The New York State Assembly and Senate have come to a two-way agreement on a revenue plan that will help to close the state's $9.2 billion budget gap (A.9710-C). The legislation would increase revenue by $954 million in the 2010-2011 fiscal year and help close out-year deficits by increasing revenue $1.725 billion in 2011-2012. The revenue figures are based on the same financial plan as the Governor's last emergency budget extender legislation.
The Assembly and Senate do reject the Executive proposal for selling wine in grocery stores.
The major provisions in the legislation include:
Sales tax on clothing and footwear under $110: The sales tax exemption on clothing and footwear under $110 would be temporarily suspended from October 1, 2010 through March 31, 2011. Beginning April 1, 2011, the exemption would be reinstated at $55 until March 31, 2012. The exemption would revert back to $110 on April 1, 2012. Local governments would be given the option to maintain their current exemptions, or opt into the exemption schedule spelled out in this part. This provision will increase revenue by $330 million in the current fiscal :year.
Business tax credit deferral: For tax years 2010, 2011 and 2012, taxpayers with more than $2 million in aggregated business tax credits would be required to defer the amounts above $2 million until 2013. The total amount of credits deferred under this proposal would be paid back to taxpayers over tax years 2013, 2014 and 2015. This provision would raise $100 million this year and $970 million in the 2011-12 fiscal year.
Reducing itemized deductions for those with New York Adjusted Gross Income (NYAGI) above $10 million: The bill reduces the amount of charitable contributions allowed as a New York Itemized Deduction from 50 percent to 25 percent for taxpayers with a NYAGI above $10 million. This provision would be in effect for taxable years beginning on or after 2010 and before 2013. The limitation is expected to raise $100 million in the current fiscal year and $135 million in 2011-12.
Restructure the New York City personal income tax rate reduction for the New York State School Tax Relief Program (STAR): The bill would alter the STAR property tax exemption program to limit the benefit of the personal income tax rate reduction in New York City to the first $500,000 in income. In addition, homeowners with homes valued at $2 million or more would not be eligible for the exemption in the 2010-11 school year. Beginning in 2011-12, homeowners with incomes above $500,000 annually would no longer be eligible for a STAR exemption. These provisions are estimated to generate $140 million in savings in the 2010-11 fiscal year and $210 million in 2011-12 and thereafter. The Executive's proposal to increase the STAR "floor" adjustment was denied.
Empire State film production credit: This bill would provide an additional $420 million annually over tax years 2010 through 2014. Seven million of the annual allocation would be available for a separate post-production tax credit. These provisions would not impact revenue in 2010-11.