March 15, 2024

Following is a brief discussion of tax and business one-house and executive proposals in play as we move into the final leg of state budget negotiations.

Attached is a side-by-side document for your review.

Great thanks are due to our government relations consultants at Reid, McNally and Savage for always going long where others fall short!

March 15, 2024
RMS Tax and Business Update : Executive and One-House Budget Updates for SFY 2025

The Senate and Assembly released their FY 2025 “one-house” Article VII and Appropriation budget bills earlier this week and both houses are expected to pass Budget Resolutions related to their house budget bills today.  2 and 3-Way negotiations will then commence between the Senate, Assembly, and the Governor with a goal of reaching a final budget deal by the April 1 deadline.

Following our review of the bills, we have developed a comparison of the tax proposals by the Governor, Senate and Assembly. In addition, we have provided a brief update highlighting these and other general issues of concern to businesses.  This update is beyond those already provided on specific issues areas of the state budget for SFY 2025. 

Upon review, please let us know if you have any questions or if you would like additional details on any of the proposals.

TOTAL SPENDING:

·        Governor Hochul’s budget proposed a total of $233 billion in spending. The largest spending categories in her budget are education and health care, as is the norm historically.

·        The Senate and Assembly both proposed a significantly larger budget: around $246 billion each, with the biggest chunk of that difference being additional health care spending in both cases.

TAX HIKES:

·        Governor Hochul’s Budget rejected any new or increased taxes on personal income tax or corporations.

·        The Senate and Assembly proposals would increase current income tax rates to 10.8 percent for New Yorkers earning over $5 million a year and 11.4 percent for those earning over $25 million.

·         The legislative proposals would also implement a three-year increase in the base tax rate for corporations with an annual income over $5 million: to nine percent, up from the current rate of 7.25 percent. This would raise over $2 billion in additional revenue, according to the Assembly’s estimate.

RESERVES:

The Division of the Budget is seeking to end fiscal year 2024–25 with a balance of nearly $44 billion, approximately half of which would be “principal reserves” to protect essential services in the event of an economic downturn.  Unlike in previous years, the legislature is on board with putting roughly that amount in the bank; both the Senate and the Assembly proposed around $43.5 billion in year-end reserves.

Expansion of Lawsuits Against Business (UDAP)

The Governor’s Executive Budget proposal, Senate Budget proposal and two companion bills (A.7138 Weinstein and S.795 Comrie) in the State Legislature propose to make sweeping changes to the provisions of the state’s general business law (Section 349) dealing with deceptive practices.  In addition to creating a new private right of action, the bills would greatly expand the powers of the New York attorney general.  While the Governor’s proposal is arguably less strident than both Legislative proposals it still includes a private right of action that empowers private plaintiffs to bring actions concerning alleged deceptive acts or practices, and authorizes courts to award attorneys’ fees and costs to prevailing plaintiffs. Concomitant with its expansion of the attorney general’s power, the proposal enables private plaintiffs to bring actions to remedy “unfair” or “abusive” acts or practices¹¹ while requiring courts to award attorneys’ fees and costs to successful plaintiffs. The Governor’s proposal also increases the penalties for violation from $50 per violation to $1,000 per violation or the amount of actual damages, whichever is greater.