A Special Report from the

NYS Assembly
Small Business
Sheldon Silver, Speaker   Robert K. Sweeney, Chair January 2001
Speaker Silver Announces New Committee Chairs

Sweeney new Small Business Committee Chair;
Morelle to chair tourism panel
A leader in economic development efforts, incoming chair Robert K. Sweeney has successfully worked to establish programs that assist small businesses, especially defense-dependent manufacturers and high-tech businesses.

He received the 1995 Initiative Award from ADDAPT, a consortium of over 100 New York manufacturing firms.

Assemblyman Sweeney is credited with establishing the highly successful “NY Hi-Tech Agenda,” which promotes good, high-paying high technology jobs for New York State residents. This initiative creates the jobs of today while providing the infrastructure to ensure employment opportunities for our children.

As chair of the Small Business Committee, Sweeney will play a key role in fostering the growth and vitality of the small business sector that creates eight out of ten new jobs for working families across the state.

As chair of the Small Business Committee since 1997, Joseph D. Morelle fought to increase access to capital and boost work force training.

Morelle also took a leadership role in promoting New York’s remanufacturing industries, recognizing the enormous economic and environmental benefits of this emerging sector.

Assemblyman Morelle authored major reforms to the workers’ compensation system, which have provided needed relief to New York businesses.

Morelle will bring the same commitment to economic development and job-creation to his new position as chair of the Committee on Tourism, Arts and Sports Development.

2000 Year in Review

$1.4 billion tax cuts pave way for small business
growth, job creation
          New York’s businesses and working families will save approximately $1.4 billion when the 2000-01 tax cuts are fully implemented. The new tax cuts build on the $13 billion in tax relief enacted by the Assembly since 1994 to build a stronger, more competitive state economy, create good-paying jobs and help families keep more of their hard-earned dollars.

Empire Zones to foster job growth in economically distressed communities

          The cornerstone of the targeted business tax cut plan is an Assembly initiative to establish job-creating, tax-free “Empire Zones.”
          Existing economic development zones will become virtually tax-free, with incentives targeted to communities throughout the state that have missed out on the current economic boom.
          When fully implemented in 2001, the Empire Zones will invest approximately $40 million per year in job-creating businesses, including:

           an income or franchise tax credit for real property tax paid, up to 100%, depending on increases in employment;
           a state sales tax exemption on the purchase of tangible personal property or services used or consumed (localities will have the option of matching this exemption);
           a credit against income or franchise tax resulting from business conducted in the zone, up to 100%, the amount of which will be dependent on the amount of increased employment.

          The program also offers $150 million in tax credits for insurance companies that invest in venture capital pools which, in turn, invest in businesses statewide. Under this program, known as “CAPCO,” one third of the credits would be allocated for investments in Empire Zone businesses.

Cutting energy taxes

          Repealing the gross receipts tax (GRT) on employers’ utility bills was a major budget highlight, at a time when skyrocketing energy costs pose a significant obstacle to business investment and job growth.
          When fully effective, the GRT repeal will save industry, businesses and residential electric and natural gas customers $330 million.
          The budget also repealed the state sales tax on transmission and distribution of gas and electricity for commercial customers, which is estimated to save businesses nearly $150 million when fully implemented. In addition, the petroleum business tax on heating oil used for commercial purposes was reduced by one-third.

Other new tax cuts

           reduced the entire net income rate that small corporations face under the corporate franchise tax from 7.5 to 6.85 percent, the same as the state’s personal income tax rate, by the end of 2003;
            reduced the S-corporation differential rate to allow these corporations to be taxed more closely to the rate of small, unincorporated businesses;
           eliminated the minimum taxes on petroleum businesses and aviation fuel businesses;
           created a green buildings tax credit for constructing or rehabilitating buildings that exceed current environmental standards;
           reduced the supplemental ton mileage tax by 10 percent.

Boosting Remanufacturing
Emerging industry creates 2,000 New York jobs
         Remanufacturing returns a product to like-new condition and keeps thousands of tons of solid waste from clogging landfills each year. This process has been particularly successful in retooling toner cartridges, which cannot be recycled.
          There are over 350 toner cartridge remanu-facturers in New York State, employing over 2,000 skilled and semi-skilled workers and saving about 2,250 tons of waste from entering New York landfills each year.
          However, this important industry faces a real threat from printer manufacturers whose toner licensing agreements prohibit the remanufacture of the product –– agreements that automatically take effect the moment a toner cartridge package is opened.
          During the past session, the Assembly won passage of a new law (A.11523, Chapter 95, Laws of 2000) encouraging the use of recycled or remanu-factured printer or toner cartridges by State agencies.
 Another bill (A.6984D, Morelle) would require New York State agencies to give preference to purchasing remanufactured goods, and prohibit the state from purchasing products for which the original manufacturer has forbidden to be remanufactured.
          This measure passed the Assembly, but failed to pass the Senate.
          “Remanufacturing creates jobs, uses less energy to convert materials to a useable form and reduces solid waste disposal,” said Assemblyman Joseph Morelle. “It is a win-win situation for New York.”

get tax break in 2001

For tax years beginning January 1, 2001, certain remanufacturing companies will be eligible for New York State qualified emerging technology company (QETC) tax credits, created by the Assembly in 1998.

  QETC employment credit –– grants a tax credit of $1,000 per full-time worker employed over the company’s base year employment level.
The credit is available for up to three years.
  QETC capital credit –– provides a tax credit for investments in qualified emerging technology companies: 20% of investments in companies expected to be held for nine years, and 10% of investments in companies expected to be held for four years. The credit is claimed in the year the investment is initially made.

For more information, contact your tax advisor or the New York State Department of Taxation and Finance.

Providing Access to Capital

The Assembly approved the following bills during the past legislative session, but unfortunately, the measures died in the Senate.

  Creating Business Outreach Centers (A.11029, Morelle)
These centers would help small businesses gain access to economic development, capital and technical assistance, and help local development organizations foster small business growth in their communities. The program would increase the resources available to entrepreneurs by coordinating “networking” at every stage of business development.

Allowing Credit Unions to Participate in Excelsior Linked Deposit (A.2565, Vann)
The Excelsior Linked Deposit Program gives small businesses access to loans that traditional lending institutions are unable or unwilling to provide. By including Credit Unions in the program, small businesses will have greater access to loans within their own communities.

 Establishing a Business Loan Secondary Market (A.592, Schimminger)
This bill would allow the Urban Development Corporation to originate and purchase small business loans so they could be pooled and used to issue and sell securities called “small business loan securities.” The small business loan securities would be made legal investments for State pension funds as well as for banks and insurance companies.

Reviving the Small Business Innovation Research Program (A.1304-A, Schimminger)
The state SBIR program helps emerging high-tech companies compete for a greater share of federal research contracts under the federal SBIR program. The state program increased the amount of federal dollars coming to New York from under $5 million annually in the mid-1980’s to over $30 million by 1991. Although the program remains in effect, it has not been funded because of disagreement over how to distribute funds among award winners. This bill clarifies how funds will be allocated so the program can begin anew.

Investing in Small Business –– New
York’s Job-Creation Engine
The Assembly made sure the 2000-01 state budget made key investments helping small businesses prosper, create and retain jobs, and to increase economic opportunities for communities in need.

  Entrepreneurial Assistance Program (EAP) –– these centers provide comprehensive assistance in starting a business and helping new businesses succeed ($1.3 million);
  Empire State Technology Employment Incentive Program –– a new program addressing the shortage of engineers, researchers, scientists, and other highly-trained technical employees ($1.7 million);
  Jobs Now –– provides funding for large-scale projects that will create new jobs ($42 million);
 Economic Development Fund –– invests in projects that create or retain jobs ($37 million);
  Biotechnology Industry Growth Fund –– provides funds for university-based biomedical research and for small start-up biotechnology companies ($10 million);
  Urban and Community Development Program –– provides state technical assistance and capital for the start-up of “micro-enterprise” businesses and provides funds for development in economically distressed communities ($3.5 million);
  Minority and Women-Owned Businesses –– makes capital available for local loan funds to start-up minority and women-owned businesses and provides funds for business development in economically distressed areas ($3.5 million);
  Centers for Advanced Technology (CATs) –– work with New York companies on developing new technologies and products, and creating new businesses and high quality jobs throughout the state ($14 million for existing CATs; $10 million for additional development);
  Technology Development Organizations (TDOs) –– provide technical assistance to high-tech companies seeking to remain competitive ($1.5 million);
 Industrial Technology Extension Services (ITES) –– provide technical and managerial assistance to small and mid-sized New York manufacturers ($1 million);
  Emerging Industry Alliance –– provide increased levels of operating support for regionally based not-for-profit organizations so they can provide technical assistance for emerging industries ($600,000);
  Technology Transfer Program –– provides grants to colleges and universities for technology transfer activities, such as patent applications, for the creation of business plans, venture capital conferences, and other ways to commercialize high technology innovations ($800,000).

Helping small businesses meet
environmental standard
Over the past decade, new federal and state environmental laws and regulations have made it necessary for many small businesses to invest in pollution control equipment at a time when access to capital is often difficult. To ease the financial burden on smaller companies while protecting the public health and safety, the Assembly passed a bill to help small businesses obtain loans from private lenders (A.549, Destito) to purchase pollution control equipment. Another bill approved by the Assembly (A.550, Destito) would encourage private lenders to make pollution prevention or compliance loans to small businesses, backed by a loan loss reserve fund. Unfortunately, neither bill was approved by the Senate.
Power for Jobs Program Expanded

          Highly successful Assembly initiative provides low-cost power to job-creating businesses

          The Assembly’s highly successful Power for Jobs program was expanded to save business $250 million over five years.The program will gain 300 megawatts of low-cost power for businesses that create or maintain jobs.

          With electric rates among the highest in the nation, New York suffers a competitive disadvantage as a place to do business. That’s why the Assembly led the fight to create the Power for Jobs program, which has already created or retained a quarter of a million jobs for New York’s hardworking families since its inception three years ago.

          For more information about the Power for Jobs program, contact Assemblyman Robert Sweeney’s office at (518) 455-5787.

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