With the final votes cast less than twelve hours earlier, yesterday morning the Governor and legislative leaders held a celebratory press conference on the enacted state budget for 2014-15. The message, in perhaps a nod to beginning of of baseball season, was that the budget was a “grand slam” for New York.
As our statement from earlier in the week indicated, this budget was a mixed bag for small business – definitely not a “grand slam” – but to be fair, not a fly out to center like last year was.
In further looking through the budget and dissecting the various components, one thing is definitely sure. This was an election year budget designed to mitigate broad dissatisfaction and provide something for the various special interests all across New York.
The biggest “something” for small business in the broadest sense is the estate tax reform. The reform ebbed and flowed from the fire to the back burner as an issue on the Albany center stage. The opponents, seemingly fixated on the connotations of “estate”, touted the reform as a hand out to the uber wealthy.
Throughout the debate we made the argument that this reform was essential to our family owned small businesses and farms. Sustaining existing business and attempting to stem the tide of business and people leaving New York for more tax friendly environments are paramount to the fiscal and economic future of our state.
Critical to pointing out the numerous flaws in the anti-reform argument was the Empire Center for Public Policy’s report on the estate tax. Through comprehensive factual and anecdotal data, this report was essential in painting a very different, and more accurate, picture of the issue. The business community writ large embraced these findings and ultimately “won” the day.
Over the next few years, New York’s estate tax will be more, though not entirely, in line with the rest of the nation. A much needed victory for small business!
Outside of this, the other tax reform components for business were targeted to corporations and manufacturers. While we represent some small business that file their taxes as corporations and represent many manufacturers, main street was left out of the final deal in a broad sense. Please note, we supported these reforms, but continued to push and offer solutions for more broad tax reform to fully capture the entirety of the small business community. We are disappointed we were not successful.
Also enacted was the property tax “freeze”, or more accurately, the property tax rebate. The Governor’s rhetoric on property taxes is spot on, it is unfortunate however that he choose to dig in his heels on this approach. The rebate checks will come to most homeowners this and next fall (assuming local governments share services, etc.) in various amounts of money. The administration touts rebates as high as $450, while some local leaders across New York have calculated the checks as low as $16.
Does that sound like reform? What happens in year 3 when the freeze goes away? The property tax burden is still there, as it is today, and your bill is going to be higher.
All this “freeze” represents is a two year detour from comprehensively addressing the unfunded mandates Albany has imposed on your schools and communities. Until actual mandate relief is enacted, the property tax burden will remain a major impediment to creating a fair and equitable tax climate in New York.
Overall, the plan avoided placing new cost mandates on small business (think paid leave or minimum wage last year) and enacted a good package of tax cuts for business. The flip side is small business broadly won’t receive those cuts and will continue to see the “new New York” TV commercials touting a better tax climate (or no taxes for businesses that don’t exist yet) that they do not necessary see.
This plan could have been a “grand slam” if the tax reform was more broad and the tax rebate program was replaced with mandate relief initiatives. Does it move New York forward? Yes, a good step, but not the leap main street was looking for.