New York State's political leadership, led by Governor Andrew Cuomo, proudly announced at the end of March that for the sixth straight year, they have reached a budget agreement on time. As is usual, the budget includes landmark policies and provisions that will strengthen working and middle class families and the business community, while improving the lives of all New York State citizens. While the budget document is a roadmap, implementation is accomplished by the adoption of the requisite statutes and regulations. By nature, this process takes some time, so we will need to wait to see how all of these policies are finalized by the Legislature and the Governor.
The budget contains numerous tax and non-tax provisions important for both individuals and businesses. These include significant labor, environmental, minimum wage, paid family leave, and other non-tax related provisions.
Key Tax Provisions include:
- A middle class tax cut, reducing the rates previously reduced in 2012 to 5.5%, with a phase-in beginning in 2018.
- Estate tax domicile reform was adopted, prohibiting consideration of a decedent's history of charitable contributions in determining domicile.
- The Earned Income Tax Credit is enhanced.
- Farm Workforce Retention Credit is established.
- Low-Income Housing Investment Credits are enhanced.
- The Voluntary Compliance Initiative is extended.
Other Key Provisions include:
- Paid Family Leave: The budget includes the longest and most comprehensive paid family leave program in the country. After phase-in, a 12- week paid family leave will apply for individuals caring for an infant or a family member with a serious health condition, or to relieve family pressures when a family member is in active military service. These additional benefits are phased in beginning in 2018 at 50% of an employee's average weekly wage, and increases to 67% when fully implemented in 2021.
- Minimum Wage Increased: The press has cited the budget provisions increasing the New York State and New York City minimum wage as exemplary. In general, New York State minimum wages increase to $9.70 at the end of 2016, with increases of $.70 per year until reaching $12.50 on December 31, 2020. New York City workers employed by large businesses (those with at least 11 employees) will see their minimum wage rise to $11 at the end of 2016, increasing by $2 each year, reaching $15 on December 31, 2018. Small business employees receive an initial minimum wage increase to $10.50 in 2016, with an annual increase of $1.50 per year until their minimum wage reaches $15 at the end of 2019. Nassau, Suffolk and Westchester County employees' minimum wage increases to $10 at the end of 2016 and then increases $1 per year until reaching $15 on December 31, 2021. The budget provides a mechanism effective in 2019, wherein the State Director of the Budget can review the needs of the New York economy to determine if wage increases should be temporarily suspended, with the ultimate decision resting with the Department of Labor.
- Total State operating funds are limited to 2% annual growth.
- Public school funding is increased by 6.5%.
- Medicaid spending has been approved to increase by 3.4%.
- Higher education spending increases by 2%.
- $175,000,000 in funding was approved to assist failing and other high needs schools to become community schools. This funding seeks to insure that issues of community poverty are considered in promoting educational objectives.
- Charter school contributions are increased by approximately $430 per pupil.
- Infrastructure spending has been approved with over $15 billion of transportation investments.
As the budget winds its way through legislative enactment, we will continue to monitor just how these new policies are implemented. The 2016-2017 budget is certain to impact all working families and businesses in New York State. Your Marcum professionals will continue to keep you advised as the 2016-2017 budget proposals come to fruition.