state should reject proposed Tier 6 retirement-plan enhancements because these sweeteners are expensive and unnecessary.
• The state should defer decisions on the Heat Act until there is a full analysis and proposal about the consumer and economic impact of capping household utility bills.

Key Data

• $16+ billion — The current structural budget gap that needs to be reduced by restraining spending growth.
• 3.5 percent — The proposed increase in adjusted State Operating Funds spending for the current year.
• 32 percent — The growth in adjusted State Operating Funds from FY 2020 to FY 2025.
• $33.8 billion — The total dollar growth in adjusted State Operating Funds from FY 2020 to FY 2025.
• $6.4 billion — The inflation-adjusted increase in State Operating Funds from FY 2020 to FY 2025.

Recommendations related to State Tax Policy

• The State should not budget money it does not have, as there is a risk that the State does not receive the revenue from the new tax on Medicaid and other managed care plans.
• Federal funds generated by the new tax on Medicaid and other managed care plans should be time-limited and used only to finance one-time programs.
• The State should only pursue the new tax on Medicaid and other managed care plans after it has identified and publicized the planned one-time programs.
• The State needs to break its bad habit of ratcheting up spending on the back of temporary receipts from the proposed Medicaid and managed care tax.

Key Data

• $16 billion to $20 billion — The state's structural budget gap.
• $4 billion — The amount of federal money the state aims to leverage through the new tax on Medicaid and other managed care plans.

Recommendations related to State Tax Policy

• The State should be using closeout balances each year to build reserves, rather than to support further spending increases.
• Spending growth should be slowed significantly—especially in high-cost areas such as Medicaid and school aid—in order to stabilize the State’s fiscal foundation and avoid further damage to New York’s already shaky economic competitiveness.
• Restraining spending growth to 2.0 percent annually would close future gaps and eliminate the structural imbalance and allow temporary tax increases to expire.

Key Data

• $20.3 billion — The structural imbalance in the State budget in the one-house budgets.
• $16.8 billion — The amount of non-recurring resources the Executive Budget relies on to achieve budget balance in fiscal year 2025.
• $6.3 billion — The additional non-recurring resources from new temporary taxes relied upon by the Legislature’s one-house budget proposals.
• $8 billion — The additional amount currently required for principal reserves to cover receipts losses and spending growth of a typical recession.
• $5.0 billion — The portion of fiscal year 2028’s $8.5 billion in non-recurring resources comprised of temporary tax increases.
• 2.0 percent — The annual rate to which spending growth should be restrained to close future gaps and eliminate the structural imbalance.

Recommendations related to State Tax Policy

• The Legislature should enact the phaseout of the hold harmless provision to ensure Foundation Aid better reflects current school district demographics.
• The State should shift some of its expense-based aid to Foundation Aid to target funding based on need rather than a district's ability to self-fund.
• The State should eliminate the School Tax Relief (STAR) program, a property-tax-relief initiative that disproportionately benefits wealthier districts.
• The Legislature should enact a fiscal year 2025 budget that brings State school aid growth to a more sustainable level.

Key Data

• $413 million — Savings from proposed changes to the Foundation Aid formula in school year 2024-25.
• $38.1 billion — Total State school aid projected for the coming school year under the Governor's proposal.
• $2.4 billion — Amount of State aid allocated to 145 districts that can already fully fund a sound basic education with local and regular federal resources.
• $15,761 — Projected per-student State aid for the coming school year.
• 6.8 percent — Average reduction in Foundation Aid for districts in the highest wealth decile under the proposed changes.

Recommendations related to State Tax Policy

• The State should avoid tax increases to prevent weakening New York’s already precarious competitive position.
• Spending growth should be limited to no more than 2 percent annually to close budget gaps and achieve structural balance by fiscal year 2028.
• The State should eliminate the school aid hold harmless provision to help manage the State's two biggest expenses.
• The Legislature should identify spending reductions to offset added spending, such as targeting poorly managed school aid, ineffective economic development programs, and runaway Medicaid spending.
• The State must ensure that housing incentives and actions are well designed to ensure development is fiscally feasible and promotes housing production for all income levels.

Key Data

• $8 billion — Added to State Operating Funds spending on top of the Governor’s proposal.
• 8.9 percent — Year-over-year growth of State Operating Funds spending.
• 7.9 percent — Successive years of spending growth.
• $10 billion — Out-year budget gaps facing the State.
• $16 billion — Structural budget gap topping this amount.
• 2 percent — Recommended annual limit for spending growth to close gaps.

Recommendations related to State Tax Policy

• The State does not increase taxes, since nation-leading taxes and spending should be sufficient, and higher taxes risk competitiveness for residents and businesses.
• The State should restrain spending growth, ideally to 2.0 percent annually, which would close projected gaps, stave off a fiscal reckoning, and achieve structural balance by fiscal year 2028.
• The State should reject the NYC sales tax capture, as the State should not foist its costs onto local governments, and the continuation of the sales tax capture unreasonably harms the City’s budget.

Key Data

• $16.4 billion — The State's structural budget imbalance in fiscal year 2028.
• $9.9 billion — The projected out-year budget gap in fiscal year 2028.
• $1.6 billion — Cumulative increases in the tax receipts forecast for fiscal year 2025.
• 2.0 percent — The recommended annual limit for State Operating Funds spending growth to close projected gaps.

Recommendations related to State Tax Policy

• The State should restrain spending to put the State on a path to budget balance.
• Policymakers should avoid additional tax increases, as they would weaken the State’s competitiveness.
• The State should avoid layering on further tax and spending increases to relieve building budget pressure and stave off a potentially harsh fiscal reckoning.

Key Data

• $9.9 billion — The State currently projects a budget gap in fiscal year 2028.
• $16.4 billion — The structural imbalance of the State budget when accounting for non-recurring resources.
• $26 billion — The amount SOF spending grew from fiscal year 2021 to fiscal year 2024.
• 7.9 percent — The average annual growth rate of SOF spending from fiscal year 2021 to fiscal year 2024.
• $51 billion — The amount SOF spending is projected to grow over the 8 years between fiscal years 2021 and 2028.
• 1.5 percent — The rate at which SOF spending growth would need to be kept to close the State's structural imbalance.

Key Data

• $15,350 — Total state and local expenditure per capita in New York in 2021, which is 50% more than the national average.
• $10,331 — Total state and local taxes collected per capita in New York in 2021, the highest of all states.
• $135 — Total state and local taxes collected per $1,000 of personal income in New York in 2021, the highest in the nation.
• 50% — Amount more per capita that New York State and its localities spent compared to the national average in 2021.
• 63% — Amount more in taxes per person that New York State and its localities collected compared to the national average.
• 76% — Percentage by which New York's local property tax collections per capita exceeded the national average.

Recommendations related to State Tax Policy

• The State should replace the 421-a tax credit program to help boost housing production and affordability.
• The State should pilot a reliable funding stream such as vehicle miles travelled fees to maintain roads and bridges as gas tax revenue erodes.
• The State should end the School Tax Relief (STAR) program to better target education aid based on district need.

Key Data

• $2.8 billion — Amount of State education aid sent to the wealthiest school districts that already fund a sound basic education locally.
• $9.1 billion — Amount of expenses supported by non-recurring resources, which contributes to the State's structural imbalance.
• 3.4 percent — Projected growth in receipts over the financial plan, which is far exceeded by the 5.3 percent growth in spending.

Recommendations related to State Tax Policy

• New York must exercise spending restraint to put the state on a path to fiscal stability.
• The state should avoid raising taxes, as combined top personal income and business tax rates are already the nation's highest.
• Policymakers must address the structural budget gap of $17 billion in the upcoming budget proposal.

Key Data

• $17 billion — The structural budget gap that must be addressed to ensure fiscal stability.

Recommendations related to State Tax Policy

• Closing these gaps will require the State to shift to restraining spending growth, rather than the recent trend of adding new spending.
• To deal with two years of recessionary tax receipt losses and fund modest annual SOF spending growth of 1 percent for two years of a recession, the State should have more than $27 billion in reserves.
• If receipts exceed projections this year, additional funds should be deposited in the Rainy Day Reserve.
• The full balance of the State’s principal savings should be moved immediately into statutory lockboxes.

Key Data

• $16.8 billion — The structural gap between recurring receipts and disbursements.
• $27 billion — The amount the State should have in reserves to weather a recession.
• $19.6 billion — The current level of the State's principal reserves.
• $19.5 billion — The increase in State Operating Funds spending from fiscal year 2021 to fiscal year 2023.
• $4.7 billion — The reduction in the fiscal year 2025 out-year budget gap following the Mid-Year Update.

Recommendations related to State Tax Policy

• To close gaps, the state should restrain spending growth, necessarily starting with its largest programs.
• State school aid should be better targeted to districts with higher-need students, instead of funneling billions of dollars to wealthy districts with strong local funding.
• In Medicaid, understanding and reversing rapid cost growth in long-term care and other areas can reduce costs.
• In “economic development,” the state should curtail — not expand — programs with dubious impacts.
• Another round of tax increases or drawing down reserves should not be part of the package.

Key Data

• $9 billion — Next year's projected budget gap.
• $13 billion — The projected budget gap thereafter.
• $22 billion — The structural hole the state will face once temporary funds are removed.
• 9.0% — Annual rate of state spending growth over the past three years.
• 5.2% — Budgeted annual increase in spending going forward.
• $1.5 billion — Budgeted migrant costs over two years.

Recommendations related to State Tax Policy

• The Governor should veto S7562/A7757, which expands eligibility for the Empire State Film Production Credit.
• New York should focus on expanding its economy based on its comparative strengths, such as human capital and cultural and natural amenities, rather than competing through tax incentives.
• The state should enhance its willingness to make it easier to do business in New York instead of relying on tax credit competition.

Recommendations related to State Tax Policy

• The State and its localities should rigorously evaluate existing incentives and programs to determine their effectiveness.
• The State and its localities should narrow, shrink, or eliminate programs that are not proven effective.
• The State and its localities should adopt performance-based incentives whenever possible.
• The State and its localities should create a unified economic development budget.
• The State and its localities should increase oversight powers of the State Comptroller and Authorities Budget Office.

Key Data

• $10.7 billion — Total State and local economic development spending in New York in 2022.
• $4.4 billion — Total State economic development spending in 2022.
• $6.3 billion — Total local and county government economic development spending in 2022.
• $13 billion — Projected annual economic development spending by 2025.
• $9.1 billion — The State budget gap projected for the next year.
• $13.4 billion — The State budget gap projected for fiscal year 2027.

Recommendations related to State Tax Policy

• The State should combine all principal reserves into the Rainy Day Reserve (RDR) lockbox immediately to ensure appropriate protection for the entirety of the State’s reserves.
• The State should deposit up to an additional $2.4 billion to the RDR this year as a priority for any excess mid-year receipts or underspending.
• The State should set a target for the RDR of 22 percent of SOF spending, which would be enough to mitigate two years of recession tax receipts shortfalls.
• The State should increase the maximum allowed RDR balance to 30 percent of SOF spending to provide capacity for the third year of a recession.
• The State should mandate automatic RDR deposits when the economy is growing, with deposits equal to two-thirds of tax receipts growth in excess of 2 percent annually.

Key Data

• $27.9 billion — The recommended rainy day savings target for fiscal year 2024, representing 22 percent of State Operating Funds (SOF) spending.
• $2.4 billion — The additional amount recommended to be deposited into the Rainy Day Reserve this year.
• 30 percent — The recommended maximum allowed Rainy Day Reserve balance as a percentage of State Operating Funds (SOF) spending.
• $24.2 billion — The projected two-year shortfall in tax receipts during a recession, based on historical performance.
• 45 percent — The portion of New York State's own source revenue that comes from the economically sensitive personal income tax.
• $19.5 billion — The amount currently held in New York State's 'Principal Reserves' as of June 2023.

Key Data

• $15 billion — The amount to which the long-term structural deficit has increased under the enacted budget.
• $5 billion — The amount of the budget gap projected in the Executive Budget, which the enacted budget widens substantially.
• three years — The duration for which the state extended its 'temporary' personal income and business tax surcharges.

Recommendations related to State Tax Policy

• The State should enact a budget that restrains spending growth and paves the path to sunsetting temporary tax increases.

Key Data

• $15 billion to $20 billion — The projected range of the State's structural budget gap.
• nearly $1 billion — The amount of additional City spending that may be required due to State policies.

Recommendations related to State Tax Policy

• The final agreement should not raise taxes.
• The final agreement should restrain spending to stave off massive future cuts.
• The final agreement should maximize reserve deposits to protect New Yorkers from economic shocks.
• The final agreement should eschew wasteful subsidies.

Recommendations related to State Tax Policy

• Allow temporary tax increases to sunset as scheduled or earlier to improve New York's competitiveness and reduce the costs of living and doing business.
• Restrain State Operating Funds (SOF) spending growth to 2 percent annually to bring spending trends in line with receipts and close forecast gaps.
• Maintain or expand the Governor’s Rainy Day reserves plan by accelerating the plan to make all deposits this year and raising balance and deposit caps.
• Publish basic financial plan tables with the enacted budget to ensure New Yorkers understand the fiscal impacts of their leaders' choices.
• Reform the State’s budgeting and fiscal management to improve services, stability, and accountability through standardized accounting and better debt management.

Key Data

• $20 billion — The projected structural gap in fiscal year 2027 if the Legislature's budget plans are enacted.
• $2 billion — The amount of new temporary tax increases on businesses and personal income proposed by the Legislature to support new spending.
• $15 billion — The projected structural gap in fiscal year 2027 under the Governor's budget plan.
• $23.8 billion — The growth in State Operating Funds (SOF) from fiscal year 2020 to fiscal year 2023.
• $28.2 billion — The amount by which the Executive Budget proposal would exceed the pre-acceleration spending trend by fiscal year 2027.
• $32.1 billion — The amount by which the Legislative budget proposal would exceed the pre-acceleration spending trend by fiscal year 2027.

Recommendations related to State Tax Policy

• State leaders should craft a budget that ensures fiscal stability and protects New Yorkers by promoting economic and tax competitiveness.
• The final budget should adopt or even improve upon the Governor's version to strengthen the structure of the Rainy Day Fund.
• State elected leaders should craft a final budget that paves the path to reasonably competitive taxes that ensure New York’s value proposition is compelling.

Key Data

• $2 billion — Additional annual taxes on personal income and business taxes added by the legislative budget proposals.
• $1 billion — Business tax surcharge extension proposed by the Governor.
• $5 billion — New spending added by the legislative budget proposals, most of which is likely to be recurring.

Recommendations related to State Tax Policy

• The State should reject the corporate tax surcharge extension and future dependence on the personal income tax surcharge.
• The State should commit to sunsetting the personal income tax surcharge on time or ahead of schedule.
• The State should shrink rather than expand the film tax credit and reject the extension of New York City economic development incentives absent rigorous evaluation of their effectiveness.

Key Data

• $5 billion — The amount of annual tax revenues raised by the Fiscal Year 2022 Enacted Budget through 'temporarily' increasing business and personal income taxes.
• $700 million — The proposed annual cap for the film production tax credit under the Governor's expansion plan.
• 60 percent — The amount by which the Governor proposes to increase the annual cap for the film production tax credit.

Recommendations related to State Tax Policy

• The State should reject the proposed expansion of the Empire State Film Tax Credit.
• The State should be shrinking the film tax credit program until a rigorous analysis justifies some form of incentive.
• The State should perform a rigorous evaluation to determine what economic activity was induced by the incentive, estimate the benefit of that additional economic activity, and compare it to the cost of the program and the impact of using those resources in another manner.
• The State should phase out the film tax credit absent a rigorous evaluation that demonstrates its need and cost-effectiveness.
• The forthcoming evaluation of State tax incentive programs should inform the existence and design of the film tax credit programs instead of actions by other state’s legislatures.

Key Data

• $9.4 billion — Current lifetime maximum cost of the film tax credit program.
• $14.6 billion — Proposed lifetime maximum cost of the film tax credit program under the Executive Budget.
• 55 percent — The increase in the lifetime maximum cost of the program under the proposed changes.
• $420 million — Current annual credit cap for the film tax credit program.
• $700 million — Proposed annual credit cap starting in 2024.
• $6.5 billion — Total credits provided since the start of the program.

Recommendations related to State Tax Policy

• A recurring State contribution should be included, understanding that City taxpayers are major contributors to State receipts.
• The balance of the plan should be appropriately allocated among those in the MTA region, as the current plan places a significant portion of the burden on New York City taxpayers.
• Productivity improvements, including changes in MTA operations that require agreement from labor, should be at least half of the plan.
• The MTA should proceed with planned 5.5 percent fare and toll increases to maintain price sufficiency and fiscal stability.

Key Data

• $800 million — Annual revenue generated by increasing the Payroll Mobility Tax’s top rate from 0.34 percent to 0.50 percent.
• $500 million — Annual payment required from New York City for certain MTA expenses.
• $2.9 billion — Potential annual savings identified from operational reforms.
• $640 million — Portion of the $800 million Payroll Mobility Tax increase likely to come from City businesses.
• $300 million — One-time appropriation from the State budget.
• $400 million — Increased plan for annual operational efficiencies.

Recommendations related to State Tax Policy

• New York State leaders should ensure that public services are supported by taxes that do not encourage people and business to leave the state.
• The State should close its budget gaps and stabilize its finances by restraining spending growth to be in line with its recurring revenue.
• New York State should avoid extending the temporary business tax surcharge and the nation-leading combined corporate tax rates.

Key Data

• $12 billion — The amount by which the structural budget gap exceeds annually.
• $5.7 billion — The projected budget gap in fiscal year 2025.
• $9.0 billion — The projected budget gap in fiscal year 2026.
• $7.5 billion — The projected budget gap in fiscal year 2027.
• 7.1% — The average annual increase in State Operating Funds spending over the past three years.
• 12.8% — The growth in State Operating Funds spending during the current year.

Recommendations related to State Tax Policy

• The Governor should veto A3801A/S3587C, the “toll payer protection act,” which would limit the ability of State authorities to collect tolls by mail and impose penalties for non-payment.
• The State should be working to improve collection of user fees on toll roads and bridges in order to support New York’s critically needed infrastructure.
• Tolling authorities should have appropriate flexibility to ensure that tolls, which are needed and legitimately levied, are paid.
• The State should avoid granting amnesty for non-payment of legitimate tolls and charges, as it sets a bad precedent and may increase the delinquency rate.
• The State should carefully monitor the still nascent cashless tolling program rather than implementing restrictive legislation.

Key Data

• $2 billion — Amount of general State revenue diverted to backfill the Thruway budget and fund capital projects when toll rates were frozen from 2016 to 2020.
• 83% — Percentage of trips that automatically pay tolls via E-ZPass on the NYS Thruway.
• 88% — Percentage of trips that automatically pay tolls via E-ZPass on the PANYNJ crossings.
• 95% — Percentage of trips that automatically pay tolls via E-ZPass on the MTA Bridge and Tunnel crossings.
• $5 — Proposed penalty cap for non-payment of tolls after 30 days.
• $50 — Current penalty amount for late payment of tolls after 60 days.

Recommendations related to State Tax Policy

• Finally, mind New York’s tax competitiveness to avoid chipping away at the state's revenue and economic foundation.
• The state should better target aid to high-need districts and reevaluate assistance to wealthy districts, especially those that receive over $3 billion annually despite already self-funding a sound basic education.
• Restrain spending growth, as limiting growth to 2% annually through 2028 would be enough to close that year’s $12 billion projected gap.

Key Data

• $6 billion — Future budget gaps approaching this amount by FY 2027.
• $12.7 billion — Projected budget gap in the year following FY 2027.
• $3 billion — Annual aid provided to wealthy school districts that already self-fund a sound basic education.
• 32% — Education aid increase that the state started to phase in during 2021.
• 50% — Portion of the state budget comprised of Medicaid and education spending.

Recommendations related to State Tax Policy

• The State must build reserves, vigilantly restrain spending growth, and identify and implement long-run cost savings to address widening budget gaps.
• It is imperative that the State continue on the path of depositing $15.4 billion into reserves, at least until there is a recession.
• The State should seek to reduce recurring spending, especially in high-growth areas such as Medicaid and school aid, while continuing to build reserves.

Key Data

• $6.2 billion — Projected budget gap by fiscal year 2027.
• $15.4 billion — Amount the State plans to deposit into reserves over four years.
• $19.4 billion — Total reserve balance after planned deposits.
• $2.1 billion — Increase in tax receipts in fiscal year 2023 based on collections to date.
• $1.9 billion — Downward re-estimate of tax receipts in fiscal year 2024.
• $893 million — Estimated State cost for New Yorkers remaining enrolled in Medicaid due to the continued public health emergency.

Recommendations related to State Tax Policy

• The State could pay off the debt over time with higher tax rates, which is the standard practice.
• The State could partially accelerate repayment of the debt using State revenues.
• The State could rapidly pay off the debt using State revenues, which would provide immediate tax relief to employers.
• The State could tap higher-than-expected tax receipts and unallocated federal aid to repay the debt more quickly.
• Lawmakers should consider reforming the UI system to ensure it is better equipped to meet claims during economic downturns.

Key Data

• $8.1 billion — The amount of debt New York owes to the federal government for its Unemployment Insurance Trust Fund as of June 7, 2022.
• $110 million — The amount of interest New York has accumulated for the federal fiscal year 2022 on its unemployment insurance debt.
• $6.5 billion — The total unemployment insurance benefits paid out in New York in the second quarter of 2020.
• 27 percent — New York's share of the total outstanding unemployment insurance debt across all U.S. states.
• 64 percent — The increase in the average State unemployment insurance rate on employers from 2019 to 2021.
• $530 million — The total unemployment insurance benefits paid out in New York in the fourth quarter of 2019.

Recommendations related to State Tax Policy

• The State should actively develop plans to restrain Medicaid and education spending growth to avoid future tax increases or service cuts.
• The State should adhere to spending targets and maximize Rainy Day Fund deposits to maintain fiscal balance and avoid future tax hikes.
• The Legislature and Governor should release basic financial plan tables with both the one-house and enacted budget bills to improve governmental transparency.
• The State should improve accountability and transparency by implementing performance management to ensure fiscal stability.

Key Data

• $8 billion — Annual budget gaps likely to open beginning in fiscal year 2028 after temporary personal income tax increases sunset.
• $15.4 billion — Total planned deposits to reserves over a four-year period.
• $222 billion — Total All Funds spending in the fiscal year 2023 enacted budget.
• $130 billion — State Operating Funds spending, adjusting for off-budget shifts and payment timing.
• $10 billion — Amount of debt service costs prepaid in fiscal years 2022 and 2023 to achieve budget balance.
• $10.8 billion — Portion of planned reserve deposits allocated to the Rainy Day Fund lockbox.

Recommendations related to State Tax Policy

• The State should utilize market incentives as much as possible, such as a fee system or a cap-and-trade system, to incentivize businesses and residents to choose low energy intensive goods and technologies.
• Policymakers should better understand the specifics that might incentivize businesses to adopt low emission technologies, or households to invest in heat pumps and EVs such as tax credits or subsidies or peak-period utility pricing.
• The Final Scoping Plan should disaggregate the financial impacts of each strategy on businesses and households to help prioritize strategies to maximize equity and minimize negative economic impacts.
• The Final Scoping Plan should calculate and identify the cost effectiveness of each mitigation strategy to provide the necessary basis for prioritization.
• The State should retain the low carbon benefits of nuclear energy as a key component of the state’s decarbonization path.

Key Data

• $300 billion — Total costs through 2050 for the climate scenarios on a discounted present value basis.
• 85 percent — The goal for reducing statewide GHG emissions from 1990 levels by 2050.

Recommendations related to State Tax Policy

• The State should be bringing spending growth in line with long-run receipts to ensure last year’s tax increases expire on time or early.
• The extension of the film tax credit continues an expensive program that does not provide commensurate value for New Yorkers and should be phased out and ultimately eliminated.
• The reported set aside of reserves equal to 15 percent of State operating funds is important, substantial, and welcome; these funds all should be deposited in a locked Rainy Day Fund.

Key Data

• 15 percent — The portion of State operating funds that should be deposited in a locked Rainy Day Fund.
• $40 billion — The average amount by which recent recessions prior to 2020 reduced expected receipts over three years.
• $10 billion — The amount of the Governor's proposed spending increase.

Recommendations related to State Tax Policy

• The Governor and the Legislature should adopt a budget that keeps to the Executive Budget’s top line on spending.
• The state should roll back the tax increases so New York is a competitive location for residents and businesses.
• The Governor and Legislature should diligently manage and provide oversight of funded programs by developing plans, identifying goals, measuring activities and results, and ensuring accountability.
• The state should put funds in reserves as the Governor proposed to ensure continued fiscal stability.
• The state should publish basic financial plan tables that show the receipts and disbursements with the one-house and enacted budgets to improve transparency.
• The state should implement statewide performance measurement and management to ensure and assess how successful its spending is in delivering results.

Key Data

• $7.7 billion — Estimated budget gap in fiscal year 2026 if the Legislature's spending proposals are adopted.
• $15 to $17 billion — Estimated annual tax receipts shortfall in the event of a typical recession.
• $55 billion — Total four-year tax receipts surplus compared to pre-pandemic projections.
• $15 billion — Amount the Governor's proposal would add to reserves by fiscal year 2025.
• $4.8 billion — Amount the Legislative proposals would add to reserves.
• $16.2 billion — The Legislature's proposed fiscal year 2023 spending increase.

Recommendations related to State Tax Policy

• All economic development spending, whether direct, through tax incentives, or through reduced utility or other costs, should be justified by a rigorous analysis that shows that the public benefits that would accrue will exceed the public’s costs.
• As part of shaping any policy to publicly subsidize a capital investment, these impacts and their level should be quantified.
• The State should transparently provide an analysis that identifies the benefits and full costs for any proposed subsidy.
• The analysis should credibly identify the incremental economic and fiscal impacts attributable to a proposed subsidy and use them in conjunction with the length of time the subsidy would provide benefit to calculate a proposed subsidy’s value.
• Ideally, the analysis should discount the benefits by a factor that represents the benefit that would be accrued should the State use those funds for another purpose.
• Any subsidy should be after private investment and include clawback provisions.

Key Data

• $1 billion — Potential public funding sought by the Buffalo Bills owners for a new stadium.
• $862 million — Calculated cost to renovate the existing Highmark Stadium.
• $1.4 billion and $1.7 billion — Estimated cost range for constructing a new stadium.
• $350 million — Additional cost for a stadium in downtown Buffalo due to site acquisition.
• $27 million — Estimated annual fiscal impacts in tax revenue generated by the presence of the Buffalo Bills.
• $385.8 million — Annual economic output attributed to the Buffalo Bills franchise.

Recommendations related to State Tax Policy

• State lawmakers should better tailor affordability options to reflect different market conditions by creating new options for mid-rise projects outside the Prime Development Area or offering Option B to all projects outside that area.
• The City should track and evaluate program usage to inform successor programs by creating a comprehensive database of project recipients and reporting on overall residential development trends.
• State and City officials should work to align the incentive with other housing programs by modifying ANNY and the Mandatory Inclusionary Housing program to be compatible and clarifying rules for projects receiving bond financing.

Key Data

• 30 percent — New York City's property taxes as a percentage of rental income, compared to 13 percent elsewhere in the country.
• 50 percent — The cost to operate a multifamily building in New York City is higher than the national average.
• 60 and 65 percent — The range of gross rental income that fully taxed rental buildings in New York spend on expenses, compared to an average of 38 percent elsewhere in the country.
• 75 percent — The amount rents would have to increase to generate a reasonable rate of return without the property tax exemption.
• $9,800 — The monthly rent needed to generate a 5 percent yield on cost for a typical Manhattan development without the 421-a exemption, up from $5,600.

Recommendations related to State Tax Policy

• State leaders should hold the top line on spending, and allocate no more than the $5 billion non-recurring funds already available for fiscal year 2023.
• State leaders should deposit funds into reserves as proposed to ensure the State can weather the next storm and protect New Yorkers.
• State leaders should not add recurring programs without reducing other recurring spending.

Key Data

• $5 billion — Non-recurring funds available for fiscal year 2023 that should be the limit for new allocations.
• $10 billion — Proposed increase in State Operating Funds (SOF) spending for the next year.
• $2.2 billion — Proposed homeowner tax rebate that could be reallocated to help balance the budget.
• 15 percent — Target level of State Operating Funds (SOF) spending to be built into reserves.
• $4.6 billion — Average annual projected growth of the State Operating Funds (SOF) budget after fiscal year 2023.
• $2 billion — Amount provided to wealthy school districts that could be a target for reducing recurring spending.

Recommendations related to State Tax Policy

• Spending restraint is essential to allow last year’s tax increases to sunset as scheduled or, better still, to be reduced or eliminated earlier.
• The Legislature should reject the Executive Budget's proposal to continue allowing the State to take $250 million in local sales tax revenue.

Key Data

• $250 million — Annual amount of local sales tax revenue the State takes from local governments.
• $200 million — Portion of local sales tax revenue taken annually from New York City.
• $50 million — Portion of local sales tax revenue taken annually from counties other than New York City.

Recommendations related to State Tax Policy

• The enacted State budget should allow the business tax increase to sunset.
• The enacted State budget should restrain spending to allow the personal income tax increase to sunset sooner or at least as scheduled.

Key Data

• 22% — New York’s share of the nation’s millionaires declined 22% from 2010 to 2019.

Recommendations related to State Tax Policy

• New York could replace the federal mandate penalty that was repealed in 2018 with an identical policy at the State level.
• New York could follow the lead of Maryland and integrate the processes of filing for taxes and enrolling in health coverage programs.

Key Data

• $201.6 Million — Total amount collected from 280,750 tax returns with a penalty in 2016.
• $718 — Average penalty amount from 2016 tax returns with a penalty.
• $3.6 Billion — Total penalty amounts from slightly fewer than 5 million tax returns in 2016.
• $728 — Average penalty amount from 5 million tax returns in 2016.

Recommendations related to State Tax Policy

• The State should lower, reverse, or at least allow the latest tax increases to sunset to foster economic competitiveness.

Key Data

• $15 billion — Projected annual tax receipts shortfalls due to the pandemic as of last January.
• $19.6 billion — Estimated two-year impact of a typical recession on state revenues.
• $3.5 billion — Recurring program spending supported by federal aid in fiscal year 2025 that will create a fiscal cliff.

Recommendations related to State Tax Policy

• Implementing congestion pricing in Manhattan should reduce emissions.
• State leaders should consider how transportation emission reductions can be encouraged when making tax policy, state spending, and local aid decisions.
• The State should consider carbon fees to build the cost of carbon emissions in the price of fossil fuel heavy transport options like gas cars and aviation with the intent to reduce their use.

Key Data

• 47 percent — Transportation sector's share of New York State's total annual carbon dioxide emissions in 2018.
• 31 percent — Increase in transportation emissions in New York State between 1990 and 2018.
• 4.3 metric tons — Transportation emissions per capita in New York State in 2018.
• 22 MMT — Aviation related emissions in 2018, up from 2 MMT in 1990.
• 44.2 MMT — Total emissions from motor gasoline in 2018.
• 21 percent — Growth in SUV ownership in New York City between 2016 and 2020.

Key Data

• $4.3 billion — Annual increase in personal income and corporate taxes agreed upon by lawmakers.
• $22 billion — Additional funds available over the next two years compared to the Governor's initial budget proposal.
• 0.75 percentage points — Increase in corporate tax rates when combined with NYC and MTA taxes.
• $212 billion — Total amount of planned All Funds spending.
• $5 billion — Increase in school aid, representing the largest increase in recent history.

Recommendations related to State Tax Policy

• To address the gaps that will exist and grow when federal funds are depleted, the state should use the next two years to restructure spending to be more sustainable.
• Given the availability of federal aid and higher revenue, the state should omit the proposed personal income tax increases.

Key Data

• $12.6 billion — Direct federal funding provided to the State under the American Rescue Plan.
• $9.6 billion — Projected surplus over fiscal years 2021 through 2023 if the Executive Budget is enacted.
• $5.9 billion — Amount available to fully reverse spending reductions and make additional investments after omitting proposed tax increases.
• $7 billion — Annual amount of tax increases proposed by the State Legislature in their one-house budget bills.
• $9 billion — Additional federal aid provided for elementary and high schools.
• $5.7 billion — Increase in State Operating Funds spending in fiscal year 2022 under the Governor's Executive Budget.

Recommendations related to State Tax Policy

• The state should enact a budget that does not raise income and business taxes.
• The state should restructure school aid to focus resources on needy districts rather than providing increases to all districts.
• The Foundation Aid formula should be modernized to account accurately for support by local resources.
• The state should revive the Medicaid Redesign Team (MRT) and expand its charge to identify additional Medicaid efficiencies and program redesign.
• The state should curtail unproductive economic development programs to strengthen New York's future.

Key Data

• $7 billion — Annual new revenue generated by proposed tax increases on high income earners and businesses.
• $3.7 billion — Amount by which revenues for the current and next two fiscal years are projected to be higher than before the pandemic.
• $9.6 billion — Projected state surplus over the next 2 years if the Executive Budget is adopted as is.
• 16.49 percent — Current combined State, City, and MTA tax rate for New York City businesses.
• $1.2 million — Average amount paid to both the State and City by New Yorkers who earn over $10 million annually.
• 7.1 percent — Proposed increase in total school aid for school year 2021-22 using funds from the December federal relief package.

Recommendations related to State Tax Policy

• New York State should balance its budget without increasing personal income taxes or delaying the middle class tax cut.
• The State should pursue eliminating unproductive economic development spending to balance the budget.
• The State should focus on appropriately financing capital investment as an alternative to tax increases.
• The State should prioritize targeting education aid to low wealth school districts to improve fiscal footing.

Key Data

• $6 billion — Additional federal aid estimated in the 'worst case' scenario.
• $1.6 billion — Annual increase in tax receipt projections.
• 20 percent — Portion of the State Operating Funds budget financed by the top 1 percent of earners.

Recommendations related to State Tax Policy

• The State should focus its capital investments on the most critical projects during this period.
• If the State reduces its planned capital disbursements by 10 percent and finances up to 50 percent of the remaining paygo capital spending with debt, it would save $1.6 billion in fiscal year 2022.
• A 50 percent reduction in proposed economic development capital spending plus financing 50 percent of the remaining paygo spending with debt would yield another $713 million in fiscal year 2022.
• The State should smooth the year-to-year fluctuations in aid to avoid a sudden drop-off.
• The overall distribution approach should focus on directing aid to high need districts and reducing aid to wealthier districts.

Key Data

• $1.6 billion — Projected savings in fiscal year 2022 from reducing planned capital disbursements by 10 percent and financing 50 percent of remaining paygo capital spending with debt.
• $713 million — Projected yield in fiscal year 2022 from a 50 percent reduction in proposed economic development capital spending combined with financing 50 percent of remaining paygo spending with debt.
• $1.5 billion — Estimated tax revenue generated in fiscal year 2022 by the proposed temporary personal income tax surcharge on high-income earners.
• 14.7 percent — The combined top marginal tax rate in New York, which would be the highest in the nation if the proposed surcharge is enacted.
• 20 percent — The portion of the State Operating Funds budget financed by the top 1 percent of income taxpayers through income taxes.
• $1.2 million — The average personal income tax liability for taxpayers with taxable income over $10 million.

Recommendations related to State Tax Policy

• The State should balance this year’s budget without long-term borrowing for operating expenses.
• The amount used for borrowing should be limited to what is needed after the State exhausts other gap-closing strategies and uses new federal aid to reduce budget gaps.
• Borrowing should not be used to increase state operating spending, inclusive of any federal stimulus aid, more than 2 percent or the inflation rate, whichever is lower.
• Borrowing should be part of a comprehensive and feasible multiyear plan that leads to fiscal stability and is presented in accordance with GAAP.
• The State Comptroller should assess whether the fiscal stability plan is realistic and feasible, and approve each instance of borrowing for operations only if it comports with a realistic and feasible plan.
• The State should adopt, in law and practice, fiscal integrity and transparency measures that include the transition to an annual State operating funds budget that is balanced in proposal, adoption and at year end in accordance with GAAP.

Key Data

• $11 billion — The amount of debt the State is proposed to have the authority to issue for operations.
• $1.7 billion — The amount of Medicaid payments the State shifted by three days to appear to spend less in fiscal year 2019.
• 2 percent — The maximum permissible levy increase set by the local property tax cap, which also serves as a limit for borrowing increases.
• $8 billion — The amount of short-term debt the Fiscal Year 2022 Executive Budget proposes re-authorization for.
• $3 billion — The amount of a line of credit for state agencies proposed in the Fiscal Year 2022 Executive Budget.

Recommendations related to State Tax Policy

• The State should adopt other less harmful measures before considering personal income tax increases.
• The State should reduce aid to wealthy school districts as an alternative to tax increases.
• The State should eliminate wasteful economic development spending instead of raising taxes.
• The State should shift cash spending on capital projects to debt to avoid tax hikes.
• The State should pursue structural spending reforms to ensure finances are stable rather than relying on tax increases.

Key Data

• $6 billion — Baseline assumption of federal aid included in the Executive Budget.
• $15 billion — Amount of federal aid the State hopes to receive to wipe out near-term deficits.

Recommendations related to State Tax Policy

• The Executive Budget should present a plan to close the entire State budget gap if it does not receive federal aid.
• Any proposal for recreational marijuana legalization should be realistic about the timing of revenue, and avoid dedicating revenue to uses beyond programs related to the consequences of use.
• The Executive Budget should increase use of debt to finance capital expenses and limit capital expenses to investments that are necessary to maintain critical infrastructure, preserve public health and safety, and provide demonstrable economic benefits.
• New York State should focus its scarce resources on those districts that lack the local resources to fund a sound basic education.
• The State should avoid balancing this year’s budget using cost shifts or revenue intercepts that harm local governments.
• The State should not convert the $3.5 billion in short-term debt to long term debt.

Key Data

• $8.2 billion — Budget gap in the current year reported in the October Mid-Year Financial Plan Update.
• $16.7 billion — Budget gap in fiscal year 2022.
• $1.6 billion — Annual school aid going to wealthy districts that already spend enough local revenues to fund a sound basic education.
• $200 million — Sales tax revenues intercepted from New York City in recent years to offset Medicaid expenses.
• $3.5 billion — Short-term debt that the State reportedly plans to repay within this fiscal year.
• $7 billion — Total amount of New York's rainy day funds, Economic Uncertainties Fund, and other reserves.

Recommendations related to State Tax Policy

• State leaders should be cautious about relying on potential marijuana revenues to help close budget gaps.
• Any future revenue should be received and spent on-budget, not through off-budget trusts or other fiscal gimmickry.
• The revenue should not be committed to a specific purpose and should be used for recurring operating budget purposes.
• New York should be pragmatic in estimating revenues from legalized marijuana.
• New York should be transparent on the sources and uses of marijuana tax revenues.

Key Data

• $341,691,001 — Colorado recreational marijuana revenue in the most recent year.
• $395,523,567 — Washington recreational marijuana revenue in the most recent year.
• $225,543,653 — Alaska recreational marijuana revenue in the most recent year.
• $142,517,466 — Oregon recreational marijuana revenue in the most recent year.
• $764,000,000 — California recreational marijuana revenue in the most recent year.
• $68,750,000 — Massachusetts recreational marijuana revenue in the most recent year.

Recommendations related to State Tax Policy

• Policymakers should leave the stock transfer tax dormant and find alternative ways to fill the budget gap.
• New York’s leaders should reject proposals to revive the stock transfer tax.

Key Data

• $8 billion — The current budget gap facing New York State.
• $17 billion — The expected budget gap for New York State in the coming year.
• $13 billion — The amount advocates claim the stock transfer tax could yield in annual revenue.
• $4 billion — The amount the stock transfer tax would have yielded in fiscal year 2020.
• $27.3 billion — The pre-tax profits of the securities industry in New York City in 2018.
• 18 percent — The share of State tax collections accounted for by the securities industry in fiscal year 2020.

Recommendations related to State Tax Policy

• The State should stop awarding from future year allocations to ensure caps effectively limit state liability.
• The State should stop spreading claims over 3 years to reduce the delay between job creation and state financial impact.
• The State should decrease the credit substantially to 10 percent of qualified costs and eliminate the annual cap to reduce program costs.
• The State should further decrease the share of expenses that can be claimed in New York City to push production to areas with greater economic development needs.
• The State should continue to decrease the film tax credit until the program is eliminated to help stabilize state finances.

Key Data

• $7.8 billion — Total tax incentives allocated to the film and television industry since 2004.
• 9.7 percent — New York State's unemployment rate during the economic downturn.
• $9 billion — The size of the state's budget gap.
• $19 billion — Projected annual deficits in fiscal year 2023.
• 25 percent — The rate of the refundable film tax credit provided by New York.
• $420 million — The annual cap on the film tax credit through 2025.

Recommendations related to State Tax Policy

• Policymakers should leave the stock transfer tax dormant and find alternative ways to fill the budget gap.
• New York’s leaders should reject proposals to revive the stock transfer tax.

Key Data

• $17 billion — The projected budget gap for New York State in the coming year.
• $4 billion — The amount the stock transfer tax would have yielded in fiscal year 2020, which is only a third of advocates' estimates.
• 18 percent — The portion of State tax collections accounted for by the securities industry in fiscal year 2020.
• $13 billion — The amount advocates claim the stock transfer tax could yield in annual revenue.

Recommendations related to State Tax Policy

• New York could limit its sales tax exemptions on residential energy, which currently apply to fossil fuels, to zero-emission fuels and renewable energy sources.
• The state could tailor existing tax incentives to incorporate renewable energy, such as excluding heating systems that rely on fossil fuels from economic investment tax credits.
• The state should align spending decisions and tax policies that work at cross purposes with the CLCPA’s goals to advance all New Yorkers towards a clean energy future.

Key Data

• $800 million — Potential annual savings for the state from adjusting tax policies and fiscal choices.
• $200 million — Amount spent by New York on utilities, such as heating and cooling, in fiscal year 2019.
• 7,000 — Number of vehicles in the government fleet that could be converted to electric.

Recommendations related to State Tax Policy

• Reducing school aid to wealthy districts can be used to close the $8 billion gap.
• Financing capital projects with bond proceeds rather than on a pay-as-you-go basis can be used to close the $8 billion gap.
• Eliminating unproductive economic development spending can be used to close the $8 billion gap.
• Walking back tax policy expenditures can be used to close the $8 billion gap.
• The plan should not rely on fiscal maneuvers and accounting shifts that have obscured spending growth and exacerbated budget pressures.

Key Data

• $58 billion — Projected budget gaps for the New York State budget over the next four years.
• $8 billion — Amount in unidentified budget balancing actions or spending reductions needed annually.
• $102.2 billion — Reported fiscal year 2020 spending following the April update to the financial plan.
• $1.7 billion — Medicaid payments deferred into fiscal year 2020, which the State plans to increase back to this level in fiscal year 2021.
• $726 million — Additional federal Medicaid funding expected as of July 1, 2020.

Recommendations related to State Tax Policy

• The state should curtail $4.4 billion in economic development spending that has demonstrated little impact, particularly in upstate communities.
• The state should eliminate $1.6 billion in aid to school districts with more than enough local resources to fund a sound, basic education.
• The state should utilize $3.5 billion in rainy day funds to help balance the budget.
• The state should finance $3 billion in capital investments through bonds instead of cash.
• The state should delay the Jan. 1, 2021 personal income tax cut as part of a sustainable, comprehensive, and balanced package.
• The state should suspend the sales tax exemption on clothing as part of a sustainable, comprehensive, and balanced package.

Key Data

• $1.6 billion — Aid provided to school districts with more than enough local resources to fund a sound, basic education.
• $4.4 billion — Spending on economic development that has demonstrated little impact, particularly in upstate communities.
• $3.5 billion — Available rainy day funds that can be used to balance the state budget.
• $3 billion — Capital investments that can be financed through bonds instead of cash.

Recommendations related to State Tax Policy

• Improving the fiscal outlook for both the State and the City primarily requires controlling expenditures and advocating for federal aid.
• Any consideration of tax increases should include the impact on State and local economic competitiveness.
• As New York’s leaders look to close budget gaps, they must be cognizant that combined State and City PIT rates are the second highest in the nation, while combined CFT rates are the highest.

Key Data

• $8 billion — Potential budget gap for New York State in fiscal year 2021.
• $15 billion — Potential budget gap for New York State in fiscal year 2022.
• 16.49 percent — The total effective corporate franchise tax rate for businesses operating in New York City.
• 12.696 percent — The combined top personal income tax rate imposed on married couples in New York City.
• $1.4 billion — The amount of additional tax revenue New York could have generated if its share of national millionaire capital gains had remained at 2010 levels.
• $6.9 billion — Potential budget gap for New York City in fiscal year 2022.

Recommendations related to State Tax Policy

• The Governor and Legislature should quickly enact a “bare bones” budget that supports the estimated pandemic response need.
• State leaders should not consider tax increases at this time, as New York’s already high taxes and the federal cap on state and local tax deductions risk the state's competitiveness.
• The Governor and Legislature should plan for the eventuality that this budget will have to be revised in the coming months as more information becomes available about the economic and fiscal impacts of the pandemic.
• The state should leverage and continue the work of the Medicaid Redesign Team (MRT) to design appropriate responses to the program's unsustainable expenditure growth.
• The state should appropriately use emergency federal aid to replace lost tax revenues or support the pandemic response, rather than substituting it for necessary structural Medicaid reforms.

Key Data

• $4 billion — Estimated revenue shortfall below Executive Budget projections.
• $7 billion — Potential revenue decline due to recession or stock market drops.
• $34 billion — Potential state revenue shortfall over three years based on previous recessions.
• $18 billion — Unbudgeted Medicaid expenditure growth contributing to the state's five-year budget gap.
• $35 billion — Total five-year budget gap for the state.
• $4.5 billion — Potential relief provided through a temporarily increased federal share for Medicaid.

Recommendations related to State Tax Policy

• HCRA tax increases should be avoided as a strategy for balancing the Medicaid budget because that action increases the cost of health insurance premiums and likely depresses wage growth for a majority of New Yorkers.
• Lawmakers should review HCRA’s role in health care funding and its impact upon privately insured New Yorkers.

Key Data

• $6 billion — Annual revenue generated by the Health Care Reform Act (HCRA).
• 4.3% — Combined impact of the Surcharge and Covered Lives Assessment on commercial health insurance premiums.
• $1,000 — Statewide average annual cost of HCRA taxes for a family health insurance plan.
• 80% — Portion of HCRA revenue used in recent years to pay for the State’s share of Medicaid.
• $700 million — Annual amount the State government pays via HCRA taxes.
• $557 million — Annual share of Surcharge revenue paid by the federal government.

Recommendations related to State Tax Policy

• The State should not raise health care taxes, as these are passed on to New Yorkers as higher health insurance premiums.
• The State should make the Global Cap global by including all spending, ensuring all Medicaid costs are accounted for and managed within the cap.
• The State should make the Global Cap a cap by following accounting principles, specifically using a modified accrual basis to prevent payment deferrals.
• The State should choose the right cap by indexing Medicaid spending to the rolling average of medical inflation to provide appropriate discipline.
• The State should adhere to and improve the law requiring Medicaid spending transparency by publishing monthly reports and enhancing their content.
• The State should target supplemental payments based on need to promote equity and reduce total costs among hospitals.

Key Data

• $2.5 billion — The MRT's goal for State-share Medicaid savings.
• $1.7 billion — Amount of payments deferred for three days into the next fiscal year to adhere to the Cap in fiscal year 2019.
• $500 million — Cost for the health homes care coordination model in the first five years.
• $1,000 — Annual increase in health insurance premiums paid by the average commercially insured family in New York due to healthcare taxes.
• 44.1 percent — Share of the Global Cap budget comprised by long-term care in fiscal year 2015.
• 47.6 percent — Estimated share of the Global Cap budget comprised by long-term care in the last year.

Recommendations related to State Tax Policy

• The State should maintain competitiveness by not increasing taxes.
• The State should avoid tax increases, including health care taxes, to keep health insurance affordable.
• The State should further reduce the film tax credit by decreasing the share of eligible expenses in 5 percentage point increments until it is completely phased-out.
• The State should evaluate the cost-effectiveness of the Excelsior Jobs Tax Credit program before granting a long-term extension.

Key Data

• $38.6 billion — Total budget gaps over five years, of which more than $18.0 billion was due to previously unbudgeted Medicaid spending.
• 37 percent — Share of personal income tax revenues paid by the top 1 percent of personal income tax filers.
• $7.3 billion — Total authorized subsidies to the film and television industry since the enactment of the State film tax credit in 2004.
• $1.0 billion — Projected revenue increase to help close the fiscal year 2020 deficit.
• $2.1 billion — Projected revenue increase in fiscal year 2021.
• $420 million — Increase in the total allocation for the film tax credit proposed in the Executive Budget.

Key Data

• 71% — New York City taxpayers provide <b>71 percent</b> of the MTA’s non-fare and toll, nonfederal revenue through a combination of local, regional, and State taxes.
• $1.7 billion — In 2018, City taxpayers contributed nearly <b>$1.7 billion</b> of their own tax revenue to the MTA through the City budget.
• 93% — In 2020, City taxpayers will pay <b>93 percent</b> of the new funding sources enacted by the State to support the MTA.
• $5.5 billion — State-authorized taxes allocated to the MTA totaled <b>$5.5 billion</b> in 2018.

Recommendations related to State Tax Policy

• As the Legislature considers the budget and its wish list, it should be mindful that spending already is larger than it appears.
• The State should avoid shifts and reclassifications that undermine transparency and make year-to-year comparisons challenging.
• The State must identify concrete plans to achieve the $2.5 billion in Medicaid savings rather than relying on unspecified cuts to meet the spending growth benchmark.

Key Data

• $2.5 billion — Medicaid savings that have yet to be identified.
• 4.2 percent — SOF spending increase absent the $2.5 billion in Medicaid savings.
• $6.2 billion — Amount the fiscal year 2021 budget would be lower if the State had held spending growth to 2 percent annually since fiscal year 2017.
• $110.4 billion — Total proposed SOF spending in fiscal year 2021.
• $4.5 billion — Disbursements being shifted out of fiscal year 2021 SOF spending.
• $1.9 billion — Reduction in reported SOF spending in fiscal year 2021 due to shifting MTA taxes off-budget.

Recommendations related to State Tax Policy

• The State should hold the line on taxes to avoid undermining its competitive position, as increasing personal income taxes on the wealthy would make New York less competitive.
• The State should not use gimmicks that inappropriately balance the budget, such as shifting expenses onto local governments, into future fiscal years, or off-budget.
• The State should include GAAP-basis financial statements in the Executive Budget, 30-day amendments, Enacted Budget, and Mid-Year Update to provide important insights into the State’s financial position.
• The State should reconstitute the Medicaid Redesign Team to identify savings that can be quickly implemented and those that can significantly restrain costs over time.
• The State should target increases in State education aid to those districts that lack the funding to provide a Sound Basic Education, rather than providing aid to wealthy districts that already have sufficient local resources.

Key Data

• $28.8 billion — The cumulative budget gap over four years from fiscal year 2020 to fiscal year 2023.
• 48 percent — The amount by which New York's combined state and local tax burden is higher than the national average.
• 37 percent — The approximate share of all personal income taxes paid by taxpayers with incomes in excess of $1 million.
• $1.7 billion — The amount of the fiscal year 2020 budget gap that must be closed in the next three months.
• $1.6 billion — The amount of state aid provided to wealthy school districts that already have sufficient local resources to deliver a Sound Basic Education.

Recommendations related to State Tax Policy

• Only projects tied to an established regional or State strategy should be eligible for economic development-related financial assistance.
• The REDC process should utilize quantifiable criteria by which target industries are identified.
• REDCs should focus projects in major population centers—the anchor metropolitan areas in a given region—where projects are more likely to contribute to the development of sustainable industry clusters.
• The State should establish standardized metrics for regional performance and require project-level reporting on progress, employment, and spending.
• The REDCs’ project scores should count as a greater proportion of the total assessment.

Key Data

• $6.2 billion — Total State grants, tax credits, and other funding allocated since the REDCs’ 2011 inception.
• $773 million — Average annual funding allocated by the State through REDCs since 2011.
• $4.4 billion — Total State spending on economic development in 2018, including direct expenditures and forgone tax revenue.
• $2.5 billion — State economic development-related tax expenditures in 2018.
• 58 percent — Share of all State economic development costs represented by tax expenditures in 2018.
• $1.5 billion — Amount awarded by the Upstate Revitalization Initiative (URI) in 2015.

Recommendations related to State Tax Policy

• Better target Medicaid supplemental payments to H+H and other facilities with the greatest need, and finance the nonfederal portion of these payments with State revenues rather than local intergovernmental transfers.
• Use more equitably the surplus operating revenue earned by large networks from commercial insurers to cross subsidize indigent care on a system wide as well as an intra-institutional basis.
• Better align Medicaid hospital payment rates to reasonable unit costs of services, and fund with better use of Medicaid supplemental payments, more equitably allocated high commercial insurance payments and other broad based sources.
• Reducing reliance on local tax funds and increasing reliance on the broader based statewide tax base would make these programs more equitably financed and lower the local subsidy.
• Financing redistributive activities such as care for the indigent is more appropriately done from state and federal tax bases rather than local sources.

Key Data

• $1.1 billion — The City provides the nonfederal share of most of its supplemental payments; this is about $1.1 billion annually and comprises a major portion of the local subsidy.
• $5 billion — The State provides about $5 billion annually in supplemental Medicaid payments to hospitals (and some ambulatory facilities) with much of the money going to financially distressed hospitals.
• $3 billion — H+H in fiscal years 2015 to 2017 had an average operating deficit—the difference between what is spent on patient services and what H+H is paid for providing those services—of nearly $3 billion.
• $490 million — Benchmarking to Elmhurst’s revenue recovery ratios by service line and by payer would reduce the H+H systemwide deficit by $546 million to $490 million.

Recommendations related to State Tax Policy

• New York should avoid increasing taxes now, as it would make the state more expensive for residents and businesses, decrease competitiveness, and reduce options to weather the next recession.
• The State should hold the line on the State’s already high tax burden rather than enacting additional tax increases.
• While temporary revenue increases may be appropriate to weather a recession, the retention of the PIT surcharge and other recently enacted taxes narrow options to balance the budget soundly in future recessions.

Key Data

• 48 percent — New York's State and local tax burden is higher than the national average.
• 8.82 percent — New York State's top marginal personal income tax (PIT) rate.
• 12.7 percent — The top personal income tax rate for New York City residents.
• 8.49 percent — New York's average combined State and local sales tax rate.
• 1 of every 5 dollars — Portion of state operating spending funded by taxpayers earning more than $1 million annually.

Recommendations related to State Tax Policy

• Move cooperatives and residential condominiums to Class 1 with one-, two-, and three-family homes.
• Valuation for tax purposes should reflect actual real estate market value, using sales-based models for one-, two-, and three-family homes, cooperatives, and residential condominiums.
• Full market value should be the starting point for assessing the tax base, with differential effective tax rates to favor residential properties.
• The existing class share system should be eliminated.
• Stability of the property tax should be achieved by phasing-in market value changes over three years for all parcels.
• To ease burdensome tax bills, rebates of owner-occupied residential property taxes should be provided based on household income when tax bills exceed a set share of income.
• Transition to the new system should occur over a five-year period.

Key Data

• $30 billion — The amount of revenue the property tax will generate in fiscal year 2020.
• 32 percent — The portion of all New York City revenues generated by the property tax in fiscal year 2020.
• $1 out of every $3 — The amount of city spending funded by property tax revenue.
• 6.2 percent — The average annual growth of property tax revenue since fiscal year 1999.

Recommendations related to State Tax Policy

• The State can require Opportunity Funds operating in New York State to report on their activity in order to qualify for state tax benefits.
• The State could require funds to report annually on the value of gains invested by New York State taxpayers in qualified opportunity funds.
• The legislature could limit the types of OZ projects that would qualify for state tax benefits, such as restricting them to residential projects with affordability thresholds.
• The State could limit the number of OZs in which taxpayers could claim state benefits to those that meet the most recent poverty and income criteria.
• The State could decouple fully from the federal Opportunity Zone program to minimize the direct impact on state and local tax revenue.

Key Data

• $63 million — Estimated annual revenue loss for New York State due to the Opportunity Zone program.
• $31 million — Estimated annual revenue loss for New York City due to the Opportunity Zone program.
• $6 trillion — Total amount of unrealized capital gains held by taxpayers nationally.
• $53 billion — Amount that funds intend to raise to invest in Opportunity Zone projects as of August 2019.
• $9.4 billion — Total cost of the Opportunity Zone program for federal tax years 2018 to 2022.
• $866 million — Estimated annual investment in Qualified Opportunity Funds by New York State taxpayers.

Key Data

• $47.1 billion — New York State's personal income tax revenue raised in fiscal year 2015-2016.
• 37.0 percent — Share of total state personal income tax liability accounted for by taxpayers with taxable income of $1 million or more in 2016.
• $15.7 billion — Collective personal income tax liability of New York taxpayers earning $1 million or more in 2016.
• $11.4 billion — New York City's personal income tax revenue in fiscal year 2016.
• 38.9 percent — Share of total New York City personal income tax liability accounted for by filers earning $1 million or more.
• $5.7 billion — Decline in New York State personal income tax revenue in fiscal year 2009.

Recommendations related to State Tax Policy

• Governor Cuomo should veto the three economic development bills identified in the scorecard to avoid unnecessary fiscal impacts on the state.

Key Data

• $275 Million — Fiscal impact of making real property owned by small businesses eligible for the STAR property tax exemption.
• $140 Million — Fiscal impact of extending the zero-percent Corporate Franchise Tax rate to qualified pass-through manufacturers.
• $100 Million — Fiscal impact of the new tax credit for music and video game production costs.
• $30 Million — Fiscal impact of increasing the Farm Workforce Retention Credit per eligible farm employee.
• $10 Million — Fiscal impact of establishing the GrowNY pilot program for economic gardening.
• $8.25 Million — Fiscal impact of establishing the Capital Investment Jobs Retention Program.

Key Data

• 4.9 percent — Projected State Operating Funds spending growth in fiscal year 2020.
• $4.7 billion — Total amount shifted out of fiscal year 2020 State Operating Funds spending through various accounting maneuvers.
• $1.4 billion — Reduction in reported State Operating Funds spending in fiscal year 2019 resulting from shifting the Metropolitan Commuter Transportation Mobility Tax off-budget.
• $1.24 billion — Amount by which State Operating Funds spending appears lower due to the reclassification of School Tax Relief benefits.

Recommendations related to State Tax Policy

• The State should implement a State mandate requiring individuals to have insurance to increase coverage and lower uncompensated care costs.
• The State should introduce a new, low-cost public plan that a defined population of individuals and groups could purchase at their own expense.
• The State should pursue increased use of mechanisms that promote competition and transparency, such as reference pricing and value-based provider payments.
• The State could explore expanding insurance subsidies to noneligible immigrants and to those earning between 200 percent and 400 percent of the federal poverty level, provided the costs are offset by savings elsewhere in the budget.
• The State could pilot a geographic global budget by paying a coalition of providers a lump sum to care for the population in their area.

Key Data

• 156 percent — The minimum tax increase required to fund the New York Health Act.
• $139 billion — The total tax increase required in the first year of the New York Health Act.
• $210 billion — The annual tax increase required within 10 years of the New York Health Act.
• $33.5 billion — The annual tax revenue the State would lose if just 0.5 percent of top-bracket filers left New York.
• $119 billion — The projected annual funding required for the New York Health Act in 2022.
• $179 billion — The projected annual funding required for the New York Health Act in 2031.

Recommendations related to State Tax Policy

• New York should phase in implementation to allow the public sector to build expertise in a new area of revenue generation.
• The state should maintain flexibility to accommodate new technology rather than committing to a single, proprietary platform.
• Policymakers should establish rates that vary by type of vehicle and location to account for differing impacts on infrastructure and the environment.
• The state should execute a clear and transparent rate-setting process so that motorists understand how, when, and at what rate a fee is being imposed.
• New York should use the VMT fee as an addition to existing sources to help remedy the mismatch between available highway revenues and needed annual expenditures.

Key Data

• $5.7 billion — The amount of annual investment required for the State to achieve a state of good repair on its assets.
• 37 percent — The portion of necessary repair work on state assets that is currently deferred.
• 51 percent — The reduction in the inflation-adjusted per-mile direct cost to motorists who travel on State roadways since 1993.
• $1 billion — The estimated annual revenue yield from an average per-mile fee of 1 cent based on 2016 travel data.
• 1.5 cents — The per-mile fee charged to participants in Oregon's OReGO pilot program.
• 95 percent — The E-ZPass market share for weekday transactions on Triborough Bridge and Tunnel Authority entities as of May 2018.

Key Data

• $140 Million — Fiscal impact of extending the zero-percent Corporate Franchise Tax rate to qualified pass-through manufacturers.
• $30 Million — Fiscal impact of increasing the Farm Workforce Retention Credit per eligible farm employee.
• $275 Million — Fiscal impact of making real property owned by small businesses eligible for the School Tax Relief (STAR) property tax exemption.
• $100 Million — Annual cap on the new tax credit for music and video game production industries.
• $10 Million — Annual grant authorization for the GrowNY pilot program to provide technical assistance to growing businesses.
• $8.25 Million — Fiscal impact of the Capital Investment Jobs Retention Program, a refundable tax credit for eligible businesses.

Recommendations related to State Tax Policy

• The City should adopt the paper carryout bag fee to realize the fiscal and environmental benefits of sharply reducing the number of single-use bags from the waste stream.
• The City should support legislation to authorize the 5-cent fee on paper carryout bags, which would take effect on March 1, 2020, concurrent with the statewide plastic bag ban.

Key Data

• 71,000 tons — Amount of plastic bags in the City’s residential waste stream, representing about 2 percent of the total.
• $12.1 million — Annual cost to landfill plastic bags.
• 500 years — Time it takes for plastic bags to decompose.
• 94 percent — Reduction in single-use bags achieved in Los Angeles following a similar fee effort.
• 40 percent — Portion of revenue collected in New York City that will be returned to the City to buy and distribute reusable bags.
• 60 percent — Portion of revenue collected in New York City that will be deposited in the State Environmental Protection Fund.

Key Data

• $1 billion — Annual revenue expected from the congestion pricing program.
• $15 billion — Capital investment in the MTA's 2020-2024 Capital Plan supported by congestion pricing.
• $365 million — Annual revenue expected from the two newly enacted real estate transfer tax surcharges.
• $5 billion — MTA capital needs expected to be supported by the new real estate transfer tax surcharges.
• $1.685 billion — Total annual yield estimated from all new revenue resources.
• $25 billion — Total MTA capital plan financing expected to be provided by the new revenues.

Recommendations related to State Tax Policy

• The state should phase out the personal income tax surcharge on wealthy taxpayers to soften the impact of the federal cap on state and local tax (SALT) deductions and preserve revenue options for future recessions.
• It is critical to limit fee exemptions for the congestion pricing program to preserve projected revenues and traffic reduction.
• State leaders should restrain spending growth and increase the State's rainy day funds to prepare for potential fiscal imbalances.
• The state should avoid mandating the use of design-build contracting on all projects greater than $25 million, as it may be counterproductive and the waiver process is burdensome.

Key Data

• $34 billion — Three-year potential gap in a recession.
• $1.3 billion — Cost of the property tax relief credit in fiscal year 2020.
• $840 million — Amount added to the film tax credit.
• $500 million — Imbalance threshold for cutting local aid.
• $3 billion — Size of the Rainy Day Reserve fund.

Recommendations related to State Tax Policy

• The Governor and legislature should develop and advance a comprehensive proposal this year, one that raises sufficient revenues to reduce transportation funding shortfalls and to support additional mass transit service to meet the needs of those drivers who choose to switch modes.
• Long-term the State should shift away from fuel taxes toward a more sustainable VMT fee.
• New York ought to prepare for the continued erosion of revenues, and it should consider user fees that supplement fuel taxes.
• The State needs to begin the thoughtful process to develop a VMT fee.
• Increasing current motorist user fees can yield significant resources but must be balanced with maintaining the state’s competitiveness.

Key Data

• $3.6 billion — Annual transportation revenues collected by New York State from motorist user fees.
• 17 percent — Decrease in the amount of fuel tax per mile driven in New York since 1993.
• 18.5 percent — Portion of New York's share of the National Highway System with pavement considered 'Rough' or 'Very rough'.
• 55 percent — Amount by which the 1993 fuel tax rate would exceed the current combined rate if it had kept up with inflation.
• 15 percent — Decrease in fuel tax raised per vehicle-miles traveled (VMT) between 1993 and 2018.
• $1.2 billion — Potential annual revenue generated by a vehicle-miles traveled (VMT) fee charged at a rate of 1 cent per mile.

Recommendations related to State Tax Policy

• The state should eliminate film and production tax credits to generate savings for reinvestment.
• The state should reduce ESD discretionary capital spending by half to improve fiscal efficiency.
• The state should consider targeted safety net enhancement for poor and low-income workers, such as an enhancement of the Earned Income Tax Credit.
• The state should implement a stricter prioritization of projects based on potential return on investment to allow for sustained investment.
• The state should align funding with regional strategies to focus on projects in thriving industries and large cities to foster agglomeration effects.
• The state should strengthen SUNY partnerships with REDCs to develop and assess training programs.
• The state should provide resources to scale up effective SUNY programs and those geared toward areas of projected job growth.

Key Data

• $570 million — Savings from eliminating film and production tax credits.
• $570 million — Savings from reducing ESD discretionary capital spending by half.
• $1.1 Billion — Total available for reinvestment from eliminating ineffective expenditures.
• $175 million — Allocation in the NYS FY2019 budget for workforce training.
• $750 million — Annual awards to regional projects based on REDC rank and State agency score.
• 14.3% — New York's poverty rate, which is now greater than the national rate of 13.9%.

Recommendations related to State Tax Policy

• The State should restrain spending growth, avoid one-shot gap-closing actions, and bolster its rainy day funds.
• The State should hold spending growth to 2 percent to help close budget gaps.
• The State should increase education aid only to those districts that need additional State resources to fund a sound basic education as defined by the Foundation Aid formula.
• The property tax relief credit set to expire after calendar year 2019 should be repealed to reduce the fiscal year 2020 deficit.
• The State should decrease State economic development programs that have not been proven effective, including the film tax credit.
• The State should resist increasing broad-based taxes which can be counterproductive, especially given the SALT cap.
• The State should eliminate the appropriations connected to unused settlement funds and dedicate them to rainy day funds.

Key Data

• $2.3 billion — Shortfall in January personal income tax collections reported by the Governor.
• $1.45 billion — Savings achieved in fiscal year 2020 by holding spending growth to 2 percent.
• $500 million — Potential savings from increasing education aid only to districts that need additional resources.
• $1 billion — Amount by which the fiscal year 2020 deficit would be reduced by repealing the property tax relief credit.
• $2.9 billion — Total of allocated but unused settlement funds that could be dedicated to rainy day reserves.
• $2.3 billion — Total of existing rainy day reserves under the Governor’s budget proposal.

Recommendations related to State Tax Policy

• In order to appropriately fund the State’s infrastructure needs, New York will require more funding from its existing funding sources and should pursue alternate funding sources, such as congestion pricing and value capture.
• New York should consider implementing a pilot vehicle-mile-traveled (VMT) program as an alternative to the gas tax.
• The Office of Infrastructure should articulate set of criteria to prioritize infrastructure investment, aligned with statewide policy objectives and needs.
• The Office of Infrastructure should create a Center of Excellence for state infrastructure investment with the objectives to tackle cost drivers, assess and recommend the most appropriate project delivery, and encourage and facilitate knowledge sharing across entities.
• The Office of Infrastructure should be a clearinghouse for project transparency and reporting, providing a single access point for capital infrastructure projects statewide.

Key Data

• $100 billion — Estimated new investment required to meet New York State's infrastructure needs.
• $2.5 billion — Funding provided by the Clean Water Infrastructure Act for drinking water, wastewater, and water protection infrastructure.
• $1.58 billion — Gross revenue generated by London's congestion pricing from 2003 through 2013.
• $950 million — Annual revenue that could be raised by a 2% Infrastructure Resiliency Charge.
• $0.45 — The current gas tax rate per gallon in New York.

Recommendations related to State Tax Policy

• Recreational marijuana revenues should not be included in the State financial plan until the very complicated steps of crafting the statute and regulations have been completed; budgeting should not rely upon best guesses or optimistic assumptions.
• It is better to under-forecast revenues and have a surplus than be overly optimistic and create a deficit.
• Any future revenue should be received and spent on-budget, not through off-budget trusts or other fiscal gimmickry.
• The revenue should not be committed to a specific purpose.
• If New York does implement such a program, the associated revenue must be cautiously forecast, transparently disbursed, and utilized for general state operating purposes.

Key Data

• $430 million — Washington State marijuana tax revenue collected in fiscal year 2017.
• $82 million — California tax revenue received in the first six months of recreational marijuana sales.
• $185 million — Projected tax revenue for California in the first six months of recreational marijuana sales.
• $700 million — New York State Department of Health estimate of potential annual tax revenue from marijuana legalization.
• $110 million to $428 million — Range of revenue estimates for a hypothetical excise tax in New York.
• $33 million — Estimated reduction in New York State alcohol tax revenues due to legalized marijuana.

Recommendations related to State Tax Policy

• The Legislature should closely scrutinize an increase in the Excelsior Jobs Program cap to ensure it does not exceed legislatively set limits.
• New York State should implement a cap on the level of wages eligible for the Excelsior credit to avoid paying benefits for the salaries of high-earning executives.
• State capital funding should be invested in general infrastructure rather than used for discretionary capital grants that benefit individual companies.
• City and state officials should reevaluate tax expenditures to ensure benefits are only spent to induce job creation that would not otherwise occur.
• Capital investment should be considered alongside citywide needs through the regular budgetary process rather than diverted to specific neighborhood funds.

Key Data

• $1.5 Billion — Amount in tax breaks and grants offered by New York State to Amazon.
• $1.3 Billion — Amount in benefits offered by New York City to Amazon.
• $2.8 Billion — Total combined state and city incentives offered to Amazon for the headquarters project.
• $3.5 Billion — Potential combined state and city incentives if Amazon creates 40,000 jobs and 8 million square feet of office space.

Recommendations related to State Tax Policy

• Excelsior should not be expanded to accommodate the needs of a single company, as doing so sets a concerning precedent that programs will be broadened to be too generous and insufficiently targeted.
• Caps to the level of wages eligible for reimbursement under the Excelsior jobs program would minimize the State’s financial exposure.
• State capital funding is best invested in general infrastructure, not for the direct benefit of an individual company.
• Amazon should pay the full value of the PILOT directly to the City rather than diverting some funds to the surrounding neighborhood.
• New York City’s as-of-right tax incentives should be reconsidered, evaluated, and potentially narrowed or eliminated to ensure benefits are only spent to induce job creation that would not otherwise occur.

Key Data

• $2.8 billion — Total benefits available to Amazon from New York State and City if 25,000 jobs are created.
• $3.5 billion — Total benefits available to Amazon from New York State and City if 40,000 jobs are created.
• $1.2 billion — Maximum Excelsior tax credits Amazon can receive over a ten-year period.
• $386 million — Estimated total of the ICAP property tax abatement.
• $505 million — Total capital grant amount available to Amazon from Empire State Development.
• $900 million — Potential total REAP credit by 2039 assuming the creation of 25,000 jobs.

Key Data

• 30.5% — Total tax collections increase since fiscal year 2011.
• 8.82% — Top personal income tax rate in 2017.
• 20th — New York's rank for state taxes per $100 of income as of 2015.
• 6.5% — Corporate franchise tax rate following reforms.
• $2 Million — Threshold for the top personal income tax rate for married filing jointly in 2017.

Recommendations related to State Tax Policy

• It is time for New York to adopt measures that will completely eliminate the required local share of Medicaid.
• The State should design a way to eliminate the mandated local share in a reasonable time period.
• A requirement could be placed on counties to reduce their property tax levies in concert with the local takeover.
• Takeover proposals need to include provisions for the continued exclusion of these additional payments from the takeover.
• The State will likely have to exempt local takeover costs from the Medicaid Global Cap or exempt them in a way similar to other episodic costs.

Key Data

• $7.6 billion — The frozen annual local share of Medicaid statewide.
• $15 billion — The amount saved by local districts from fiscal year 2005 through fiscal year 2018 due to the cap and freeze of Medicaid local share growth.
• 8.6 percent — The average portion of local districts' gross expenditures consumed by the Medicaid local share in 2016.
• $3.3 billion — The annual cost of the School Tax Assessment Relief (STAR) program, which could be eliminated to help fund a state takeover.
• $675 million — The amount of enhanced federal Medicaid funding from the Affordable Care Act passed down by the State to local districts.
• $7 billion — The amount local districts currently pay for Medicaid services annually after accounting for ACA funding.

Recommendations related to State Tax Policy

• The State should estimate conservatively revenue benefits from sports betting because it is difficult to predict how much illicit activity will transition to the legal market.
• Legislators should ensure taxes are designed thoughtfully in a competitive marketplace to avoid discouraging operators from entering the local market.
• Policymakers must ensure sports betting’s potential impact on other gambling revenues is considered to avoid cannibalizing existing revenue streams like state lotteries.
• Legislation should take into account that gambling taxes are regressive and that increased gambling prevalence will impose social costs like crime and bankruptcy.

Key Data

• $150 billion — Estimated annual illegal sports betting market in the United States.
• $2.8 billion to $8.7 billion — Estimated portion of the illegal sports betting market comprised by New York.
• $155 million to $475 million — Forecasted Gross Gaming Revenue for New York.
• 8.5 percent — Proposed state tax rate on gross sport wagering revenue in New York legislation.
• $3 billion — Annual revenue generated by state run lotteries for education aid in New York.
• $3.5 million — Amount allocated in the Fiscal Year 2019 Enacted Budget for problem gambling services.

Recommendations related to State Tax Policy

• Expanding the proposed UBT to include S-corporations and sole proprietors, and conforming the UBT income apportionment formula as closely as feasible to each business organizational form’s existing formula for sourcing revenues under the personal income tax.
• Making the UBT optional by an election at the entity level to reduce risk to the taxpayer by providing choice.
• Preserving the proposed 5% rate, which combined with the 93% credit would provide significant benefit.
• Preserving the proposed 93% personal income tax credit, which combined with the 5% rate will provide significant benefit.
• Expressly reflecting in law that the UBT is not added back for taxable State income purposes to ensure it is not treated as an addition to an individual partner’s or member’s federal adjusted gross income.
• Making the UBT credit non-refundable to reduce the risk of a legal challenge to the tax.
• Modifying statutory language to strengthen the case for deductibility by expressly stating that the UBT is a tax imposed on the net business operations of the unincorporated business itself.
• Working with other states to align tax provisions, including credits and apportionment rules, to maximize the UBT’s benefits and minimize cases where taxpayers are disadvantaged.

Key Data

• $10,000 — The federal cap on a taxpayer’s deduction of state and local taxes (SALT cap).
• $500,000 — The suggested threshold for State taxable net income at which to impose the tax for unincorporated businesses.
• 5% — The proposed tax rate for the Unincorporated Business Tax.
• 93% — The proposed personal income tax credit rate to be combined with the 5% business tax rate.

Recommendations related to State Tax Policy

• The Governor should reject the ten economic development bills that create or expand targeted tax incentives, as these measures often lack sufficient economic justification.
• State policymakers should avoid enacting new, narrow tax credits that complicate the tax code and reduce overall revenue without proven broad-based economic benefits.
• Legislators should prioritize broad-based tax reform over the proliferation of industry-specific tax expenditures that favor select businesses.
• The state should subject all proposed economic development tax incentives to rigorous cost-benefit analysis before approval to ensure they provide a tangible return on investment.
• Policymakers should consolidate existing economic development programs rather than creating new, overlapping initiatives that increase administrative complexity.

Key Data

• $140 million — Fiscal impact of the proposed zero-percent Corporate Franchise Tax rate for manufacturers.
• $100 million — Annual fiscal impact of the proposed tax credit for music and video game production industries.
• $25 million — Annual fiscal impact of the proposed tax credit for the video game production industry.
• $20 million — Fiscal impact of the HIRE NY act providing loans for microbusiness hiring.
• $10 million — Fiscal impact of the GrowNY pilot program for economic gardening.
• $7 million — Annual fiscal impact of the Empire State Commercial Production Tax Credit.

Key Data

• $140 Million — Fiscal impact of extending the zero-percent Corporate Franchise Tax rate to qualified pass-through manufacturers.
• $100 Million — Annual cap for the new tax credit for music and video game production costs.
• $65 Million — Increase in funding for the Excelsior Linked Deposit Program.
• $25 Million — Annual cap for the new tax credit for video game production.
• $7 Million — Annual cap for the Empire State Commercial Production Tax Credit.
• $2.5 Million — Appropriation for the I Love NY Outdoor program to promote outdoor recreation.

Key Data

• $1.5 billion — The Metropolitan Commuter Transportation Mobility Tax was shifted to go directly to the MTA, decreasing State Operating Funds spending by $1.5 billion.
• $862 million — New School Tax Relief (STAR) recipients will receive their benefits as a personal income tax benefit instead of a property tax exemption, reducing State Operating Funds spending by $862 million in fiscal year 2019.
• $84 million — The reduction in State Operating Funds spending from the STAR program change is $84 million more than the prior year.
• $3.107 billion — Taken together, shifts and reclassifications will decrease fiscal year 2019 State Operating Funds spending by $3.107 billion.

Key Data

• $440 Million — Total funding increase for the Excelsior Linked Deposit Program.
• $140 Million — Fiscal impact of extending the zero-percent Corporate Franchise Tax rate to qualified pass-through manufacturers.
• $20 Million — Fiscal impact of the HIRE NY act, which provides loans for microbusiness hiring.
• $1.5 Million — Fiscal impact of creating the Microenterprise Development Fund.
• $0.3 Million — Fiscal impact of establishing grants to open and operate bicycle kiosks to promote tourism.
• $0.21 Million — Fiscal impact of creating a pilot program to train and counsel small retail business owners.

Key Data

• $440 Million — Increase in total funding for the Excelsior Linked Deposit Program.
• $200 Million — Amount dedicated to business startups within the Excelsior Linked Deposit Program.
• $140 Million — Fiscal impact of extending the zero-percent Corporate Franchise Tax rate to qualified pass-through manufacturers.
• $20 Million — Fiscal impact of the HIRE NY act providing loans for microbusiness hiring.
• $10 Million — Fiscal impact of the GrowNY pilot program.
• $1.5 Million — Fiscal impact of the Microenterprise Development Fund.

Recommendations related to State Tax Policy

• State officials must vigilantly monitor and assess the effects of these changes on taxpayers and the economy.
• State officials should work to design and adopt an Unincorporated Business Tax for pass-through entities during the Legislative Session.

Key Data

• $1 billion — Unplanned tax increase eliminated by the State’s decoupling from the federal tax code.
• $1.3 billion — Annual cost of wasteful property tax relief credits that will be extended.

Recommendations related to State Tax Policy

• Create charitable public education and health funds for the State and authorize localities to do the same, provided that a mechanism is included to ensure those funds are treated in a transparent and accountable manner.
• Decouple the personal exemption, enhanced child tax credit, and the state and local tax deduction cap from the federal definitions to mitigate $740 million of the $1 billion unplanned tax increase.
• Adopt the Governor's proposed technical business tax change clarifying that corporations may not reflect partial federal deduction on foreign income deemed repatriated on State tax returns.
• Adopt an optional Employer Compensation Expense Tax (ECET) covering wages of high-salary employees.
• Adopt an Unincorporated Business Tax (UBT) to preserve deductibility for pass-through entities.
• Identify and adopt reforms for 2019 that allow continued conformity to the federal definitions for the standard deduction, miscellaneous deductions, medical expense deduction, and alimony changes that eliminate the unplanned tax increases.
• Consider broader reforms to improve competitiveness and streamline the tax system.

Key Data

• $740 million — Amount of the $1 billion unplanned tax increase that can be mitigated by decoupling personal exemptions and tax credits from federal definitions.
• $1 billion — Total amount of the unplanned tax increase resulting from the federal Tax Cuts and Jobs Act.
• $200,000 — Threshold for wages of high-salary employees to be covered under the proposed optional Employer Compensation Expense Tax.
• 6.65 percent — Proposed rate for the optional Employer Compensation Expense Tax.

Recommendations related to State Tax Policy

• The City and the State should respond with practical solutions to send a clear signal that New York will defend its economy by protecting its taxpayers and businesses.
• New York should not allow counterproductive federal tax policy to drive unsound City and State tax policy.
• While the City and State should move quickly with solutions to address immediate problems, both must also allow time for deeper analysis and experience for complex issues.

Key Data

• $1 billion — unplanned State personal income tax increases resulting from the Tax Cuts and Jobs Act
• $109 million — State business tax increases resulting from the Tax Cuts and Jobs Act

Recommendations related to State Tax Policy

• The State should repeal the School Tax Relief (STAR) program entirely, as it is a poorly designed program that drives excessive benefits to wealthy taxpayers.
• Online sales should be subject to the same taxes as brick and mortar retailers, regardless of the intricacies of how those sales are arranged.
• If the business tax credits are unnecessary, they should be repealed; otherwise, the business tax credits should be paid as scheduled.
• The State should reject the proposed Health Insurance Windfall Tax because there is no legitimate justification for targeting this specific industry when other sectors will receive the same tax benefits.

Key Data

• $2 million — The threshold for taxpayers claiming business tax credits subject to the proposed three-year deferral.
• $3.4 billion — The amount the State would save annually if the School Tax Relief (STAR) program were repealed entirely.
• $1.2 billion — The annual cost of the property tax rebate based on a property owner's STAR savings.
• $750 million — The revenues included in the Fiscal Year 2019 Financial Plan attributable to the conversion of nonprofit health insurance companies to for-profit status.

Recommendations related to State Tax Policy

• New York should uncouple from specific federal tax changes that would have the most undesired effects, such as personal exemptions and child tax credits, while allowing conformity with others.
• Proposed legislation regarding charitable deductions must assure the funds are governed by the same transparency, accountability, and legislative oversight requirements as apply to other governmental spending.
• The proposed voluntary Employer Compensation Expense Tax will need to be fully analyzed and informed by the continued input of experts and stakeholders before implementation.
• Because the Employer Compensation Expense Tax proposal would not go into effect until 2019, it is appropriate to continue refining it beyond and outside the budget adoption process.

Key Data

• $1 Billion — The amount of the unplanned net state tax increase on New Yorkers that would occur without state-level action in response to federal tax law.

Recommendations related to State Tax Policy

• The state should extend the sales tax to all internet purchases to broaden the tax base.
• The Governor and Legislature need to adopt significant reforms to the State's economic development program to ensure tangible success.
• The state should be conservative in its budget forecasts and include spending constraints to address the long-term structural problem of spending outpacing revenues.

Key Data

• $300 Million — Proposed spending for the High Technology Innovation and Economic Development Infrastructure Program.
• $600 Million — Proposed spending for a life sciences laboratory in the Capital District.
• $3 Billion — Revenue attributed to non-profit health insurers converting to for-profit status.
• $2 Billion — Potential operating budget shortfall if health insurance conversion revenue assumptions are not met.
• $1 Billion — Amount that would not be available to offset the loss of federal healthcare subsidies if conversion assumptions are not met.
• 72% — Estimated portion of MTA dedicated taxes and subsidies already paid by New York City residents and businesses.

Recommendations related to State Tax Policy

• The Governor should evaluate whether to end the Property Tax Relief rebates to stop this poor use of state funds.
• The State should consider whether to delay the Middle Income Tax Cuts to help close the projected budget gap.
• The Governor should propose economic development reforms, including an end to project-specific appropriations and the creation of a 'database of deals'.
• The Legislature should add a hearing to inquire about the state budget overall, including out-year deficits and economic assumptions.

Key Data

• $6.3 billion — The high end of the reported budget gap before accounting for potential federal policy changes.
• $1.2 billion — The projected cost of Property Tax Relief rebates in state fiscal year 2019.
• $1.1 billion — The projected reduction in State revenues from Middle Income Tax Cuts in fiscal year 2019.
• $236 million — The projected reduction in State revenues from Middle Income Tax Cuts in fiscal year 2018.

Recommendations related to State Tax Policy

• The state should repeal the New York state Film Tax Credit program.
• The state should enact a timely repeal of the wasteful film tax credit because the budget won’t realize full financial benefits for at least four years.

Key Data

• $420 million — The annual cap for the film tax credit program, which is effectively rendered superfluous by rollover provisions.
• $5 million — The threshold for companies claiming credits that requires them to spread the claim over three years.
• $6 million — An example of a credit awarded in 2017 from the 2019 allocation, which would result in subsidies being paid out as late as 2022.
• four years — The minimum amount of time it will take for the state budget to realize full financial benefits from repealing the film tax credit.

Recommendations related to State Tax Policy

• The Governor should veto the three bills that would expand the State’s economic development programs.
• No new economic development programs should be approved until reforms are put in place to improve evaluation, procurement, and disclosure requirements and existing spending is effectively evaluated.
• Narrowly focused economic development incentives should be curtailed because they do not provide a return on investment.

Key Data

• $5 billion — The amount the State already spends annually on economic development programs.
• $420 million — The current annual cost of the Film Tax Credit Program, which has grown significantly from its original cap.
• $5 million — The annual cap for the proposed new refundable tax credit for companies that hire female and minority writers and directors.
• $100,000 — The maximum grant amount authorized for small businesses supporting the commercialization of innovative energy and environmental technology.
• $25 million — The original annual cap for the Film Tax Credit Program when it was first adopted.

Recommendations related to State Tax Policy

• The Legislature should think creatively about how to replace the HCRA taxes in future budgets instead of continuing to renew them.
• New York should shift the financing of health care programs to broader-based taxes, such as the income tax or sales tax, to lower premiums and ease the burden on lower-wage workers.
• Policymakers should explore alternative waivers or special provisions to retain federal Medicaid funding while transitioning to a more progressive revenue stream.
• Any state funds allocated to graduate medical education should be raised from a tax levied uniformly across the state rather than through inequitable regional rates.
• The Governor and the Legislature should develop a new strategy for raising equivalent revenue that is less burdensome for those who pay for health insurance.

Key Data

• $4.3 billion — Annual yield from the two major taxes authorized under the Health Care Reform Act.
• $3.2 billion — Total annual yield from the hospital revenue surcharge.
• $1 billion — New York State's annual commitment to funding graduate medical education.
• $500 million — Amount of federal funding generated annually through the Medicaid revenue surcharge.
• $1.1 billion — Annual statewide yield from the Covered Lives Assessment tax on commercial health insurance.
• 9.63 percent — Surcharge rate levied on hospital revenue from private insurance.

Recommendations related to State Tax Policy

• The state should establish a unified economic development budget that captures state and local costs.
• Policymakers should use standardized metrics across all economic development initiatives.
• The state should publish a database of deals to shine a light on recipients of incentives.
• The state should improve program design to follow best practices and to reward actual performance.
• The state should make administrative reforms to procurement and oversight rules.

Key Data

• $45 billion — Estimated cost of state and local economic development tax incentives to taxpayers in 2015.
• $8.25 billion — Total amount of incentives awarded by New York in 2015.
• 2.5 times — The rate at which New York's incentive use exceeds the national average.

Recommendations related to State Tax Policy

• The state should take steps to fix a long-standing problem with how it pays for the program: its unusual requirement for substantial local government financing.
• The State should assume responsibility for the local share liability over a period of four or five years.
• New, statewide revenues will be required to replace the current local share in a way that relieves the disproportionate burden placed on taxpayers in low income counties.
• Full state financing is the best way to achieve continued cost control in a program fully controlled by the State.

Key Data

• $7.1 billion — New York’s counties will pay more than $7.1 billion for Medicaid in state fiscal year 2012.
• $6.5 billion — In fiscal year 2008, New York’s counties paid $6.5 billion for Medicaid.
• $555 — New York City ranks first in local Medicaid payments at $555 per capita.
• $1,292 — An individual with $200,000 in annual income pays $1,292 toward Medicaid if living in Chemung County.
• $1,361 — A homeowner in Chemung County with a property valued at $250,000 pays on average $1,361 towards Medicaid costs.
• 13 percent — Between 2005 and 2010, local Medicaid administrative employees increased 13 percent.

Recommendations related to State Tax Policy

• While STAR should be repealed, freezing the benefit will stem the growth of this poorly targeted program and is a step in the right direction.
• Before extending the current rate of the Personal Income Tax surcharge, serious consideration should be given to the financial feasibility of imposing a top rate below 8.82 percent.
• The extension of the Millionaires’ Tax surcharge should include a requirement to revisit the tax if substantial federal changes are adopted.
• The Empire State Film Tax Credit should be repealed or substantially decreased, as many other states have repealed or substantially decreased their film tax credits.
• A moratorium on new economic development programs should be imposed until more transparency and results are achieved, including the creation of a consolidated economic development budget and universal reporting requirements.

Key Data

• $1.8 billion — The amount of one-time financial settlements in the current year that should be used for long-term benefits rather than operating expenses.
• $420 million — The annual cost to state taxpayers of the Empire State Film Tax Credit.
• $319 million — The amount by which the Executive Budget would increase spending by Empire State Development.
• $650 million — The total amount of non-ESD economic development capital spending proposed in the Executive Budget.

Key Data

• $3.5 Billion — Projected budget gap for fiscal year 2018 as of November.
• $15.5 Billion — Total cost of items with fiscal impact included in the Governor's proposals.

Recommendations related to State Tax Policy

• Governor Cuomo should veto A.10083-b/S.7485-b, which would create new tax credits for music and digital gaming media production.
• The state should curtail narrowly focused tax credits rather than expanding them, as they do not provide a return on investment.
• Industries that would not withstand the scrutiny of criteria applied under the Excelsior program should not receive State subsidies.
• Matters of tax policy that have significant budget implications should be dealt with in the midst of budget negotiations and an overall financial plan.

Key Data

• $25 million — Annual cost of the proposed music and digital gaming media production tax credits.
• $150 million — Total estimated cost of the proposed tax credits over the next three years.
• $25 million — Original annual cap of the Film Tax Credit Program when it was first adopted.
• $420 million — Current annual size of the Film Tax Credit Program.

Key Data

• $56,561 — Companies reported receiving $56,561 in tax benefits under the START-UP New York program in 2014.
• $1.2 million — Companies reported receiving $1.2 million in tax benefits under the START-UP New York program in 2015.

Recommendations related to State Tax Policy

• The personal income tax benefit in START-UP NY should be converted into a business tax credit based on wages paid to clarify the intended beneficiary.
• Recently added industries, notably music and entertainment, should be excluded from the Excelsior program as they do not require state assistance to be economically viable.
• All economic development programs should follow the Excelsior model of pay-for-performance to ensure subsidies are provided only for investments and wages that have actually been expended.
• The state should implement a cessation to project-specific appropriations for economic development until eligibility criteria are established and accountability mechanisms are enhanced.
• The jobs credit in the Excelsior program should be capped, as the current rate of 6.85 percent of wages subsidizes salaries that are vastly in excess of the State Median Household Income.

Key Data

• $560,000 — Tax incentives received by the Muller Quaker factory through the Excelsior Jobs program.
• $200 million — Amount invested by the Muller Quaker factory before closing.
• $2,000 — Cost to the State per job per year for the Muller Quaker factory.
• $1 billion — Amount the State is paying to build a factory in Buffalo for SolarCity.
• 5,000 — Number of jobs promised by SolarCity at the end of 10 years.
• $20,000 — Cost per job per year for the SolarCity project in a best-case scenario.

Recommendations related to State Tax Policy

• In order to counter the potential impacts of an economic downturn, the State should build its reserves now.
• To address the volatility of state revenues, the State should prepare for future revenue declines by acknowledging that the current economic expansion will not continue indefinitely.
• If reserves are insufficient to cover revenue shortfalls, the State should plan for necessary tax increases or spending cuts to maintain fiscal stability.

Key Data

• $59 billion — The potential cumulative revenue loss for New York State over four years during a recession.
• 18.2 percent — The potential percentage of tax revenues lost over four years during a recession.
• 63 percent — The share of New York State tax revenues derived from personal income taxes in 2016.
• 41.5 percent — The contribution of the top 1 percent of taxpayers to personal income tax revenues in 2015.
• $3 billion — The annual revenue provided by the personal income tax surcharge on high-income earners.
• $74.7 billion — The total amount of tax revenues collected by New York State in 2016.

Recommendations related to State Tax Policy

• The state should prioritize rationalizing retiree health insurance shares to help secure the state's financial future.
• The state should implement capping STAR benefits to improve the long-term financial plan.
• The state should focus on extending rational funding plans for SUNY and CUNY to ensure fiscal stability.
• The state should reject tax credits for donations to private schools as they are less-than-desirable proposals.
• The state should reject tax credits for driving on the Thruway as they are less-than-desirable proposals.

Key Data

• $4.2 billion — Annual savings for taxpayers by 2025 resulting from personal income tax decreases for married couples.
• $54 billion — Total value of the five-year transportation capital plan approved by the state.
• $24.8 billion — Total state education spending, which grew by 6.5 percent.
• $1.2 billion — Projected state budget deficit for fiscal year 2018.
• $3 billion — Projected state budget deficit for fiscal year 2019.
• $3.4 billion — Projected state budget deficit for fiscal year 2020.

Recommendations related to State Tax Policy

• The state should reauthorize a rational tuition policy for SUNY and CUNY.
• The state should freeze the poorly targeted School Tax Relief (STAR) program.
• The state should reform retiree health benefits in a responsible and sustainable manner.

Key Data

• 6.5% — Growth rate of school aid in the fiscal year 2017 budget.
• 3.4% — Growth rate of Medicaid spending in the fiscal year 2017 budget.
• $1.3 billion — Subsidies allocated for nanotechnology and high-tech manufacturing initiatives.
• $1 billion — Funding allocated for the Jacob Javits Center expansion.
• $300 million — Funding allocated for a research corridor on Long Island.
• 2% — The cap on State operating fund growth.

Recommendations related to State Tax Policy

• The Governor and the Legislature should return to a sounder approach to funding the Thruway Authority by relying on user fees rather than state subsidies.
• The Legislature should concur with the proposal to remove the Canal Corporation's financial burden from the Thruway Authority.
• The Legislature should reject the proposal to require the Thruway Authority to pay for its own policing, which costs approximately $35 million annually.
• The State should avoid allocating additional bank settlement funds in the 2016-2017 budget to subsidize the Thruway Authority.

Key Data

• $2.3 billion — Proposed subsidy for the Thruway Authority from bank settlements.
• $4.6 billion — Total bank settlement funds appropriated in the fiscal year 2015-2016 budget.
• $1.3 billion — Amount appropriated to the Authority for its capital program in the fiscal year 2015-2016 budget.
• $1.4 billion — Amount spent by the Thruway for canal operations and capital from 1993 to 2015.
• $50 million — Estimated annual operating losses saved by removing the Canal Corporation from the Thruway.
• $35 million — Annual cost of policing the Thruway that the Executive Budget proposes shifting to the Authority.

Recommendations related to State Tax Policy

• Convert the STAR exemption into a personal income tax (PIT) credit to allow property taxpayers to see changes in their school district’s tax levy more clearly and prevent taxpayers from receiving the benefit on multiple homes.
• Reject the Education Scholarship and Program Tax Credit (ESPTC) as it is an inappropriate and unnecessary subsidy to private and parochial schools.
• Reject the $340 million Thruway Toll Tax Credit (TTTC) because it would encourage additional driving and put further stress on the Thruway’s infrastructure.
• Declare a moratorium on expansions in economic development spending, including tax-free initiatives, until the benefits of existing programs can be examined carefully and unsuccessful programs terminated.
• Reject the extension of the Excelsior Jobs Tax Credits.

Key Data

• $3.4 billion — Annual cost of the STAR (School Tax Relief) program to state taxpayers.
• $1 million — Maximum amount per taxpayer provided by the Education Scholarship and Program Tax Credit (ESPTC).
• $70 million — Cap for the Education Scholarship and Program Tax Credit (ESPTC) program.
• $340 million — Cost of the Thruway Toll Tax Credit (TTTC).
• $600 million — Amount of sales tax revenue shifted from New York City to the State over three years through the Sales Tax Asset Receivable Corporation (STARC).

Recommendations related to State Tax Policy

• The city should consolidate all homeowners into a single category to reduce the effective tax rate gap between homeowners and other property owners.
• Policymakers should eliminate the caps on assessment increases for Class 1 properties to ensure more equitable taxation.
• The city should value condos and co-ops based on market values using sales prices rather than income-producing methodologies to reduce undervaluation.
• To protect vulnerable residents, the city should provide special exemptions or property tax 'circuit breakers' to elderly or low-income homeowners instead of using broad assessment caps.
• The city should eliminate the caps and phase-in provisions for all properties to address inequities among appreciating and depreciating properties.

Key Data

• $2 billion — The target amount of additional annual property tax revenue the proposed reforms aim to raise.
• $4.5 billion — The estimated revenue foregone in fiscal year 2015 due to existing property tax cap and phase-in rules.
• $1.6 billion — The amount of revenue lost in fiscal year 2015 specifically due to assessment caps applied to smaller rental properties.
• $846 million — The revenue raised in fiscal year 2015 from the revaluation of condos and co-ops and the application of a 6 percent assessment ratio.
• $936 million — The revenue raised in fiscal year 2015 from the elimination of assessment growth caps on 1-3 family homes.
• $21.1 billion — The estimated baseline property tax levy for New York City in fiscal year 2015.

Recommendations related to State Tax Policy

• The State should cap benefits for the School Tax Relief (STAR) program to improve the program.
• The State should avoid using one-time revenue to subsidize tolls through tax credits, as these funds are necessary for infrastructure maintenance.
• The State should improve school aid formulas to prevent the allocation of new aid in ways that favor wealthier districts.
• The State should reject the proposed new education tax credits for donations to public and private schools.

Key Data

• $1.7 billion — savings in fiscal year 2018
• $4.6 billion — savings in fiscal year 2020
• $90 million — subsidy to the Thruway Authority for state police and other operations
• $2.3 billion — total one-time legal settlement funds
• $900 million — settlement funds for transportation
• $700 million — settlement funds for the Thruway Authority

Recommendations related to State Tax Policy

• The state should avoid the temptation to loosen restrictions and performance requirements to entice more entrants to the Excelsior Jobs Program.
• Empire State Development should remain cautious and vigilant in administering and monitoring the Excelsior program.
• Legislators should avoid additional modification to expand the Excelsior program.

Key Data

• $470 million — Allocated in tax credits over the lifetime of the benefit period for the Excelsior Jobs Program.
• $2 billion — Allocated in tax credits over the lifetime of the benefit period for the Empire Zones program.
• $250 million — Annual program cap for the Excelsior Jobs Program peaking in 2015.
• $478 million — Unused credits accumulated by Empire State Development during the first four years of the Excelsior program.
• $1.8 billion — Potential cost of the Excelsior program by 2019 including the allowance for rollover credits.

Recommendations related to State Tax Policy

• The state should expand the 50-cent per-ride taxicab tax to include all black car and DSP trips to help offset the negative externalities of automobile use.
• Policymakers should update the per-ride tax to a percentage-based charge of 3.95 percent of the fare for all black car and DSP trips to better align the tax burden with higher average fares.
• The state should reform the transportation sales tax by lowering the burden on black cars and dedicating the entire revenue stream to the MTA, potentially at a rate of 5.75 percent or 7.75 percent to close the funding gap.

Key Data

• $2.6 billion — The remaining MTA capital funding gap that needs to be filled.
• $250 million — The estimated amount the two existing taxes on TLC services will raise in 2015.
• 74% — The increase in tax collections from the TLC industry from 2011 to 2015.
• $33 million — The additional revenue that would have been raised in 2015 by applying the 50-cent per-ride tax to all black car and DSP trips.
• $225 million — The potential increase in MTA revenues in 2019 from a reformed transportation sales tax.

Recommendations related to State Tax Policy

• The state should implement a vehicle-miles-traveled (VMT) tax to fund transportation infrastructure over the long term.
• Policymakers should pursue enhanced tolling policies, such as East River bridge tolls and congestion pricing, to generate immediate funding.
• The state should increase vehicle registration fees to provide immediate funding for the MTA.
• Drivers should be required to cover more than twice their current proportion of mass transit costs through motor vehicle cross-subsidies.

Key Data

• $4.2 billion — Estimated amount NYC taxpayers contribute to the nearly $6 billion allocated to the MTA from state-authorized regional and statewide taxes.
• 73 percent — Share of the $1.3 billion regional payroll tax paid by New York City employers.
• 12 percent — Current portion of MTA transit services funding derived from motor vehicle cross-subsidies.
• $29.8 billion — Total cost of the MTA's five-year capital plan.
• $9.8 billion — Reduced funding gap for the MTA capital plan.
• $1.3 billion — Total amount of the regional payroll tax.

Recommendations related to State Tax Policy

• The Citizens Budget Commission supports more funding for the MTA from motor vehicle cross-subsidies.
• In the longer term, funding should be a vehicle-miles traveled fee system which could also fund transportation infrastructure state-wide.
• More immediate funding should come from East River bridge tolls and other congestion pricing mechanisms or higher vehicle registration fees.
• City, State, and MTA leaders should drop the 'City/State' frame of reference and develop a concrete plan to put the necessary funding in place.

Key Data

• $9.8 billion — The funding gap for the MTA's 2015-2019 capital plan.
• $580 million — The amount New York City taxpayers fund annually in operating and capital support to the MTA.
• $4.2 billion — The estimated amount New York City taxpayers contribute to the nearly $6 billion allocated to the MTA from state-authorized regional and statewide taxes.
• 73% — The portion of the MTA’s $1.3 billion regional payroll tax paid by New York City firms.
• $2.2 billion — The estimated savings from efficiencies in the MTA capital plan.
• 48%, 40%, and 12% — The current funding breakdown for MTA transit services from fares, tax subsidies, and motor vehicle cross-subsidies, respectively.

Recommendations related to State Tax Policy

• Lawmakers must now be prepared to enact cost-saving measures to produce the “surpluses” they just spent.

Key Data

• $1.5 billion — New state obligations annually resulting from the legislative package.
• $1.3 billion — Annual cost of the new property tax relief rebate program when fully implemented.
• $4.2 billion — Projected out-year budget gap in fiscal year 2018-2019.
• $250 million — Increase in aid to nonpublic schools.
• $783 million — Annual cost of the Property Tax Freeze Rebate.
• $410 million — Annual cost of the Family Tax Relief Rebate.

Recommendations related to State Tax Policy

• The cost of bridge and tunnel facilities should be funded entirely through user fees paid by motorists.
• Motorists’ tolls and fees should also generate a surplus large enough to cover approximately one-quarter of the cost of providing mass transit services.
• Mass transit users should pay fares sufficient to cover approximately one-half the operating cost of those services.
• State and local tax subsidies to mass transit should cover at least one-quarter of the operating cost of those services and fund “catch-up” capital investments needed to bring the system to a state of good repair.
• New York should adapt and implement new policies imposing fees for vehicle access to the central business district.

Key Data

• $3.6 billion — Projected deficit in 2016.
• $17.8 billion — Cumulative unfunded OPEB liability as of the end of 2011.
• $39 billion — Projected debt outstanding in 2015.
• $2.6 billion — Additional annual revenue provided by the 25-50-25 policy by 2016.

Recommendations related to State Tax Policy

• The State should implement further tightening of eligibility for the Brownfield Cleanup Program because it has functioned more as a real estate development program rather than an environmental cleanup program.
• Policymakers should better focus benefits on the cost of cleanup and environmental remediation rather than on redevelopment credits.

Key Data

• $1.1 Billion — Total tax breaks issued to clean up and redevelop 115 sites from 2008 to 2013.
• 85 percent — Share of total benefits accounted for by the tangible property tax credit.
• 58 percent — Amount by which the tangible property credit cost more than developers’ cost of site cleanup and groundwater remediation.
• $963 million — Cost of the tangible property credit.
• $609 million — Cost of site cleanup and groundwater remediation.
• 64 percent — Share of total tax breaks accounted for by the top 10 projects.

Recommendations related to State Tax Policy

• The State should utilize the framework for designing and evaluating economic development programs to improve the cost-effectiveness of the State’s large investment in this area.
• All investments should be coordinated and aligned to regional strategies, performance metrics should be standardized for all programs and across all regions, and more comprehensive disclosure requirements should be put in place so that the costs and benefits of each project can be weighed.
• All programs should be reevaluated for effectiveness before existing programs are increased or new ones are added.
• The qualifications for Excelsior tax credits, already weakened once, should be strengthened.
• The State should limit the Investment Tax Credit to manufacturers, eliminate the credit for used property, and end the financial services Investment Tax Credit altogether.

Key Data

• $8.1 billion — Annual economic development investments in 2014.
• $7.0 billion — Annual economic development investments in 2010.
• $2.8 billion — Expected spending on economic development tax expenditures in fiscal year 2014.
• $427 million — Estimated cost of the film production tax credit in 2014.
• $1.2 billion — State’s unused Investment Tax Credit liability as of 2013.
• $150 million — Projected annual cost of START-UP NY by fiscal year 2017.

Recommendations related to State Tax Policy

• The Governor should propose an extension for the lower personal income tax rates for middle brackets that are set to expire in 2017 and identify how to pay for it.
• The state should implement sensible reforms to Brownfields tax credits following the Governor's veto.
• The state should evaluate whether to continue the expansion of economic development tax credit programs without clear, documented benefits.

Key Data

• $4.5B — Proposed one-time spending from the windfall settlement.
• 3.6% — The spending cap for Medicaid.
• 2% — The growth assumption for the budget.
• 5th — The number of years agency spending has been frozen.

Recommendations related to State Tax Policy

• Auto user fees should pay for the facilities available to drivers; therefore, the cost of bridge and tunnel facilities should be funded entirely through tolls and fees paid by the motorists who use them.
• Motorists’ tolls and fees should also generate a surplus large enough to cover a share of the cost of providing mass transit services.
• Mass transit users should pay fares sufficient to cover a share of the cost of those services.
• State and local tax subsidies to mass transit should cover a share of the cost of those services.
• PATH should adopt a consistent funding structure that shares the cost of operating the transit system among all who benefit.

Key Data

• $487 million — Projected annual deficit for PATH in 2018.
• $383 million — PATH's annual deficit in 2013.
• 23% — Share of operating expenses and capital-related expenses covered by fares in 2013.
• $1.96 — Average fare revenue per ride in 2013.
• $8.45 — Actual full cost of a ride in 2013.
• 69% — Projected deficit as a percent of total expenses in 2018.

Recommendations related to State Tax Policy

• The legislature should work with the Governor to adopt budgets that keep state operating fund growth at 2% or less to ensure the projected surplus becomes a reality.
• Policymakers must address budget gaps beginning in fiscal year 2015-16 if the proposed tax cuts are adopted or if the Legislature adds equivalent spending commitments.

Key Data

• $142.1 billion — The total value of the fiscal year 2015 Executive Budget presented by Governor Andrew Cuomo.
• $2 billion — The projected annual surplus beginning in fiscal year 2016-17 that relies on strict spending limits.
• $1.7 billion — The amount of unspecified spending reductions inserted into the financial plan for fiscal year 2015-16.
• $3.6 billion — The amount of unspecified spending reductions inserted into the financial plan for fiscal year 2017-18.
• $1.5 billion — The projected budget gap for fiscal year 2015-16 if the unspecified spending reduction placeholders are excluded.
• $3.5 billion — The projected budget gap for fiscal year 2017-18 if the unspecified spending reduction placeholders are excluded.

Recommendations related to State Tax Policy

• The state must limit State Operating Funds disbursements to an annual growth rate of no more than 2 percent to pay for the proposed tax cuts.
• Policymakers should curtail expectations for growth in other local government assistance to meet the spending growth goal.
• The state must pursue continued discipline and serious efforts at agency reform and redesign to keep spending growth under 2 percent.
• The state should resist the pressure from legislators and interest groups to increase state spending.

Key Data

• $2 billion — Proposed tax cuts in the State of the State address.
• 2 percent — Target annual growth rate for State Operating Funds disbursements.
• $93.8 billion — State Operating Funds spending projected for fiscal year 2014-15.
• $101.5 billion — Projected State Operating Funds spending for fiscal year 2016-17.
• 200,742 — Total state workforce size.
• $13.1 billion — Cost of debt service and fringe benefits in fiscal year 2013-14.

Recommendations related to State Tax Policy

• The city should end wasteful corporate tax subsidies that fail to deliver on promised jobs.
• The administration should prioritize structural property tax reform to redress inequities without raising tax rates across the board.
• The city should take the lead in fixing the broken, inequitable, and often inscrutable property tax system through state legislation.
• The city should pursue broadening the base of the sales tax as a source of new revenue.
• The city should subject more non-essential items to the sales tax to generate additional revenue.

Key Data

• $930 million — Cost of business property tax expenditures in the last fiscal year.
• $30 million — Estimated annual savings from cutting corporate tax breaks.
• $4 billion — Annual revenue sacrificed by the current property tax system.
• $3.1 billion — Annual value of the fiscal year 2004 property tax hike.
• $440 million — Annual revenue generated by raising the sales tax 0.5 percent in 2009.
• $1 billion — Potential annual revenue from broadening the sales tax base.

Recommendations related to State Tax Policy

• Policymakers considering raising the personal income tax or the commercial property tax need to be aware that both taxes are already significantly higher than in other large cities.
• Policymakers would be well advised to examine options where New York City is not as far out of line with other cities.
• The policy implication is that these conditions should be considered in any initiatives to raise more revenue from the property tax.
• The implications of these studies for New York City tax policy must be considered carefully because of the limited parallels between state and local circumstances.

Key Data

• 46% — New York City's state and local taxes were 46% higher than the average for the other cities.
• 90% — Local taxes in New York City were 90% higher than the average for other cities.
• 51% — New York City's commercial property tax was 51% higher than the average for the other 14 of the 15 largest cities.
• $327,000 — The annual difference in commercial property tax for a $25 million property in New York City compared to the average of the 15 largest cities is $327,000.
• 162% — The commercial property tax rate in New York City was 162% higher than in Hoboken.
• $596,000 — The annual difference in property tax for a $25 million commercial property in New York City compared to Hoboken is $596,000.

Recommendations related to State Tax Policy

• The Commission should be focused on repurposing and improving the significant sums already directed to local tax relief, not on spending for new programs.
• The Commission should re-examine and reform the local tax relief programs on which the State already spends $4 billion annually.
• The Commission could achieve its objective by better targeting STAR aid and the Family Tax Relief rebate and by expanding the Real Property Tax Credit so that all three of these programs provide deeper relief for low and moderate income households with the greatest burden.
• The State should pursue further reductions in the personal income tax rates for middle income households.
• The State should expand recent efforts to take over more of the local funding mandate for the Medicaid program to help reduce the combined tax burden.

Key Data

• $4 billion — Annual state spending on local tax relief programs.
• $3.4 billion — Cost of the School Tax Relief (STAR) program in fiscal year 2014.
• $1,533 — STAR aid provided per pupil for the wealthiest/least-needy 10 percent of districts.
• $991 — Average STAR aid provided per pupil for the least-wealthy/neediest 10 percent of districts.
• $410 million — Amount allocated for Family Tax Relief rebates scheduled to be mailed in October 2014.
• $20.2 million — Total circuit breaker credit provided to taxpayers in 2010.

Key Data

• $1.8 billion — Annual commitments added by the final year of the financial plan.
• $6.0 billion — Projected budget gap for fiscal year 2017 without new ways to pay for added spending and tax breaks.
• $677 million — New business tax breaks committed over three years.
• $410 million — Annual cost of personal income tax rebates for families earning between $40,000 and $300,000.
• $2.6 billion — Existing preferential state tax provisions for businesses.
• $1.75 billion — Cash infusion provided by a shift in the accounting method for financing workers’ compensation.

Recommendations related to State Tax Policy

• State leaders should reconsider the hastily crafted plan to extend the temporary personal income tax surcharge and repurpose the revenue for rebates.
• The state should allow the tax commission to do its work to examine New York’s tax structure before the surcharge expires.

Key Data

• 12.7% — State and local income tax rate for high earners in New York City.
• $2 Billion — Projected budget gap in fiscal year 2015-16 even if the current tax surcharge is extended.
• 3 years — Duration of the extension for the temporary personal income tax surcharge.
• 2% — Limit on state-funded spending growth for the 3rd consecutive year.

Recommendations related to State Tax Policy

• Instead of putting more money in the hands of school districts through the same seriously flawed methods, state leaders should redesign the school aid formulas.
• To help assure realization of the waiver application's savings projections, and improve the state's prospects of bending the Medicaid cost curve over the long run, the Legislature and the governor should extend the Medicaid growth cap for at least five years.
• Mandate relief needs to be given renewed priority by Governor Cuomo who should press for adoption of the pending proposals in the fiscal year 2013-14 budget.
• No additional funds should be authorized for economic development programs until a thorough review of all of them has been conducted to assess whether they are working and until the results of the new performance metrics put in place by the Regional Councils can be evaluated.

Key Data

• $982 million — Projected budget gap in fiscal year 2013-14.
• $20.1 billion — Education aid in the current state budget.
• $1.5 billion — Amount education aid will grow over the next two years.
• $15.9 billion — Medicaid spending in the current state budget.
• $10 billion — Amount New York applied for a federal waiver to reinvest from the estimated $17 billion in federal savings.
• $245 million — Estimated annual savings from mandate relief proposals left on the table.

Recommendations related to State Tax Policy

• ESD should facilitate the development and reporting of meaningful and consistent metrics across all Councils and programs to evaluate economic development programs and make them public.
• New York’s leaders should consider using the cap mechanism more widely to foster a more disciplined approach to economic development spending.
• ESD should facilitate the convergence and standardization of the multiple criteria and scoring methods to improve the consistency of project scoring.
• The CFA should be expanded and should serve as the platform for a unified economic development budget.
• ESD should choose approximately 10 regional indicators and 10 project indicators that all Regional Councils must report to provide the public information with which to compare the impact of each Council’s investments.

Key Data

• $7 billion — New York State and its local governments will spend close to $7 billion this fiscal year in the name of economic development through dozens of programs.
• $762 million — This year New York will allocate $762 million in economic development funds through the recently created Regional Economic Development Councils.
• $6.9 billion — New York entities cumulatively spent $6.9 billion on economic development two years after 2010.
• $100 million — The new Excelsior program will cost $100 million in tax year 2012.
• $359 million — The state film tax credit grew to $359 million in 2012.
• $4.5 billion — The Missouri Accountability Portal covers $4.5 billion in tax incentives approved since 2000 through several dozen programs.

Recommendations related to State Tax Policy

• The cost of bridge and tunnel facilities should be funded entirely through user fees paid by motorists.
• Motorists’ tolls and fees should also generate a surplus large enough to cover approximately one-quarter of the cost of providing mass transit services.
• Mass transit users should pay fares sufficient to cover approximately one-half the operating cost of those services.
• State and local tax subsidies to mass transit should cover at least one-quarter of the operating cost of those services and fund 'catch-up' capital investments needed to bring the system to a state of good repair.
• New York should adapt and implement new policies imposing fees for vehicle access to the central business district.

Key Data

• $2.6 billion — Additional annual revenue the 25-50-25 policy would provide by 2016 without new taxes.
• $17.8 billion — Cumulative unfunded Other Post-Employment Benefits (OPEB) liability as of the end of 2011.
• $3.6 billion — Total cost overruns for five major MTA capital projects.
• $32 billion — MTA debt outstanding in 2011.
• $1.3 billion to $2.2 billion — Shortfall in revenue from auto users for 2016 under current policies.
• $17.1 billion — Annual operating and financing expenditures of the MTA's agencies budgeted for 2012.

Recommendations related to State Tax Policy

• The Legislature should pass a bill to repeal unnecessary mandates on school districts (A10290/S6688) to curb the high cost of special education and enact reforms in contracting.
• The state should repeal the Triborough Amendment, which discourages collective bargaining by awarding public employees automatic step increases for more years on the job even after contracts expire.
• State leaders should provide relief from state-imposed mandates that burden local governments with unnecessary expenses rather than approving borrowing schemes.

Key Data

• 7.5 percent — Instructional spending for special ed in New York has grown over the past decade at an average rate of 7.5 percent a year.
• 20 percent — Instructional spending for special ed in New York has grown 20 percent faster than for general education.
• 200 — Growth in special education spending is in part driven by the more than 200 state-imposed special-ed mandates that exceed those required by federal law.
• 75 percent — A pension sweetener creates a presumption that a type of staph infection is job-related, entitling eligible police and firefighters to a 75 percent disability benefit.

Recommendations related to State Tax Policy

• The state should enact a new pension tier for new hires that raises the retirement age and vesting period while reducing pension spiking from overtime.
• New York should rejigger school-aid programs to address disparities in local districts' wealth and capacities to fund their schools rather than sending aid to wealthy districts.
• The state must continue curbing growth in Medicaid spending and phase out the inequitable local financing scheme that requires poorer counties to shoulder an unfair share of costs.
• Albany should resist the temptation for more economic-development spending and ensure that existing funds are used with transparency and accountability.
• The state should reduce reliance on fiscal gimmicks like the deferral of business-tax credits and the amortization of pension payments, which mask the structural deficit.
• New York should forgo one-shot revenues that provide temporary cash injections but fail to address long-term spending commitments.

Key Data

• $1.7 billion — The budget gap remaining after the tax hike on high earners that the state must close.
• $120 billion — The estimated savings over 30 years from the proposed new pension tier for new hires.
• $970 million — The amount of business-tax credits deferred as a fiscal gimmick to mask the structural deficit.
• $782 million — The amount of pension system payments amortized as a fiscal gimmick to mask the structural deficit.
• $800 million — The total amount of one-shot revenues used by the state in the previous year to close budget gaps.
• $1.5 billion — The amount of new revenue expected from the tax hike on high earners.

Key Data

• $80 billion — The amount of money New York State residents, workers, and businesses send to the state government each year.
• $26.1 billion — The amount of own-source revenues the state disbursed to school districts, community colleges, and other recipients for education purposes in fiscal year 2010.
• $29.4 billion — The total personal income tax revenue to be distributed regionally when allocated by county of residence.
• $34.8 billion — The total personal income tax revenue to be distributed regionally when allocated by place of work.
• $5 billion — The amount of tax revenues New York State receives from residents of other states.
• 45 percent — New York City’s share of state revenue payments based on the analysis of income-tax payments allocated to the region in which taxpayers reside.

Recommendations related to State Tax Policy

• The Governor should avoid more new taxes as the way to close the rest of the budget gap.
• State leaders should close the remaining budget gap with structural reform measures that slow down the fastest cost drivers—pensions, school aid, and Medicaid.
• The basic formulas by which school aid is distributed should be reopened to address better the great disparities in local districts’ wealth and capacities to fund their schools.
• New York’s inequitable local financing scheme for Medicaid should be phased out to ensure poorer counties do not shoulder an unfairly large share of program costs.
• The State should resist the temptation for more economic development spending and instead focus on repurposing existing funding and improving transparency.
• The State should end the deferral of business tax credits and the amortization of pension payments while addressing the underlying cost drivers.
• The State should take a hiatus from one-shot revenues such as sweeps from dedicated revenue funds and mandatory contributions from public authorities.

Key Data

• $3.2 billion — Estimated budget gap in New York State’s fiscal year 2012-13.
• $1.9 billion — Additional annual revenues provided by the recent overhaul of New York’s tax code.
• $15 billion — Total spending increase in fiscal year 2012 compared to fiscal year 2008.
• $120 billion — Potential savings over 30 years from the proposed pension tier for new hires.
• $970 million — Amount of business tax credits deferred by the state.
• $782 million — Amount of pension system payment amortized by the state.

Recommendations related to State Tax Policy

• Next year’s budget should not be allowed to grow more than 2%.
• The state should implement reform of the state and local pension system along the lines of the Governor’s “Tier 6” proposal.
• The new tax brackets should be accompanied by long-term measures to curb expenditures.
• New York should create a Commission to re-examine New York’s tax structure.
• New York should authorize design-build procurement practices for infrastructure projects.

Key Data

• $1.9 billion — Net gain in annual revenue from the new personal income tax brackets compared to letting the “millionaire tax” expire.
• 12.7% — State and local income tax rate for high earners in New York City, which is higher than anywhere else in the nation.
• $120 billion — Projected savings over the next 30 years from pension system modifications like the Governor’s “Tier 6” proposal.
• 2% — Recommended limit for the growth of next year's budget.

Key Data

• 2% — The growth limit imposed on local school district revenue from property taxes by the state-wide property tax cap.
• $1.3 billion — The amount by which state aid for school year 2011-12 was cut from the previous year's level.

Recommendations related to State Tax Policy

• To be fully effective, the councils should have responsibility and authority over all state economic development resources, not just a subset of selected programs.
• Performance should be gauged only by new activity created in addition to baseline payroll and/or property value.
• Benefits should be paid retroactively based on firm performance.
• The ultimate goal should be the creation of a Unified Economic Development Budget.
• Funds for the expansion of regional council investments should be generated by reducing or eliminating current programs that are deemed unsuccessful after a thorough review.

Key Data

• $6.6 billion — Annual cost to the State and local governments in tax breaks, power subsidies, and direct spending for economic development.
• $2.5 billion — Annual reduction in state tax receipts caused by more than a dozen separate state tax credit programs.
• $554 million — Cost to the State in lost tax receipts from the Empire Zone program in 2010.
• $1.0 billion — Amount of Empire Zone credits businesses reported carrying forward in 2007 that were yet to be claimed.
• $586 million — Total amount invested by the State in the Centers of Excellence program from 1997 to 2006.
• $371 million — Total amount spent in grants by NYSTAR on ten funding programs over the 2001 to 2009 period.

Recommendations related to State Tax Policy

• Talk of a surplus and using it for new initiatives should end immediately.
• New York should reduce reliance on existing fiscal gimmicks, particularly ones that add to long-term costs.
• Any surprise surplus should be used in ways that help lower the budget gap, such as paying down debt or reversing deferrals, rather than funding tax cuts or spending restorations.
• The Governor and the Legislature should view any unexpected revenues as a temporary blessing and keep the lid on the piggy bank sealed shut.

Key Data

• $799 million — Amount by which tax collections for the first quarter of the fiscal year exceeded original projections.
• $1.2 billion — Amount by which disbursements came in below projections for the first quarter of the fiscal year.
• $351 million — Amount by which receipts fell short during the month of July.
• $377 million — Remaining savings from labor that the Governor and unions still need to finalize.
• $2 billion — Total value of undesirable fiscal gimmicks included in the current-year budget.
• $2.4 billion — Minimum budget gap projected for the start of the next fiscal year.

Recommendations related to State Tax Policy

• New York State should mandate prudent uses of surplus funds, including rainy day fund deposits.
• The state should raise the cap on the size of the rainy day funds to reflect likely needs in times of recession.
• New York should set uniform conditions for withdrawal from both funds, with those conditions based on declining economic indicators.
• The state should set uniform repayment rules for both funds, with those rules allowing adequate time for economic and fiscal recovery before payments must begin.

Key Data

• 20.3 percent — The decline in New York State’s total tax collections from the first quarter of fiscal year 2008-09 to the first quarter of fiscal year 2010-11.
• $10 billion — The budget gap for the fiscal year beginning April 1, 2011.
• 60 percent — The portion of New York State tax collections comprised of personal income tax in fiscal year 2009-10.
• $473.3 million — The total amount of the 11 loans taken from the Tax Stabilization Reserve Fund for the General Fund.
• $37 million — The general fund cash balance at the end of May 2009.
• $1.2 billion — The negative month-end balance that would have occurred in May 2009 without the use of the Tax Stabilization Reserve Fund and the Rainy Day Reserve Fund.

Recommendations related to State Tax Policy

• Unfunded mandates imposed by the state on localities and school districts, particularly unnecessary special education requirements, should be removed so they are not forced to raise local taxes.
• A property tax cap will need to be designed carefully to avoid hardship for needy communities that do not receive sufficient state aid to adequately fund services.

Key Data

• $132.5 billion — Total approved spending in the state budget.
• $7.6 billion — Total amount of cuts from a mushrooming set of baseline commitments.
• $2 billion — Total budget balance risk if anticipated savings do not materialize as planned.

Recommendations related to State Tax Policy

• It is now time to allow temporary revenue measures to phase out and to begin to restructure spending commitments.
• In order to avoid a perpetual reliance on one-shot revenues and tax increases, spending growth must be more closely aligned with long-term revenue growth.

Key Data

• $11.7 billion — Revenues attributable to actions taken since the start of fiscal year 2008-09.
• $8.5 billion — Reduction in base tax collections in the current fiscal year due to the national recession.
• $8.4 billion — Amount state-funded spending in the current fiscal year is higher than in fiscal year 2007-08.
• $19.4 billion — Total revenue enhancements and temporary revenues New York currently benefits from.
• $5.0 billion — Projected revenue from the temporary income tax surcharge on individuals earning more than $200,000.
• $21.2 billion — Projected budget gap for the next year without the inclusion of revenue measures.

Recommendations related to State Tax Policy

• Establish a more rigorous and comprehensive balanced budget requirement.
• Move the executive and legislative budgets from a cash basis to an accrual system in accordance with generally accepted accounting principles.
• Enhance the allowable size of the state’s rainy day fund and require that funds are dispersed only in an emergency.
• Impose a new constitutional debt limit to rein in state borrowing.
• Provide more timely and meaningful fiscal information to legislators and to the public.

Key Data

• 5.4 percent — Average annual rate of increase for the New York state operating budget over the past 25 years.
• $17 billion — Amount the Governor argues his spending cap would have curbed state spending by in fiscal year 2007-08 had it been in place starting in 2002-03.
• $1.1 billion — Predicted surplus in fiscal year 2011-2012 from the proposed spending cap based on a projected three-year rolling average inflation rate of 2.0 percent.
• $3.2 billion — Total amount of rebate checks sent to Colorado taxpayers between fiscal year 1996-97 and fiscal year 2000-01 due to the state's revenue limit.
• $348 — Amount by which Colorado's per capita spending was lower than it would have been without the state's spending cap.
• $1.1 billion — Amount Connecticut borrowed at the end of the year for an unexpected deficit.

Recommendations related to State Tax Policy

• School aid comprises nearly one-third of the State's own-source spending, and it must be addressed if spending is to be contained in future years.
• School district and State leaders must figure out how to improve the impact of the State's added investments in education to manage with reduced aid and constrained local funds.
• The state should have enacted the tax on sugary beverages, which would have provided recurring revenues from a consumption tax with public health benefits.

Key Data

• $4.0 Billion — Total spending reductions included in the fiscal year 2010-11 budget.
• $1.5 Billion — School aid cut resulting from the Governor's vetoes.
• $47 Billion — Total Medicaid costs expected to grow 10% annually.
• $190 Million — Savings achieved by canceling member items for the year.
• $7 Billion — Projected increase in school aid over the next four years.
• $775 Million — Medicaid cost containment package passed earlier in the year.

Recommendations related to State Tax Policy

• The Legislature should refrain from passing the proposed "pension sweetener" bills that increase the pension burden on taxpayers.
• The state should maintain the integrity of the recently created Tier V pension system rather than undoing reforms by eliminating the minimum retirement age for state employees.
• Policymakers should avoid extending the automatic assumption that certain ailments are work-related, which would allow employees to collect a lifetime disability pension for common illnesses.
• The state should reject legislation that would saddle the MTA with new health-insurance costs by accelerating the vesting of lifetime insurance benefits.
• The Legislature should avoid expanding eligibility for Variable Supplement Funds to those who have retired under disability and to the survivors of retirees.

Key Data

• $1.7 Billion — Cost of state government pension contributions in fiscal year 2010-11.
• 85 percent — Projected growth of state pension costs by 2014.
• $3.2 Billion — Projected cost of state pension contributions by 2014.
• 50 — Number of bills introduced in the Assembly and Senate to sweeten pension and health-insurance benefits.
• $7.7 Million — Annual cost to the state for eliminating the minimum retirement age for state employees.
• $9.1 Million — Annual cost to local governments for eliminating the minimum retirement age for state employees.

Recommendations related to State Tax Policy

• The Empire Zone Program and the Power for Jobs program should be replaced without further delay.
• The state should replace the Empire Zone Program with the Excelsior program.
• The Excelsior program should award tax credits based on a standard application and retroactively, based on the prior year's performance.
• The new Power for Jobs program should include greater provisions for environmental audits to help firms identify areas where they can conserve energy.
• Both replacement programs should be fit into a larger economic development strategy that identifies overarching goals and includes metrics for assessing the performance of new programs.

Key Data

• $30 million — The cost of the Empire Zone Program in 2000.
• $600 million — The cost of the Empire Zone Program in 2009.
• $479 million to $640 million — The estimated annual cost of the Power for Jobs economic development programs.
• $100 million — The amount of direct aid provided to residential rate-payers to replace discount power contracts.

Recommendations related to State Tax Policy

• The State Legislature should allow the Empire Zones program to sunset as of June 30, 2010, as established by law.
• The State Legislature should enact the Excelsior program as proposed by the Governor.
• The State Legislature should reject provisions that would extend local Empire Zone administration boards and wage credits, as policies that have proven ineffective should not be continued.

Recommendations related to State Tax Policy

• State leaders must achieve the full $5.1 billion worth of spending reductions proposed in the Executive Budget.
• The legislature should drop overly optimistic claims regarding high fraud recoveries and tax collection on Indian Reservations.
• The state must get the borrowing total for the year down well under the Ravitch Plan's $2 billion maximum.
• The Governor should ensure that reforms in the Ravitch Plan, including a balanced budget requirement and better accounting, accompany any agreed-upon borrowing.

Key Data

• $5.1 billion — Spending reductions in the Executive Budget that should be achieved.
• $3.3 billion — Expected jump in employee compensation over the four-year term of the financial plan.
• $2 billion — Deficit financing proposed in the Lt. Governor's five-year fiscal plan.
• 4% — Raises for employee unions scheduled for April 1.
• 2% — Reduction in per-pupil spending proposed in the Executive Budget.
• 10% — Increase in all funds spending during the previous year.

Recommendations related to State Tax Policy

• The time has come to end the program.
• Increasingly scarce public resources should no longer be spent in this unproductive way.
• The Empire Zone program should be a prime target for elimination.

Key Data

• $582 million — The cost of the Empire Zone program in 2008, representing a twenty-fold increase from $30 million in 2000.
• $900 million — The amount of unused tax credits firms have accumulated that can be used in future years.
• $514 million — The total cost of the Empire Zone program in 2006.
• $391 million — The amount of tax credits claimed by just 500 firms in 2006, representing 76 percent of the total program cost.
• $127 million — The amount of tax credits that went to Fortune 1000 firms in 2006, accounting for about 25 percent of total annual claims.
• $30 million — The amount of tax credits received by 11 retail chains among the Fortune 1000.

Recommendations related to State Tax Policy

• New York State would have to lower its long-term liabilities from the 2008 level of $120.0 billion by $20.4 billion to fall below the danger zone threshold.
• If the reduction were achieved through long-term bonds, the state would have to lower its long-term bond debt from $71.9 billion to $51.5 billion.

Key Data

• $5.6 billion — Annual debt service currently paid by New York.
• $7.1 billion — Projected state credit card obligation, representing one of every ten dollars paid in taxes.
• 1.099 — New York's debt-to-resources ratio, which ranks fourth highest among all states.
• $120.0 billion — New York's total long-term liabilities in 2008.
• $20.4 billion — The amount by which New York would need to lower its long-term liabilities to fall below the danger zone threshold.

Recommendations related to State Tax Policy

• To complete the model of progressivity, New York needs to focus on lowering the tax burden on households with moderate incomes.

Key Data

• 11.6 percent — The middle quintile of New York families pay this share of their income to state and local taxes, which is well above the national average of 9.4 percent.
• 9.6 percent — The poorest fifth of New Yorkers pay this share of their income for state and local taxes, ranking 29th among the states.
• 7.2 percent — The top 1 percent of earners in New York, whose incomes exceed $633,000 annually, pay this share of their income for state and local taxes.
• 5.3 percent — On average, New Yorkers in the poorest fifth pay this share of their income to property taxes, compared to 3.6 percent nationally.
• 6th — New York has the most progressive tax system in the nation according to the ITEP index.

Recommendations related to State Tax Policy

• The basis for reporting and budget reform should be broadened to encompass all of the activities of state government.
• The State’s capital budget should be separated from its annual operating budget plan, and it should cover the activities of public authorities as well as State agencies.
• More detailed GAAP reporting requirements should be adopted.
• A simpler, more transparent budget format that tracks cash disbursements should be developed.
• Metrics that are well developed, regularly reported to the public, and discussed with agency heads in public hearings help improve accountability.

Key Data

• $121.6 billion — All Funds cash total for the previous year.
• $54.6 billion — General Funds portion of the total state spending.
• 45 percent — Portion of the total state spending represented by the General Fund.
• $3 billion — Amount of personal income tax revenues transferred out of the General Fund every year to support the School Tax Relief program (STAR).
• $13.5 billion — Deficit the State ran on a GAAP basis last year.
• $1.9 billion — Positive year-end balance shown on the State’s cash report last year.

Recommendations related to State Tax Policy

• Reporting and disclosure of cost-benefit calculations for all economic development subsidies should be improved.
• Newly focused efforts should be targeted toward growth industries (such as the development and manufacturing of new technologies).
• Subsidies aimed at retention in manufacturing and other sectors should be clearly delineated and paired with appropriate measurements of their success or failure.
• The best way to ensure outcomes is to base program payments on performance post-facto rather than on projections made upon approval.
• Program management should be consolidated under a statewide or regional board structure.

Key Data

• $580 million — The cost of the Empire Zone program in 2008.
• 45 percent — The average annual growth rate of the program's cost from 2000 to 2008.
• $2,200 — The median benefits per job for program participants.
• $690,000 — The amount Manhattan Nursing Home Realty received in 2006 for adding a single job.
• 58 percent — The percentage of firms in the program that fell short of either their job targets or investment targets by more than 60 percent.
• 79 percent — The percentage of the 570 Empire Zone beneficiaries in New York City that failed to meet their targets.

Recommendations related to State Tax Policy

• The state must implement aggressive spending reductions to address the growing budget gap and avoid more painful future cuts.
• New York should reject increasing taxes as a solution, given the state's poor tax climate for economic growth.
• The state should avoid borrowing to cover deficits, as it jeopardizes credit ratings and limits capital investment capacity.
• New York must refrain from passing costs on to local governments, as the local tax burden is already the highest in the nation.

Key Data

• 22% — Decline in personal income tax revenue from the previous year.
• 36% — Expected growth in Medicaid spending over the next three years.
• $4.6 billion — Projected budget gap for the upcoming year.
• $18.2 billion — Projected budget gap by 2012-13.
• $26 billion — Current outlay for education aid to local school districts.
• $58 billion — Planned outstanding state-supported debt by 2013-14.

Recommendations related to State Tax Policy

• The $7.4 billion in federal stabilization aid should have been used primarily as a substitute for tax and fee increases, rather than as a substitute for the kinds of spending changes that will be needed when the funds run out.
• State leaders should lower spending in General and State Operating funds to respond to the crisis, rather than relying on unsustainable spending levels.
• Budget actions that represent real cost increases for New Yorkers, such as tuition increases, should be counted as revenue raisers rather than being officially reported as reductions in general fund spending.

Key Data

• $8.1 billion — Total revenue raising measures enacted in the 2009-10 budget.
• $3.9 billion — Estimated revenue from the increase in personal income tax rates for higher income brackets.
• $1.5 billion — Revenue generated from the cancellation of the Middle Class School Tax Relief (STAR) rebate.
• $857 million — Revenue generated from new health insurance company assessments.
• $547 million — Revenue generated from the utility tax.
• $17.9 billion — The size of the budget gap created by existing budget gaps and severe revenue losses.

Recommendations related to State Tax Policy

• Any tax increase should be temporarily imposed with a fixed set of dates for phase out or expiration to address cyclical revenue loss.
• Tax increases must run in tandem with significant measures to lower expenditures in ineffective and low priority programs and contractual changes with public employee unions.
• Policymakers should consider a rearrangement of the state and local tax systems, including property tax reform, to balance equity and stability.
• The state should form a bipartisan commission to examine tax reform from the dual perspective of fairness and competitiveness.
• Any income tax increase must be accompanied by serious, sustained reductions in government spending.

Key Data

• 56.5 percent — The portion of total State tax collections comprised by the personal income tax in 2006.
• $18.7 billion — The projected budget gap in year three of the financial plan.
• 35 percent — The amount by which New York's overall tax burden per $1,000 of personal income exceeds the national average.
• 28 percent — The share of total private sector wages in the State comprised by the financial services sector.
• 10.2 percent — The share of total jobs in the State comprised by the financial services sector.

Recommendations related to State Tax Policy

• Reduce State-mandated local government Medicaid costs more than authorized by the 3 percent cap on local growth enacted in 2005.
• Redesign State school aid programs including STAR to better serve poorer districts and thereby lower their local school tax burden.
• Redesign the State-mandated pension benefits for future state and local government workers through changes such as raising the minimum retirement ages, increasing the required employee contributions, eliminating inclusion of overtime in benefit calculations, and eliminating variable supplements for uniformed workers.
• Lower Medicaid expenditures by eliminating long-term care eligibility loopholes that extend benefits to middle-class residents.
• Discontinue issuance of State-funded debt to cover operating deficits.
• Integrate public authorities’ proposed borrowing for capital investments with the State’s capital plan in order to prevent inefficient use of borrowing capacity.
• Subject public authority borrowing to more rigorous financial review by an enhanced Public Authorities Control Board or by the Division of Budget.
• Reduce the State’s future debt by lowering capital spending and/or increasing pay-as-you-go financing.
• Prepare more extensive multi-year financial plans.
• Require that lump-sum appropriations meet specific program criteria and be subject to sunshine provisions.

Key Data

• $1.1 billion — Estimated savings to local governments in the current fiscal year from Medicaid measures.
• 158 percent — The local government portion of the tax burden in New York relative to the national average.
• $7,912 — New York's average Medicaid spending per beneficiary, which is 176 percent of the national average.
• $5.8 billion — Estimated annual savings from changing Medicaid policies.
• $105.8 billion — Total debt outstanding for the State and its authorities at the end of fiscal year 2004–05.
• $4.2 billion — Projected budget gap for the next fiscal year based on the current enacted budget.

Recommendations related to State Tax Policy

• Don’t adopt harmful tax increases – In particular, increases in the personal income tax and the gross receipts tax on utilities should be avoided.
• Do form a commission to examine the question of how to reform New York’s tax structure – Issues of fairness, stability, and the division of responsibilities among State and local governments should be thoroughly aired.
• Do end middle class STAR – The program is poorly crafted and difficult to administer.

Key Data

• $14.0 billion — Revised budget gap for fiscal year 2009-10.
• $18.7 billion — Budget gap in year three of the financial plan.
• $1.1 billion — Additional revenue losses.
• $4.4 billion — Harmful actions that should be avoided.
• $1.7 billion — Economically harmful tax hikes that should be avoided and replaced in the financial plan.
• $1.5 billion — Fiscal gimmicks and one-shots in the plan that should be eliminated.

Recommendations related to State Tax Policy

• New York should phase out the Empire Zone Program, which is a largely wasteful use of limited state resources.
• The state should pursue the decertification of businesses in substantial noncompliance and cease any new commitments that fail to meet well-defined, strategic objectives.
• New York should develop a more effective approach to economic development that focuses on strategic growth industries and offers deeper benefits for the most distressed areas of the state.
• Future state support should be based on quality of jobs, commitment to meet fair labor standards, and contribution to targeted industry clusters.
• The Legislature should work with the Governor and economic development groups to develop a new program that results in significant and measurable outcomes.

Key Data

• $600 million — The approximate annual cost of the Empire Zone Program.
• 58% — The percentage of participating firms in 2006 that fell short of their job creation and investment targets by 60% or more.
• 69 to 79% — The range of the failure rate for participating firms in several regions.
• 400% — The extent to which Empire Zone awards vary in value.

Recommendations related to State Tax Policy

• The budget adopted by the Legislature should reduce the Governor’s proposed $5 billion in new revenue measures to no more than $2 billion.
• Savings from spending reforms should first be used to eliminate tax increase proposals that curtail economic activity and add to the already high cost of doing business in New York.
• The State should use temporary federal funds as flexibly as possible to obviate the need for tax increases that would hinder New York’s recovery.
• The Legislature should require a greater share of health insurance premiums to be paid by current and retired employees to reduce the need for tax-funded expenditures.
• The State should eliminate high tax aid and hold harmless provisions in school aid formulas to promote equity and produce further savings that reduce the need for tax revenue.

Key Data

• $18.6 billion — The projected budget gap for fiscal year 2011-12.
• $5 billion — The amount of new revenue measures proposed in the Governor’s Executive Budget.
• $2 billion — The recommended maximum amount for new revenue measures in the adopted budget.
• $1.9 billion — The amount of revenue increases mis-categorized as spending reductions in the Governor’s budget.
• $404.0 million — The projected revenue from a non-dietetic soft drink tax.
• $1,864.2 million — The total value of mis-categorized revenues in the gap closing plan.

Recommendations related to State Tax Policy

• The size of any new payroll tax should be based on a revised assessment of need that extends and enhances the work of the Commission.
• The payroll tax could be a more reliable and stable future source and should be considered as a substitute for these dedicated taxes which could be reallocated to the State’s General Fund.
• More revenue should be raised from auto users by increasing and dedicating to the MTA other fees such as those for drivers’ licenses and vehicle registration.
• The proposed tolls on East River Bridges and Harlem River Bridges should be higher than the Commission recommends.

Recommendations related to State Tax Policy

• Fares should cover half of mass-transit operating costs.
• The MTA must link fares to costs to create an incentive for efficiency.
• Drivers should pay a quarter of the cost of mass transit, in addition to the full cost of MTA bridge and tunnel operations.
• A general tax subsidy should cover the remaining 25 percent of mass-transit operating costs.
• The Ravitch Commission does not need to propose major new taxes dedicated to the MTA, such as a payroll tax or increased sales tax.

Key Data

• $1.3 billion — Additional revenue needed from drivers in 2009 to meet the 25 percent funding target.
• $1.9 billion — Additional revenue needed from drivers in 2012 to meet the 25 percent funding target.
• $97 — Projected cost of a monthly Metrocard following a cumulative 20 percent fare increase by 2012.
• 15 percent — Required fare increase in 2009 to ensure fares cover 50 percent of operating costs.
• 20 percent — Cumulative fare increase required by 2012 to reach the 50 percent cost-coverage target.
• 13 percent — Current portion of mass-transit costs covered by driver revenues, falling short of the 25 percent target.

Recommendations related to State Tax Policy

• The Empire Zone program should be abolished because its problems are extensive and longstanding.
• The Empire Zone program should be a prime target for elimination given the current stress on the State budget.
• Increasingly scarce public resources should no longer be spent on the unproductive Empire Zone program.

Key Data

• $582 million — The cost of the Empire Zone program in 2008.
• $514 million — The total amount of Empire Zone tax credits claimed in 2006.
• $900 million — The amount of unused tax credits firms hold that can be used in future years.
• $391 million — The amount of credits claimed by just 500 firms in 2006, representing 76 percent of the total.
• $127 million — The amount of credits claimed by Fortune 1000 firms in 2006, representing about 25 percent of total annual claims.
• $30 million — The cost of the Empire Zone program in 2000.

Recommendations related to State Tax Policy

• New York should replace the problematic STAR homestead exemption program with an improved circuit breaker program that would work more effectively.
• The state should expand the existing circuit breaker program to provide targeted relief to the neediest taxpayers whose property taxes are burdensome relative to current income.
• Policymakers should adopt a model that refunds property taxes above 5 percent of income for homeowners earning less than $20,000 and above 7 percent for all others.
• The state should implement a circuit breaker program for renters that refunds property taxes in excess of 6 percent of income.
• New York must update the income and wealth criteria for its circuit breaker program, which have not been modified since 1985, to ensure it provides meaningful relief to residents.

Key Data

• $18,000 — Income ceiling for New York's current circuit breaker program.
• $85,000 — Maximum home value ceiling for New York's current circuit breaker program.
• $450 — Maximum rent value ceiling for New York's current circuit breaker program.
• $2.6 billion — Cost of a proposed circuit breaker program for homeowners.
• $2.7 billion — Cost of a proposed circuit breaker program for renters.
• 5.1 million — Number of owners and renters that would be reached by the dollars planned for the STAR program.

Recommendations related to State Tax Policy

• The state should restructure its health insurance to bring it in line with other public-sector employers to avoid tax increases.
• The state should change the pension benefits for future employees by creating a new tier for them to reduce state spending.
• Empire Zones should be cut from the budget and the money set aside for Centers of Excellence should be reduced to avoid tax increases.
• New York could save money by reducing non-competitive institutional rates like those paid to nursing homes.
• The state could also close eligibility loopholes for individuals with significant personal assets to reduce Medicaid spending.
• Limiting how many hours of 'personal care services' the state’s Medicaid program will cover would generate significant savings.

Key Data

• $5 billion — Annual savings that can be generated without reducing state services.
• $2 billion — Annual savings that could be achieved through Medicaid reforms.
• $1.1 billion — Annual savings that could be achieved through fringe benefit reforms.
• $800 million — Annual savings that could be achieved through economic development program reforms.
• $7,910 — New York's Medicaid spending per beneficiary.
• 69 percent — Amount by which New York's Medicaid spending per beneficiary exceeds the national average.

Recommendations related to State Tax Policy

• The State should pursue structural changes to the Medicaid program to reduce ineffective services.
• The State should convert to a defined contribution rather than a defined benefit system for public employee pensions.
• State law could require arbitrators to award wage increases that will not necessitate tax increases or require that any wage increase be funded in part by productivity gains.
• The State should base a household’s rebate on property taxes as a share of income to improve upon the STAR rebate program.
• A complete state takeover of local Medicaid expenses would ameliorate the fiscal burden on counties.

Key Data

• $111 billion — Annual amount New Yorkers pay in state and local taxes.
• $150 — New York's combined state and local taxes per $1,000 of personal income in fiscal year 2005.
• $2.2 billion — Medicaid mandates required from counties (excluding New York City) in fiscal year 2005.
• $4.7 billion — School property tax relief spending in fiscal year 2007-08.

Key Data

• 36-50 percent — The range of the effective tax rate reduction on new business investment caused by combined federal, state, and local taxes in 2006.
• 34-36 percentage points — The portion of the effective tax rate reduction typically attributed to federal taxes.
• 42.1 percent — The average combined federal-state-local effective tax rate for representative firms in New York City in 2006.
• 40.9 percent — The projected average combined federal-state-local effective tax rate for representative firms in New York City following 2007-08 state budget changes.

Recommendations related to State Tax Policy

• The state should close the loopholes in this year's new budget-reform law to prevent a breakdown in the budget process.
• The state should move the start of its fiscal year from April 1 to July 1 to allow for more accurate revenue estimates and more time for budget negotiations.
• To curb spending, the state should reduce the size of its workforce through productivity gains.
• The state should fix the state's broken debt limit as the current debt load is unsustainable.
• The state should tighten the eligibility rules for long-term care and take measures to stimulate the market for private long-term-care insurance among the middle class.
• The state should reduce hospital and nursing-home rates to more competitive levels.
• The new education funding formula should operate only on the basis of need, not be distorted by last-minute political deal-making.
• New York needs tighter accountability standards to hold school officials responsible for student performance.
• The STAR program should be restructured to deliver property-tax relief where it's needed most.

Key Data

• $121 billion — The size of the budget that legislators had less than two hours to review.
• 9 percent — The rate at which this year's budget inflated spending, which is more than three times the rate of inflation.
• $5 billion — The budget gap the state must close in just 18 months.
• $60 billion — The amount New York's debt load will soon exceed.
• $10 billion — The amount by which New York's debt load exceeds what is affordable under reasonable standards.

Recommendations related to State Tax Policy