Miscellaneous Receipts

General Fund

Also included in the Other Transactions category are law changes to Health Care Provider Assessments which will reduce receipts by approximately $15 million in State Fiscal Year 1997-98, and by $540 million when fully implemented.

The Committee Staff forecast for State Fiscal Year 1998-99 is $1,447 million, which represents a reduction in overall Miscellaneous Receipts of $140 million, or 8.8 percent, over State Fiscal Year 1997-98. This forecast assumes a return to normal transaction patterns, especially in the Other Transactions category, and incorporates law changes that will affect Provider Assessments. The expected loss to the State from Provider Assessments is approximately $40 million in State Fiscal Year 1998-99. This estimate is $46 million higher than the Executive.

Recent Legislative History

Motor Fuel Tax

General Fund

The Committee Staff forecast for State Fiscal Year 1998-99 is $168 million, representing 1.2 percent growth over State Fiscal Year 1997-98. This estimate is $2 million higher than the Executive.

All Funds

The Committee Staff estimates All Funds receipts of $492 million for State Fiscal Year 1997-98. The Emergency Highway Construction and Reconstruction Fund, the Emergency Highway Reconditioning and Preservation Fund and the Dedicated Highway and Bridge Trust Fund will receive $326 million. The Committee Staff estimate is $2 million higher than the Executive.

For State Fiscal Year 1998-99, the Highway Funds will receive $332 million, which when combined with General Fund collections, will result in an All Funds forecast of $500 million. This estimate is $9 million higher than the Executive.

Recent Legislative History

Motor Vehicle Fees

General Fund

The Committee Staff current-law forecast for State Fiscal Year 1998-99 is $502 million, which represents a 0.4 percent increase. The Committee Staff estimate is the same as the Executive.

Legislation submitted with the Executive Budget would reduce passenger vehicle registration by 25 percent and increase the county clerk retention percentage to 9.3 percent. Based on these proposals, the Committee Staff proposed-law forecast for State Fiscal Year 1998-99 is $423 million, a decline of 15.4 percent. The Committee Staff estimate is the same as the Executive.

All Funds

Recent Legislative Changes

Other Taxes

General Fund

Pari-Mutuel

General Fund

The Committee Staff current-law forecast for State Fiscal Year 1998-99 is $41 million, representing no growth over State Fiscal Year 1997-98.

Legislation submitted with the Budget will extend the authority for expanded simulcasting and the lower tax rates afforded to NYRA for an additional year. Based on these proposals, the Committee Staff proposed-law estimate for State Fiscal Year 1998-99 is $40 million. This estimate is the same as the Executive.

Recent Legislative History

NYRA was also required to use the first $2 million of annual profits for increasing purses, and any additional profits would then be used to reduce debt obligations.

In 1996, expanded simulcasting for when NYRA is not running, in-home simulcasting, telephone wagering, out-of-state harness races, out-of-state thoroughbred track simulcasting, and NYRA winter meet simulcasting were extended for one additional year. This legislation also allowed any corporation or association to retain a portion of the fee, not to exceed 50 percent, for capital improvements to be used for advertising and promotional expenses, and altered the distribution formula to permit the sharing of commissions with regional thoroughbred tracks, in a limited way.

In 1995, expanded simulcasting, for when NYRA is not running, was extended for one year. The reduced tax rate of 4 percent on NYRA on-track regular bets, and the reduced tax rates at OTBs and NYRA wagers on regular, multiple (0.5 percent), and exotic bets (1.5 percent) were extended for three years. Taxes on NYRA on-track regular bets were reduced to 3 percent and multiple bets to 2.5 percent for three years.
 

Personal Income Tax

General Description

New York State’s definition of income closely mirrors federal rules, which include wages, salaries, capital gains, unemployment compensation, and interest and dividend income. The sum of these sources is Federal Adjusted Gross Income. New York Adjusted Gross Income (NYAGI) is calculated starting with this base, from which certain income is added or subtracted to arrive at New York Adjusted Gross Income.

The New York standard deduction or itemized deductions, and a dependent exemption are subtracted from NYAGI, which yields New York State Taxable Income. Taxes are calculated based on this amount. Certain credits are then subtracted from the calculated tax to determine total tax liability.

General Fund

The largest component of the Personal Income Tax is withholding. Employers withhold tax from wages based on the estimated liability of each employee. Receipts from withholding also include taxes withheld on bonus payments paid to employees.

Withholding receipts are projected to total $15,225 million. This represents an increase of $325 million, or 2.2 percent over State Fiscal Year 1996-97. This increase is attributable to several factors, such as falling unemployment rates combined with rising wages and bonus payments.

Estimated payment collections are projected to total $4,424 million. This represents an increase of $568 million, or 14.7 percent over last fiscal year. Estimated payments consist of quarterly payments made by certain taxpayers on their estimated tax liability. These taxpayers historically have consisted of high income earners, or people who realize significant capital gains. The strong performance of the financial markets in 1997, leading to high capital gains realizations, is primarily responsible for the increase in estimated payments. Consistent with this strong growth is the Committee Staff forecast for capital gains growth of 49.2 percent in 1997.

The Committee Staff estimates that current-law Personal Income Tax collections will total $21,224 million in State Fiscal Year 1998-99. This estimate is $721 million higher than the Executive.

Withholding receipts are projected to increase to $16,482 million in State Fiscal Year 1998-99. This represents a growth of $1,257 million or 8.3 percent over State Fiscal Year 1997-98. The Committee Staff forecast for wage growth of 5.8 percent, coupled with no new additional tax cuts, will allow withholding to increase by 8.3 percent.

The Committee Staff forecasts that estimated payments will total $4,915 million representing growth of $491 million or 11.1 percent over State Fiscal year 1997-98. The performance of the financial markets is expected to remain favorable, resulting in an increase in capital gains realization of 18.1 percent in 1998.

Legislation submitted with the Executive Budget would dedicate $724 million in Personal Income Tax receipts to a newly created "School Tax Relief Fund." In addition, the Executive proposes to accelerate the base acreage amounts used in calculating the current agricultural school property tax credit. Lastly, the Executive proposes to exclude any distribution from the Holocaust Victims’ Fund to a Holocaust survivor or his or her descendants from New York Adjusted Gross Income. Based on these proposals, the Committee Staff proposed-law forecast for State Fiscal Year 1998-99 is $20,497 million.

All Funds

Recent Legislative History

• Increasing the Child and Dependent Care Credit to 100 percent of the Federal credit for taxpayers with adjusted gross income of $17,000 or less;
• Creating the New York State College Choice Tuition Savings Program. New York State residents and non-residents can establish savings accounts to pay for qualified higher education expenses;
• Enhancing the Farm School Property Tax credit by exempting up to the first $30,000 of non-farm Federal gross income in the determination of eligibility for the credit. It also provides for subtracting principal payments on farm debt when calculating the income limit for the phase-out of the credit;
• Extending the Employment Incentive Credit and Economic Development Zone Employment Incentive Credit to businesses whose owners are taxable under the Personal Income Tax; and
• Establishing a new solar credit for residential investment in solar electric generating equipment.

A tax amnesty program was also established in 1996, which was provided to taxpayers with outstanding liability for Tax Years up to and including 1994. Penalties, but not interest, were waived. Gross Personal Income Tax revenues collected exceeded $130 million under the program.

In 1995, the Legislature enacted a three-year Personal Income Tax reduction plan. This legislation:

• Reduced the top rate from 7.875 percent in 1994 to 6.85 percent in 1997;
• Accelerated the increase in the Earned Income Tax Credit (EITC) for 1996 to a fully phased in level of 20 percent of the Federal credit;
• Reduced the EITC in 1996, and every year thereafter, by the amount of the Household Credit used by the taxpayer;
• Introduced an Excess Deductions Credit for 1995 only, to ensure that middle income itemizers will not experience a tax increase due to the change from the 5-bracket to the 4-bracket structure; and
• Maintained the scheduled increases in the standard deduction from $9,500 for married couples filing jointly in 1994 to $13,000 in 1997.

Petroleum Business Taxes

General Fund

The Committee Staff forecasts receipts to decline by an additional 13.3 percent, to a total of $98 million in State Fiscal Year 1998-99. Additional dedication of General Fund receipts to the Dedicated Highway and Bridge Trust Fund and to the Mass Transportation Operating Assistance Fund (MTOAF), and the continuation of the tax cuts implemented in State Fiscal Year 1996-97 are reflected in the negative growth. This estimate is $1 million higher than the Executive.

All Funds

Recent Legislative History

In 1996, legislation was enacted that: reduced the tax on "railroad diesel" by 7 cents per gallon; eliminated the Petroleum Business Tax on non-automotive diesel motor fuel and residual used in manufacturing; increased the basic credit or reimbursement on residual petroleum products or diesel fuel for utility companies by 0.5 cents per gallon; reduced the automotive diesel motor fuel component by 1.75 cents per gallon; and changed the distribution of revenues from the Petroleum Business Tax to hold the transportation funds and MTOAF harmless from these reductions. Furthermore, other provisions included: the reimbursement of the Petroleum Business Tax on aviation and kero-jet fuel purchased in-state but consumed out-of-state; expanded the time for which taxpayers may claim a refund for taxes paid on fuel purchased in-state but consumed out-of-state; and allowed taxpayers to file for refunds for taxes paid up to four years after the tax was paid.

In 1995, the reduction of the Petroleum Business Tax rate and the elimination of the supplemental tax for aviation gasoline and kero-jet fuel were enacted. In addition, fuel consumed by not-for-profit organizations was given a full exemption.

In 1994, legislative actions repealed the 10-cent tax on lubricating oil; provided for the refund of sales on accounts determined to be uncollectible; exempted manufacturers from the Petroleum Business Tax supplemental tax; provided for a commercial heating oil credit against the Petroleum Business Tax; exempted farm and greenhouse use of diesel and residual fuel from the Petroleum Business Tax when the fuel is delivered to the farm; postponed potential downward indexing; restricted Petroleum Business Tax rate increases by capping them at 5 percent; provided for refunds for commercial fishing vessels on diesel motor fuel and motor fuel,; and granted a partial exemption for not-for-profit organizations for the supplemental Petroleum Business Tax and the Business Surcharge Tax.
 

Real Estate Gains Tax

General Fund

The Committee Staff forecasts total receipts of $19 million in State Fiscal Year 1998-99, a decline of 36.7 percent. Despite the repeal of the Gains Tax in 1996, revenues will continue to accrue due to audits and installment payments from prior year transfers. This estimate is the same as the Executive.

Recent Legislative History

Real Estate Transfer Tax

General Fund

All Funds

For State Fiscal Year 1997-98, All Funds Real Estate Transfer Tax revenue is estimated to total $236 million. Collections in the current fiscal year have been relatively strong, due in part to relatively stable mortgage interest rates, and slow but steady economic growth. This estimate is $11 million higher than the Executive.

The Committee Staff estimates that Real Property Transfer Tax receipts will total $243 million, in State Fiscal Year 1998-99. This forecast is based on projections of moderate growth in the economy in 1998. This estimate is $6 million higher than the Executive.

Legislation submitted with the Budget will increase the deposit of revenues to the Environmental Protection Fund by $25 million per year in State Fiscal Year 1998-99.

Recent Legislative History

Also in 1996, voters approved the Clean Air/Clean Water Bond Act. As part of the Act, revenues in excess of the $87.0 million already dedicated to the Environmental Protection Fund will be used to pay debt service on the Bond Act. Any funds in excess of that which is necessary to make debt service payments will be transferred back to the General Fund and show up as transfers to the General Fund.
 

Regional Business Tax Surcharge

All Funds

The Committee Staff estimates State Fiscal Year 1997-98 revenues will total $563 million, representing 0.5 percent growth over State Fiscal Year 1996-97. The estimate is based on earnings for businesses, especially for the financial sector, which is a very significant element within the MCTD. This estimate is $24 million higher than the Executive.

The Committee Staff forecast for State Fiscal Year 1998-99 totals $566 million, also representing growth of 0.5 percent. This estimate is $29 million higher than the Executive.

Recent Legislative History

Sales Tax

General Fund

The Committee Staff current-law forecast for State Fiscal Year 1998-99 is $5,639 million, which represents growth of $186 million, or 3.4 percent. This estimate is based on moderated strength in the retail sector, led by a slow-down in durable goods orders, moderate gains in employment, continued strong wage growth, and the maintenance of relatively high levels of consumer confidence. This estimate also accounts for tax cuts enacted in the 1996 and 1997 State budgets. The current-law forecast is $82 million lower than the Executive.

Legislation submitted with the Executive Budget would include footwear in the clothing exemption for the September 1998 back-to-school week and add an additional week in January 1999, when clothing and footwear costing less than $500 would be exempt from the State Sales Tax. Based on these proposals, the Committee Staff proposed-law forecast for State Fiscal Year 1998-99 is $5,624 million, which represents an increase of 3.2  percent.

All Funds

One percent of the State Sales Tax is dedicated to pay for the debt service of the Local Government Assistance Corporation (LGAC), which was created in 1990 to eliminate the annual Spring Borrowing. Once the debt service obligations are paid, any remaining excess revenue is then transferred back to the General Fund. In State Fiscal Year 1997-98, $1,818 million will be dedicated to LGAC. The current-law forecast for State Fiscal Year 1998-99 is expected to yield an LGAC dedication of $1,880 million; $1,875 million for the proposed-law dedication.

In 1981, MTOAF was created to help finance the State’s public transportation system. A portion of the revenue is derived from the 0.25 percent Sales Tax that is imposed in the Metropolitan Commuter Transportation District (MCTD). In State Fiscal Year 1997-98, the Committee Staff estimates that $304 million will be deposited in MTOAF and $316 million will be deposited in State Fiscal Year 1998-99 (current and proposed-law), from the 0.25 percent Sales Tax in the MCTD.

Recent Legislative History

An additional one-week exemption was provided for the week of January 17 through January 23, 1998. Articles of clothing and footwear costing less than $500 per item were exempt from the State Sales Tax. All municipalities that levy a local sales tax, except the City of White Plains, exercised the local option.

The actual Sales Tax collectors are the merchants who sell taxable goods. In an effort to compensate those merchants for complying with State regulations, the State allows them to retain a small portion of the taxes they collect. Vendors are permitted to take an allowance of 1.5 percent, subject to a $100 per quarter ($400 per year) cap. This allowance was increased in 1997, to 3.5 percent of the State Sales Tax collected, subject to a higher maximum cap of $150 per quarter ($600 per year). The increase shall apply to Sales Tax quarters commencing on March 1, 1999. The estimated cost is $26 million.

Miscellaneous Sales Tax exemptions that were enacted in 1997 include the following:

• Motor coach buses and their parts, equipment, lubricants (but not fuel), and all associated repair and maintenance services;
• Coin-operated, self-service car washes;
• Coin-operated luggage carts;
• Coin-operated photocopier sales of 50 cents or less;
• Bulk vending machine sales of 50 cents or less and all food and drink (including hot drinks) sold through coin-operated vending machines;
• Circus admissions;
• Wine used at wine-tasting events;
• Receipts from the parking, garaging, or storing of motor vehicles in condominium and cooperative housing units; and
• Emissions inspection equipment utilized by motor vehicle inspection stations.

Utility Tax

General Fund

The Committee Staff forecast for State Fiscal Year 1998-99 is $1,473 million, representing a decline of 4.8 percent. This decline is attributable to a series of tax reductions. In 1997, the Legislature reduced the tax rate on the gross receipts from the sale of utilities and telecommunications services from 3.5 percent to 2.5 percent (Section 186-a and Section 186-e). In addition, utility companies were provided a tax credit for participating in the Power For Jobs program, which was established to enhance job creation and retention. Further, in 1996, trucking and railroad companies received a rate reduction from 0.75 percent to 0.6 percent on their gross receipts beginning in Tax Year 1997 (Sections 183 and 184). These measures are estimated to reduce Utility Tax receipts by $90 million in State Fiscal Year 1998-99. This estimate is $36 million higher than the Executive.

All Funds

Recent Legislative History

• A rate reduction for Sections 186-a and 186-e of Article 9 from 3.5 percent to 3.25 percent on October 1, 1998. A further reduction of the rate to 2.5 percent will occur on January 1, 2000;
• A rate reduction for the Gross Earnings Tax in Section 184 from 0.75 percent to 0.375 percent. For transportation companies the rate reduction is from 0.6 percent to 0.375 percent. The effective date is July 1, 2000;
• For the purpose of computing the MTA Surcharge on the above, Sections 184, 186-a and 186-c, the tax shall be computed as if the rate reduction had not occurred; and
• The formula for the distribution of revenues from Sections 183 and 184 will be changed to maintain the required funding level for the MTOAF.

In 1995, Telecommunications Tax reform was enacted in response to a Court of Appeals decision. The major implications involved the moving of the access charge deduction from long distance companies to local telephone companies, updating the computation of the tax (Goldberg methodology) for providing telecommunication service, and the agreement that long distance companies would forgo refunds due to them.

In 1994, the dedicated portion of receipts to the MTA was temporarily reduced for two years. The "undedicated" revenues were deposited in the General Fund.