Republicans in State Senate urge tax breaks
Majority leader says plan ‘will reward businesses that create good jobs in New York State’
Despite predictions that the meltdown on Wall Street will widen the state’s budget deficit, state Senate Republicans on Wednesday unveiled a sweeping package of more than $260 million in tax breaks and changes to the state’s Empire Zone program to try to spur job growth and make New York businesses more competitive.
“Businesses lose out in New York State because of the cost of doing business,” said state Senate Majority Leader Dean G. Skelos, R-Rockville Center. “These [tax] credits are simple: If you create new jobs in New York State and invest in your business, New York State will lend a helping hand.”
The program would reduce state taxes on manufacturers by $130 million a year by providing tax credits for new jobs that are created. It also would offer tax credits for job training and new investments, and provide tax credits to technology firms that create new jobs.
The plan “will reward businesses that create good jobs in New York State,” Skelos said as he announced the Senate Republicans’ plan during the annual meeting of the Business Council of New York State being held in Buffalo. “It will help New York compete with other states that are doing the same thing.”
Skelos said the state should slow the growth of its spending to help pay for the tax breaks and close a budget deficit that now is projected to be $5.4 billion this year and possibly more. Reducing the growth in state spending to 4 percent would save nearly $3 billion, he said.
“The worst thing we can do is raise taxes,” Skelos said. “We need to take steps to control spending.”
Assembly Speaker Sheldon Silver, D-Manhattan, declined to comment on the specific elements of the Senate plan, but noted that he also supports efforts to reform the Empire Zone economic development program that has been criticized for not being accountable and for failing to create all of its promised jobs.
“The real issue is, how do you pay for it and what do you cut?” Silver said, especially as the state faces declining tax revenues from the upheaval on Wall Street. “Is it health care? Is it education? Is it the investment in the upstate economy?”
Silver also noted that the tax breaks are being proposed at a time when the state is facing “monumental challenges” from the bankruptcy of Lehman Brothers, the forced sale of Merrill Lynch & Co. and the bailout of insurance giant American International Group. Wall Street accounts for about 20 percent of the state’s tax revenues, he said.
“What it is going to lead to is lower wages, lower employment growth rates and probably lower every prediction we’ve made for the current fiscal year,” Silver said. The next fiscal year, which begins next spring, “is clearly going to be tough.”
The plan from the Republican- controlled Senate would cut the state’s corporate franchise tax in half for businesses with no more than 20 employees or $1 million in sales and then eliminate it entirely a year later.
Under the plan, the state also would offer loan guarantees to small businesses in an attempt to give them greater access to working capital.
The Republican proposal, which would have to be passed by the Democrat-controlled Assembly and signed by Democratic Gov. David A. Paterson to take effect, also would make the Healthy New York health insurance plan available to a wider range of families by increasing the eligibility limit for a family of four to about $60,000 a year.
Despite the state’s mounting financial concerns, Silver said he does not expect the state to back away from providing major funding for economic development initiatives, such as support for the life sciences industry in the Buffalo Niagara region.
“We have to maintain our commitment to bring the private sector into it,” Silver said. “We can’t quit making the investments.”
