FINANCE

NEW YORK STATE SENATE FINANCE COMMITTEE HEARS HOCHUL BUDGET TAX PROPOSALS AMID ECONOMIC CONCERNS Albany — The New York State Legislature's joint fiscal committees heard testimony on the Governor's 2023-2024 Executive Budget tax proposals on Thursday, with Acting Tax Commissioner Amanda Hiller defending the administration's approach while lawmakers raised concerns about economic forecasting, child poverty, and enforcement of illegal cannabis businesses. Commissioner Hiller presented a budget built on an $8.7 billion state surplus and $20 billion in reserves accumulated since 2020, citing "continued strength in tax receipts." However, she acknowledged significant economic headwinds: the Division of Budget now projects U.S. real GDP growth of just 0.5 percent in 2023, with bonus income expected to decline 27 percent from its 2022 peak and wage growth slowing to 2.3 percent in fiscal year 2024. The budget maintains Governor Hochul's pledge not to increase income taxes while proposing a three-year extension of the elevated corporate tax rate, projected to generate $800 million in the first year, $1.2 billion in the second, and $880 million in the third. The administration also proposed various tax credits and property tax relief measures, including simplification of the senior citizen exemption and direct deposit delivery of STAR credits. Sen. Andrew Gounardes, chair of the Senate Committee on Revenue and Budget, pressed the commissioner on what he characterized as a "missed opportunity" on child poverty. New York ranks among the highest states for childhood poverty at 19 percent and is legally required to halve that rate by 2030. The budget makes no adjustments to the state child tax credit, which remains capped at $500 per child—far below the federal $2,000 credit. Gounardes requested cost analysis for recoupling the state credit to federal standards. Sen. Dean Murray criticized the budget's priorities, noting the state is willing to forgo $116 million in fiscal year 2024 and $222 million in fiscal year 2025 from a flavored tobacco ban while allocating zero initial funding for a new childcare tax credit (capped at $25 million in fiscal years 2025-2026). "We're giving away 116 million in revenue," Murray said. "Why couldn't we have kicked that in quicker?" Sen. Thomas O'Mara, ranking member on Finance, raised concerns about bracket creep from inflation and requested the administration explore indexing income tax brackets. He also pressed Commissioner Hiller on enforcement against illegal marijuana sticker shops operating as cash businesses, citing examples of businesses giving away cars and throwing cash from rooftops as incentives. The commissioner acknowledged the Tax Department lacks the authority it needs for robust cannabis enforcement but said discussions are ongoing to expand that authority. Assemblyman Kenneth Zebrowski, chair of the Corporations, Authorities and Commissions Committee, submitted a detailed list of questions about the MTA payroll mobility tax, requesting data on affected businesses, alternatives considered, and whether all businesses in the MTA district are "similarly situated," given that some counties west of the Hudson have no access to MTA services. The hearing was the fifth in a series of joint fiscal committee hearings on the Governor's proposed budget, conducted pursuant to the New York State Constitution and Legislative Law. NEW YORK — Acting Tax Commissioner Amanda Hiller defended Governor Hochul's 2023-2024 tax proposals before a joint legislative committee on Thursday, emphasizing the department's modernization efforts while facing sharp questioning from lawmakers skeptical of several key initiatives. Hiller acknowledged that the state's tax administration systems run on 40-year-old technology, hampering efforts to modernize service delivery for low-income families claiming tax credits. She noted that many families remain unbanked, preventing electronic direct deposit of refunds, and that the department currently cannot issue credits electronically throughout the year. Sen. Liz Krueger (D-Manhattan) pressed Hiller on the administration's proposal to extend a reduced property transfer tax rate for real estate investment trusts—$1 per $500 compared to the standard $2 per $500 rate—in place since 1999. Krueger questioned why the state would subsidize REITs amid national concerns about their acquisition of housing stock. Hiller defended the rate as tied to ownership transactions and said the proposal maintains the status quo. Krueger requested data on foregone revenue if REITs paid standard rates. Krueger also expressed concern about a proposal granting the Tax Department appellate rights over Tax Appeals Tribunal decisions, calling it a "slippery slope." Hiller countered that 32 states allow such appeals and cited model legislation supporting the practice. Sen. Gounardes (D-Brooklyn) challenged the adequacy of New York's child tax credit, which excludes children under five and those with undocumented immigrant parents, with a maximum benefit of just $500. He questioned whether the department could issue credits electronically year-round and requested data on a proposed childcare credit before statewide expansion. Hiller said the department lacks such data, as tax returns are still being processed. On cannabis taxation, Assemblyman Manktelow noted the budget contains no revenue line for cannabis sales, though Hiller said the financial plan anticipates such revenue. She acknowledged the department lacks current authority to tax illegal cannabis sales but said it could pursue enforcement similar to tobacco enforcement if granted statutory authority. Hiller reported preliminary data showing an uptick in millionaire outmigration following the 2021-2022 tax increases on high earners, but cautioned that one year does not establish a trend and that tax may not be the primary driver of relocation decisions. Assemblyman Mamdani challenged Hiller's assertion that New York's 7.25 percent corporate tax rate keeps the state competitive, noting New Jersey's rate is 11.5 percent. He cited a proposal to raise rates that would generate $9 billion in revenue. Hiller declined to comment on tax policy preferences, reiterating her role is to administer legislative choices. Assemblywoman Dickens raised concerns about economic headwinds—declining GDP, small business closures, and cross-border shopping losses of $1 billion annually—questioning whether revenue projections in the budget are realistic given ongoing economic uncertainty. NEW YORK — Three progressive policy organizations testified before the state Legislature's joint budget committee on Tuesday that New York should significantly raise taxes on wealthy individuals and corporations, citing strong public support and robust recent tax revenue performance. Dr. Emily Eisner, an economist, told the Finance Committee that 75-85% of New Yorkers support higher taxes on the wealthy. Charles Khan of the Center for Popular Democracy pointed to concrete fiscal results: since New York raised income taxes on those earning over $5 million in 2021, state tax receipts have beaten estimates every quarter, with last year's receipts running 37% above projections—"billions and billions of dollars," Khan said. Nathan Gusdorf of the Fiscal Policy Institute recommended multiple revenue options, including a state surtax on long-term capital gains, conforming to federal tax provisions on multinational profit shifting, and reducing pass-through entity tax rebates. He projected that restoring a $500,000 income tax bracket could generate $500 million in new revenue. The testimony drew pointed questions from legislators. Sen. Liz Krueger raised concerns about untapped revenue sources, including enforcement against out-of-state tax cheaters, gig economy workers like Uber and Lyft drivers, and companies profiting from personal data sales. "There's a whole lot of money there on the table I believe we should be getting," Krueger said. Sen. Patty Murray challenged the panelists' claims about migration, citing a Yahoo News article showing wealthy earners moving to Florida and Texas, and raising concerns about lost philanthropic donations. Eisner countered that economic research shows tax migration accounts for only 0.75% of high earners, with housing costs—not taxes—driving most relocations. The hearing was the fifth in the Legislature's 2023-2024 budget review process.