This week, the New York state leaders reached an agreement on a $212B state budget, the largest in the state’s history. Ultimately, most of smaller policy provisions proposed by the Governor were removed, but many “big picture” policy pieces made the final cut. Here is a summary of the key pieces affecting you and your customers:
No-Fault Anti-Fraud (Rejected): Big I NY supported the Governor’s proposal to more easily and aggressively prosecute medical providers (“medical mills”) that commit no-fault fraud, and lobbied members of the legislature on this issue during Independent Agents Advocacy Week. Unfortunately, this proposal was not included in the final budget. We are told this issue will be addressed post-budget.
Electronic Notarization and Electronic Service of Process (Rejected): Big I NY supported provisions in the Governor’s budget to allow for electronic notarization and service of legal process. These provisions were eliminated from the final budget.
Tax Increases for Businesses and High Earners (Included): The final budget raises the corporate franchise tax for three years on businesses earning $5M or more from 6.5% to 7.25%. The capital base tax is also reinstated at .1875%. Marginal tax rates on individuals are increased for those earning $1M, $5-25M, and $25M+. Big I NY joined the National Federation of Independent Businesses (NFIB) and a broad based coalition of business interests in calling on the legislature to reject any business tax increases. We are extremely disappointed the state has adopted a multi-billion dollar tax increase, particularly given that they are unnecessary in light of substantial new federal assistance.
Small Business Relief (Included): The final budget includes $1B in small business assistance, including $800M in small business grants and $200M in tax credits. The budget also includes a $35M return to work credit for restaurants. Big I NY met with state lawmakers and urged them to support this critical assistance package as part of NFIB’s Small Business Day in March.
Insurer Tax Surcharge: (Rejected) The Assembly advanced a proposal to add an 18% surcharge to taxes paid by NY insurers. We were concerned that this could result in higher premiums, and fortunately, this proposal was rejected in the final budget.
Ultimately, this year’s budget is a mixed bag. We are encouraged that neither the Governor nor legislature advanced harmful increases on insurance law fines and penalties as we have seen in past years, and the small business relief is desperately needed. However, the corporate and individual tax hikes will worsen the state’s already dismal business climate and threaten to accelerate the ongoing population decline.