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Cuomo's budget proposal targets businesses, property taxes

Cuomo's budget proposal targets businesses, property taxes

January 6, 2014 by YANCEY ROY /

ALBANY -- With a re-election campaign looming, Gov. Andrew M. Cuomo proposed a range of business and tax breaks, including a two-year property tax freeze for homeowners in municipalities that abide by the state's 2 percent property tax cap and take steps to share or consolidate services.

As he begins his fourth year in office, the Democrat offered a tax plan that seems to offer something for everyone. It proposed lowering corporate and estate taxes, eliminating taxes altogether for upstate manufacturers and enacting a renters tax credit for New York City residents who qualify.

Most of the ideas were proposed by a Cuomo-created tax commission in December.

Cuomo said the proposals amounted to $2 billion in tax relief, but would be spread over several years and the state budget, by and large, wouldn't be affected before 2015.

Further, the so-called property-tax freeze is actually an income-tax credit that would be available only in municipalities that took steps to rein in spending and shrink government. One watchdog said it would have very limited impact: about $125 for a Suffolk County homeowner and less than $200 for a Nassau County homeowner.

Cuomo said this carrot-and-stick approach would give localities incentives to effectively freeze property taxes. "We propose a property tax credit which will freeze property tax increases for two years," he said. "If the locality wants the credit, then the locality must perform."

Cuomo formally announced his initiative two days before he delivers his 2014 State of the State address, which sets his legislative agenda for the year. He's expected to rollout a "three T's" theme: taxes, technology and tourism.

He said he wants the State Legislature to make the tax cuts its "first agenda items."

E.J. McMahon of the Empire Center, a think tank, said the incentives were too small to greatly benefit homeowners or prod government consolidation. He estimated the maximum tax credit a Suffolk County homeowner could receive would be around $125; for Nassau County, closer to $200. Most upstate residents would get less than $100.

"It's not fiscally significant," McMahon said. "I don't know how this is going to create positive impact on the economy."

As the statewide election year begins, Cuomo offered a tax plan with something designed for upstate and downstate interests, businesses and renters.

It would offer an income-tax credit for renters with incomes below $100,000; the credit would vary with family size. More details are expected later this month when the governor proposes a 2014-15 state budget.

Appealing to businesses, Cuomo proposed lowering the corporate tax rate from 7.1 percent to 6.5 percent, eliminating taxes for upstate manufacturers and offering all manufacturers a 20 percent property-tax credit.

Cuomo also reversed course on a temporary utility tax known as 18-A levied on energy bills. Last year, instead of letting it expire as scheduled, Cuomo extended it to 2017. Now the governor wants to eliminate it immediately.

Kevin Law, president and CEO of the Long Island Association called the plan "another step in the right direction."

Liberal groups decried the business tax breaks. "How many times does history have to prove that tax breaks for business and the wealthy don't help working and middle-class New Yorkers?" said Karen Scharff, executive director of Citizen Action.

Senate co-leader Dean Skelos (R-Rockville Centre) said he was "encouraged" by Cuomo's proposal, but said the state should go further by enacting a state spending cap and making permanent a temporary middle-class tax cut enacted in 2011.

Assembly Speaker Sheldon Silver (D-Manhattan) called it a "bold vision for providing tax relief," but warned that the state shouldn't cut "vital health and education programs" to fund the tax cuts.

Also Monday, Cuomo:

Said he was more "comfortable" with a limited plan to allow 20 hospitals to dispense marijuana for medicinal purposes for certain patients rather than a wider ranging plan favored by some state legislators.

Said he disagreed with critics of Silver, who believe the answer to a spate of sexual harassment scandals involving rank-and-file legislators is to oust the speaker. "I don't agree with that," Cuomo said. "I think you have to change the rules (of the legislature) . . . as a recognition that you have to change the behavior."

Other proposals:

Among the tax breaks proposed by Gov. Andrew M. Cuomo Monday were:

A two-year income-tax credit for homeowners living in areas that abide by the state's 2 percent property tax cap and take steps to share or consolidate services.

Lowering the corporate tax rate from 7.1 percent to 6.5 percent.

A renters tax credit for New York City residents who qualify.

Eliminating taxes for upstate manufacturers and offering all manufacturers a 20 percent property-tax credit.

Eliminating a tax on energy bills now instead of 2017, as he favored last year.