New York State Economic Development Council (NYSEDC) - Summary of Economic Development Budget Highlights April 1, 2014

The legislature gave final passage to the 2014-2015 New York State Budget yesterday, which, for the fourth consecutive year, kept spending increases to below 2 percent and was enacted on time. The budget is good news for manufacturers. Their income taxes will be reduced to near zero; their real property taxes will, in effect, be reduced through a 20 percent tax credit; and their utility bills will be reduced over time as the Article 18-a two percent utility gross receipts tax is phased down. The average manufacturer in New York employs 25 workers and is family-owned. Typically, these businesses do not qualify for state or local economic development programs because they are not expanding. Consequently, they pay the highest income and real property taxes. The measures enacted in the budget will result in real cost savings for most manufacturers, which will enable them to invest more in technology, equipment, and worker training. Importantly, these measures will facilitate investment and job creation for manufacturers. This is important for the state because manufacturing jobs pay 20 percent more than jobs in all other occupations, and the multiplier for manufacturing is the highest for any sector. Economic Development State Budget Highlights Program appropriations:

Centers of Excellence o Each Center to receive: Centers for Advanced Technologies TDOs ITES High Tech Matching Grants Hot Spots & State Incubators Digital Gaming Hubs Tourism Matching Grants Market NY Program MEPs matching funds program MWBE program CDFI program Entrepreneurial Assistance Program Empire State Economic Dev. Fund Military Base Retention

$8.723 million $872,233 $13.818 million $1.382 million $921,000 $4.6 million $3.75 million $500,000 $3.8 million $5 million $1.47 million $635,000 $1.49 million $1.27 million $31.8 million $2 million

Capital projects:

Trudeau Clarkson Partnership Economic Transformation Program (Prison conversion) Utica Nano Project NY Genome Center SUNY 2020 CUNY 2020 SUNY Nanoscale College Buffalo Billion ($33 million sub-allocated for STAMP)

$10 million $32 million $180 million $55.75 million $55 million $55 million $50 million $680 million

Regional Economic Development Councils o Excelsior Jobs tax credits Freight/Passenger rail projects Municipal and private airports

$150 million $70 million $20 million $10 million

Taxes and tax credits

Extends the Film Production Tax Credit for two years to 2017; adds a 25% tax credit for production companies that conduct technical rehearsals at NYS theaters Enacts a 20 percent real property tax credit for manufacturers. Credit is applied to property for which manufacturing activities are carried out. The credit cannot be applied to property already subject to a tax credit. Real property subject to PILOTs is not eligible. Clawbacks are required if a credit is provided to property whose assessed value is reduced as a result of an Article VII proceeding. The credit is refundable for non-C-Corporation manufacturers if the amount of the credit exceeds the businesses income tax liability for the year. Estate Tax: Phases-in higher taxable estate thresholds over four years ($1 million to $5.25 million) to eventually conform with the current federal estate tax threshold. Indexes tax rates. Bank Tax and Article 9-A franchise taxes are combined and the rate is lowered from 7.1% to 6.5%. Eliminates Entire Net Income basis for calculating income taxes for manufacturers statewide. Phases to 0 the capital basis by 2021 for all manufacturers. Instead of eliminating the 18-a utility 2 percent gross receipts surcharge for large users, as proposed by the Governor, the final budget adopts a phased reduction for all consumers to 1.63 % in 2014; 1% in 2015; and, .73% in 2016. The Alternative Minimum Tax for all 9-A taxpayers is repealed beginning on January 1, 2015. The Brownfield Cleanup Program was not extended in the budget. Governor Cuomo had proposed a 10 year extension with significant modifications to the tax credits. Funding for RESTORE NY Communities program was not included in the budget. The Assembly had included $50 million in their one-house budget.

Other provisions

Requires the SUNY Chancellor to report to the Governor and legislature on effectiveness of its economic development activities related to SUNY 2020 and Start-Up NY. Enacts a $2 billion bond act to enhance technology used by K-12 schools. $1.5 billion for real property tax credits for homeowners whose local taxing jurisdictions stay within the 2 percent real property tax cap the first year, and stay within cap the 2nd year AND put forward a plan to save 1 percent of their tax levy a year for three years.