Tax relief for small businesses, funding for water infrastructure projects, new downtown revitalization program and 6th round of Regional Council initiative included in Governor’s 2016 agenda
Governor Cuomo today unveiled the fourth signature proposal of his 2016 agenda: a series of investments and initiatives designed to continue growing the economy and building stronger, more vibrant communities across New York State. These proposals include significant tax relief for small businesses, increased funding to support municipal water infrastructure improvement projects, a new effort to revitalize and transform downtown areas in each region of the state, and a sixth round of the successful Regional Economic Development Council initiative. The Governor discussed these announcements – which are a preview of signature policies from his upcoming 2016 agenda – during an event today in Rochester.
“Over the past five years, we have redeveloped New York’s economy and restored opportunity in communities across Upstate – and now we are building on that momentum to make a difference that will last for generations,” said Governor Cuomo. “We are going to make critical investments in infrastructure, cut taxes for small businesses, and invest in the regional approach to economic development that has made a difference across Upstate. Together we are going to continue moving this state forward.”
Small Business Tax Relief
Small businesses are the backbone of the State’s economy, accounting for 43 percent of all private sector jobs in New York. During the last five years, Governor Cuomo has worked tirelessly to bolster the competitiveness of small businesses by lowering their tax burden. Since taking office in 2011, he has advanced a number of small business tax cuts that are saving small businesses across the state a total of $3.8 billion by 2021. The Governor’s latest proposal is projected to save small businesses another $298 million annually, bringing the total savings statewide from the new program to nearly $1.2 billion by 2021.
To continue growth of the small business sector and help further the expansion of New York’s economy, taxes are being lowered both for small businesses who pay via the corporate tax and those paying through the personal income tax.
For small businesses that file under the corporate tax code, the Governor proposes to reduce the net income tax rate from the current 6.5 percent to 4 percent effective January 1, 2017. For the purpose of this tax cut, the definition of “small business” is a business with less than 100 employees, with net income below $390,000. Small businesses have traditionally paid a lower rate than large corporate taxpayers, but tax cuts passed in 2015 lowered the corporate tax rate to the level currently being paid by small businesses. Governor Cuomo proposes to preserve the small business tax advantage by lowering their rate even further. To avoid a “cliff” the lower tax rates would be available to small businesses having below $290,000 in net income, and the rate is phased up to the standard rate applicable to businesses with net income of $390,000 or more.
For small businesses whose members pay taxes via the personal income tax, the Governor proposes new and expanded tax cuts. Currently, sole proprietor and farm small businesses can subtract five percent of their income from tax calculations. The Governor proposes to increase the exclusion to 15 percent of income. Further, in order to create tax parity between small business types, the Executive Budget also expands this tax cut to other types of small businesses. Members of partnerships, S-corporations, and LLCs will be able to exclude 15 percent of business income as long as some of their business income is derived from a business entity with less than $1.5 million in New York gross receipts, and their total business income from these sources is below $250,000.
Roughly 1,091,000 small businesses statewide will benefit from the Governor’s 2016 proposals. A regional breakdown of benefitting businesses is available below:
Western New York
Central New York
New York City
Water Infrastructure Investment
Governor Cuomo’s Executive Budget includes $250 million in funding to support drinking water and wastewater infrastructure projects across the state, with half distributed to municipalities this year and the remaining half in 2017. Allocations will be administered by the Environmental Facilities Corporation, and the Departments of Health and Environmental Conservation.
This proposal increases by $100 million the Water Infrastructure Improvement Act of 2015, which was approved during the 2015-16 state budget to support grants over three state fiscal years. Last year, Governor Cuomo announced that $50 million of funding was awarded to 45 projects across the state, leveraging more than $440 million in water infrastructure investments. In total, this $300 million investment will leverage more than $1.5 billion in local investment in water infrastructure improvements across the state.
“Across the state, local governments struggle to repair and replace aging infrastructure with limited resources,” said Department of Environmental Conservation Acting Commissioner Basil Seggos. “Recognizing this hardship, today Governor Cuomo is showing tremendous leadership in protecting New York’s water resources by increasing grant funding for wastewater infrastructure upgrades. Municipalities from Long Island to Rochester, from the North Country to Allegheny County, can benefit from these boosts in grant funding.”
Downtown NY: Downtown Revitalization Initiative
The Governor’s $100 million Downtown Revitalization Initiative (the “DRI”) is a comprehensive and coordinated multi-agency approach to transform long-forgotten areas into dynamic neighborhoods where tomorrow’s workforce will want to live, work, and raise a family.
The state has had success with a concentrated investment approach to community revitalization such as the State’s $2 million investment in Corning to revitalize the Gaffer District and other areas. Corning used these funds to leverage an additional $8 million in private investment to rehabilitate underutilized historic buildings to house new and growing small businesses that anchor the area.
The initiative will invest $100 million in 10 communities for transformative housing, economic development, transportation and community projects that will attract and retain residents, visitors and businesses. Projects will be identified through a strategic planning process driven by third party planning experts in consultation with planners from the Department of State and Housing and Community Renewal.
The state will work with each Regional Economic Development Council to select one community that is currently experiencing population loss and/or economic decline that will submit revitalization plans, developed in collaboration with policy and planning experts, for their downtown area. Selections will be due in April, and the identified communities will be assigned State agency resource teams comprised of community planners from Department of State and Housing and Community Renewal, as well as independent planning experts to assist in the creation of a strategic investment plan that will be submitted as part of the 2016 REDC process. Each community revitalization plan will identify a series of coordinated projects that will drive economic activity and population growth in the downtown area.
Eligible projects will include those that grow small businesses and employment, expand housing, improve transportation corridors, and leverage anchor institutions such as universities and hospitals. The 2016 REDC process will also provide priority funding in the Consolidated Funding Application for downtown revitalization projects in other communities that have these same goals.
DRI funds will also be leveraged with private investment and existing State resources, including:
- Department of State Local Waterfront Revitalization Program
- Empire State Development tax incentives and capital funding
- Housing and Community Renewal affordable housing tax credits and Community Development Block Grant funds
- Environmental Facilities Corporation Green Innovation Grant Program
- Department of Transportation Complete Streets funding
- Department of Health Healthy Communities funding
- New York State Council on the Arts project funds
Regional Economic Development Councils and Upstate Revitalization Initiative
In 2011, Governor Cuomo created the Regional Economic Development Council competition to develop regional economic development plans through a bottom-up approach that brought higher education, industry, and government leaders together. This new strategy has generated nearly $4 billion of state investment that has leveraged $22 billion in private investment, funded more than 4,100 projects and created more than 200,000 new jobs across the state.
In 2015, the Governor created the $1.5 billion Upstate Revitalization Initiative to replicate the success of the Buffalo Billion and continue driving economic growth across other parts of Upstate New York. Through the URI, the Finger Lakes, Southern Tier and Central New York regions secured awards of $500 each over the next five years to support projects and strategies that create jobs and both strengthen and diversity their economies.
To build on the success of the REDC and URI programs, the Governor proposes continuing this regional economic development approach with $950 million in the 2016-17 state budget to support a sixth round of the REDC awards and URI runners-up awards. Round VI of the REDC initiative will include $750 million to be split competitively among each of the state’s ten regions, and $200 million to fund top projects for the runners up from last year’s URI.