New York State Plans to Cut Taxes, Eliminate Deficit, Increase Spending

December 8th, 2011
in econ_news

Cuomo-Silver-SkelosEconintersect:  Michael Likosky, Director of the Center on Law and Public Finance at New York University has been a leading proponent of government infrastructure banks.  An e-mail from Likosky alerted Econintersect to the latest news about public infrastructure banking, with a summary of an announcement by the leaders of both parties in the state government of New York.  In a press release dated December 6, Governor Andrew Cuomo (pictured, with Assembly Speaker Sheldon Silver (D) left and Senate Majority Leader Dean Skelos right - click on picture for larger image) announced “the most ambitious proposal at the state level to create a NEW multi-sector infrastructure bank.  It is benchmarked on national and international best practices.”  (Quote from Likosky’s e-mail.)

Follow up:

From the governor’s press release:

Governor Andrew M. Cuomo, Senate Majority Leader Dean Skelos and Assembly Speaker Sheldon Silver today announced that they have reached a proposed three-way agreement on legislative and executive proposals to create jobs and cut taxes for middle class New Yorkers. The agreement includes support for a comprehensive New York Works Agenda that will create thousands of jobs with new investments in New York's infrastructure, passing a fair tax reform plan that achieves the first major restructuring of the tax code in decades resulting in a tax cut for 4.4 million middle class New Yorkers taxpayers, approving $50 million in additional relief for areas devastated by recent floods, and reducing the MTA payroll tax to provide relief for small businesses. The leaders will now present the agreement to their members for approval.

"Our state government has come together in a bipartisan manner to create jobs, grow our economy and, at the same time enact a fair tax plan that cuts taxes for the middle class," Governor Cuomo said. "We are investing in projects that will restore our state's infrastructure and put thousands of people to work. We are cutting taxes on middle class New Yorkers and small businesses, which will inject nearly $1 billion into our economy. We are targeting new tax credits to hire inner city youth and reduce unemployment in some of the poorest areas of our state, as well as providing direct aid to communities struggling to recover in the wake of this year's severe storms. This would be lowest tax rate for middle class families in 58 years. This job-creating economic plan defies the political gridlock that has paralyzed Washington and shows that we can make government work for the people of this State once again. I commend Majority Leader Skelos and Assembly Speaker Silver for their partnership in our effort together to create jobs for New Yorkers and put our state's economy on a path for growth."

"This year, working in a bipartisan manner, we've accomplished some very important things for the people of this State - - including eliminating a $10 billion deficit, bringing spending under control and capping property taxes," Majority Leader Skelos said. "This comprehensive plan will reduce the tax rate for middle class families to their lowest levels in more than fifty years, create thousands of new private sector jobs, and begin to turn our economy around. I am pleased that this proposed agreement realizes long-held Senate Republican priorities like cutting the corporate franchise tax for manufacturers, reducing the job-killing MTA payroll tax for small businesses, eliminating New York's stealth tax by indexing tax brackets and deductions, and building our reserves, along with providing additional flood relief to support job growth in devastated communities. I am looking forward to presenting this framework agreement to the members of our conference tomorrow and hearing their feedback."

"Assembly Democrats share the Governor's belief that we need to restore fairness and equity to our tax system - someone who makes $50,000 should not be paying the same tax rate as someone making $5 million," Speaker Sheldon Silver said. "With Governor Cuomo's leadership, we have forged a bipartisan plan that is fair to all New Yorkers and will help build a brighter economic future for this State. I am submitting to my conference a proposal that will provide $2 billion in revenue for the people of New York in each of the next three years by creating a more progressive tax structure, coupled with a significant middle class tax cut. I will recommend that they give it favorable consideration. I congratulate the Governor for helping to forge this comprehensive plan to revitalize New York State's economy."

The Governor's New York Works Agenda will create tens of thousands of jobs through a $1 billion targeted and accelerated investment in key infrastructure projects around the state including roads, bridges, parks, energy and water projects. The NY Works Agenda also includes pursuing a comprehensive gaming plan and enacting a new tax credit to incentive the hiring of inner city youth.

The Governor and the legislative leaders have agreed to tax code reforms including a temporary restructuring of current tax brackets to reduce taxes for 4.4 million middle-class New Yorkers. The Governor is also establishing a commission to examine a comprehensive overhaul of the state's entire tax code that will make it simpler and fairer for all taxpayers and to create economic growth in the state.

In addition to these agreements, the Governor and legislative leaders announced a new round of flood relief, including a $50 million grant program for at businesses and counties impacted by Hurricane Irene and Tropical Storm Lee. The plan also includes a job retention tax credit for businesses impacted by a natural disaster during the last year. Finally, the Governor and legislative leaders announced that the MTA payroll tax will be reduced for small businesses.

The specific items in the proposed plan:

  • New York Works Infrastructure Fund: Creating Jobs by Rebuilding New York
  • Gaming Agreement (constitutional amendment)
  • Inner City Youth Employment Program and Tax Credit
  • Fair Tax Code Reform
  • Flood Recovery Grant Program
  • Jobs Retention Credit for Businesses Impacted by a Natural Disaster
  • Reduced Manufacturing Tax Rate
  • Reducing the MTA Payroll Tax

The actions in New York follow the lead of public infrastructure banking concepts endorsed by diverse political persona including Democrats President Obama, Sen. John Kerry (D, MA), Sen. John Warner (D, VA), former President Bill Clinton and California Governor Jerry Brown.  Republicans who have endorsed such ideas include Sen. Jim Demint (R, SC), Sen. Lindsay Graham (R, SC) and Sen. Kay Bailey Hutchison (R, KS).

From Michael Likosky’s e-mail:

GOVERNOR CUOMO'S BIPARTISAN APPROACH & KERRY-HUTCHISON AMERICAN INFRASTRUCTURE BANK

The New York Infrastructure Fund shares a number of features with the American Infrastructure Bank proposed by Senators Kerry, Hutchison, Graham and Warner - endorsed by President Obama in his State of the Union Address and also by President Clinton in his newly published book:

(1) Accelerates targeted investment in key infrastructure sectors.

(2) Adopts a bipartisan approach.  Recently, US Senator Kay Bailey Hutchison (R-TX) spoke of the importance of bipartisanship for infrastructure banks - http://hutchison.senate.gov/?p=press_release&id=837

(3) Leverages pension fund and other institutional investor capital through public-private partnerships

(4) Benefits urban, suburban and rural areas by addressing genuine needs sitting across the state and within a range of sectors including bridges, dams, parks, water systems, and also energy retrofits on homes, farms, businesses and schools.

LEVERAGING SUCCESSFUL BIPARTISAN US SENATOR BEST PRACTICES

An American Infrastructure Bank can help states such as New York leverage more effectively across sectors. Sometimes money goes further if we turn grants into loans and loan guarantees for profit-making projects.

In the coming months, I will be sending around more on how best practices state-driven initiatives by US Senator Jim DeMint and others can become more attractive to private investment through an American Infrastructure Bank partnership.  States such as TN, SC, AL, OH, IL, CA and KY can make the most of a multi-sector federal infrastructure bank in the near term.

This note follows up on the recent news from California where Governor Jerry Brown signed AB29, creating the Governor's Office of Business and Economic Development (GO-Biz) to promote partnership-driven job creation and economic growth.  GO-Biz brings together the California Infrastructure and Economic Development Bank, The Small Business Loan Guarantee Program, The Employment Panel, The California Workforce Investment Board, The Employment Development Department, The Tourism Commission, and the Film Commission.

With the creation of GO-Biz, Governor Brown shows us the value of multi-sector Infrastructure Banks in serving economic growth as members of a tight directed economic team.

An American Infrastructure Bank will be a key member of state economic teams looking to make money go further and be better spent.

Sources:   governor.ny.gov/press and e-mail communication from Michael Likosky, New York University

 









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