State Legislature Passes Budget
On March 30, 2018, the New York state legislature passed a $168.3 billion state budget for 2018, in what Governor Cuomo called the “most difficult budget we’ve ever done,” due to a $4.4 billion budget gap as well as “attacks” from Washington, in particular the reduction of the state and local tax deduction.
New York is a high-tax state, and recent changes to the federal tax code have prompted state legislators to take action in an attempt to offset the new cap on state and local tax deductions.
First, the budget creates two new state “charitable contribution funds” for health care and education. In a workaround to lessen the impact of the federal tax law changes, taxpayers could divert some of what they owe to these state funds and claim a credit on their tax returns. Local governments and school districts will be authorized to take the same steps.
Additionally, the budget authorizes an “alternative employer compensation expense program” to take advantage of the fact that businesses were not affected by the state and local tax deduction changes. It gives employers the option of implementing a payroll tax for employees that would be offset by a state tax credit for workers.
“It moves from an income tax, primarily, to a payroll tax,” Cuomo said. “Property taxes move to a charitable donation tax. Again, it’s optional. Some employers will do it, some local governments will do it, but it’s our best attempt to avoid the federal assault. The real answer is to repeal SALT.”
Tax experts had viewed Mr. Cuomo’s proposed workarounds with skepticism, warning that many of the ideas were purely academic and had never been tried in practice. Others worried that the payroll tax workaround would be unpopular with New Yorkers, as it would result in lower gross pay, even if their take-home pay would ultimately remain the same.
Still, the new tax policies show concrete action being taken to soften the impact of the recent changes to the federal tax code.
Buffalo offered Amazon $500 million in Incentives in Headquarters Pitch
A regional incentive package with separate tax break packages from Buffalo and Rochester was crafted last fall as economic development leaders made an aggressive pitch to Amazon in an effort to bring the “HQ2” Amazon headquarters to Western New York.
Buffalo offered more than $500 million in tax breaks and incentives while Rochester’s package included more than $700 million in incentives. The regional pitch, however, was not enough to land on Amazon’s 20 city short list that includes Boston, Washington and Toronto. Some 238 cities and regions made offers to Amazon.
Buffalo’s portion of the bid package focused on creating 8 million square feet of space, one of the main incentives Amazon was seeking. The space included renovating existing structures such as the One Seneca Tower, the HSBC Atrium and portions of the Buffalo News building while also building new structures in Canalside and the Cobblestone District.
The construction would have been done in phases and done with incentives crafted by the Erie County Industrial Development Agency, Empire State Development, New York Power Authority and other public sector agencies.
For Buffalo and Rochester, the offer marked perhaps the most aggressive, collaborative pitch made by the two cities and may be a foundation for future efforts to land high-profile developments.
Tesla Begins Installing Solar Panels Manufactured in Buffalo on Homes
The first customers who ordered Tesla’s ‘solar roof’ products are getting them installed on their houses, a sign that the company’s energy strategy is picking up speed.
The solar panels which comprise the roofs are being made at the enormous factory on South Park Avenue in Buffalo, where Tesla and Panasonic are partnering to make the products. The factory was built and outfitted with the support of $750 million in New York state incentives. Panasonic also has a separate operation in the Buffalo factory that makes traditional solar panels, which Tesla continues to market and sell.
Tesla, which told analysts last year that its solar shingles were already sold out well into 2018, is delivering solar shingles produced in Buffalo in the order that placements are received. The first orders were made in California, where the total price of the ‘solar roof,’ after federal incentives, is around $55,000, which includes the panels and batteries.
The facility provides ample capacity for 10,000 solar panels per day, equivalent to one gigawatt per year, providing a competitive edge to cheaper panel factories in Asia and operating as one of the largest facilities of its kind in the world.
Prepared by Eric W. Marriott, Esq.