1.24.19

Manufacturing Alliance to Focus on Workforce and Taxes this Legislative Session

The New York State Manufacturing Alliance, of which the Council of Industry is a founding partner, is focusing on two issues of vital importance to manufacturing businesses across the Hudson Valley and the State – Workforce Development and Taxes.

On the Workforce development front, we are advocating for continued support of the P-TECH program, Career and Technical Education programs, and community colleges. Of particular importance to the Alliance is the expansion of the hugely successful Manufacturers Intermediary Apprenticeship Program (MIAP).

Manufacturers Intermediary Apprenticeship Program

In 2016, New York State provided funding for MIAP program in Central New York.  This program was met with great interest by both manufacturers and their employees.  Since 2016, this program has grown from Central New York where there are over 30 companies formally participating in Registered Apprenticeship and 115 apprentices in seven unique occupations plus another 50 anticipated in 2019.

In 2017, the program rolled out to the Hudson Valley (Council of Industry) and the Rochester Region (through Rochester Tooling & Machine Association).  In these 2 regions there are now more than, 75 apprentices at 30 companies, in 10 different trades.

Manufacturers in the Western Southern Tier are now also beginning to participate in the program, and in the Albany region manufacturers are working with the Center for Economic Growth (CEG).  This momentum has motivated the New York City and Long Island areas to also request help in establishing themselves as intermediaries, proving the model is not only effective but expanding, therefore positively impacting the sector and our state’s business and workforce development as a whole.   In fact, we recently enrolled the first company on Long Island, Estee Lauder.

This model with its use of trusted associations as “intermediaries” and its collaborative partnering is a unique model of apprenticeship and is working for small and mid-sized manufacturers.  In traditional training programs, students are trained and seek employment when they are done – in an apprenticeship, a job comes first and training is supplied by an employer.  Industry participants see an increase in productivity, reduced turnover, and increased employee retention. Ultimately, we see it as a technique for improved recruitment and candidate selection. As employers struggle to fill open positions, apprenticeships are an important tool in addressing workforce development needs. MIAP helps manufacturers build effective apprentice programs.

 Given the tremendous success to date, we feel MIAP is a critical tool for continuing to build a skilled workforce throughout New York State.  This program is an essential component of a workforce development strategy to grow a stronger New York State economy through advanced manufacturing.

We are seeking $1.25 million to expand the program across the state.

A 0% Income Tax Rate for All New York Manufactures

The Manufacturers Alliance has also put forward and is seeking support for a 0% income tax rate for all manufacturers to be included in the 2019-2020 State Budget.

In 2014, we were successful in getting included in the final State Budget a reduction in the tax rate for manufacturers incorporated as C-corps.  This single action propelled New York from the bottom ten to the top 10 states for manufacturing and sent a message to large manufacturers, that New York was the place to invest.  It was a proven and effective tool to retain and grow manufacturing jobs across New York State. 

However, the vast majority of manufacturers in the Hudson Valley and across New York State are small to medium-sized manufacturers organized as S corps, proprietorships, LLCs and partnerships (pass-through entities).  These small to medium size manufacturers do not currently benefit from the existing zero percent rate and actually pay the 2nd highest income tax rate in the United States.   They are constantly being enticed by other states with friendlier tax climates to move operations and invest there.  These manufacturers are looking to their home state, New York, to demonstrate that they should stay in New York and continue to grow and invest here. 

In response to the pleas from our small to medium-size manufacturers, the Manufacturing Research Institute of New York State, commissioned a study to analyze the impact of extending the zero percent corporate franchise tax rate to these small and medium manufacturers.  According to a study by the Beacon Institute in September 2018, “the elimination of the PIT for pass-through manufacturers would increase private sector jobs by 4,660 in the first full-year and by 5,850 in 2023.   It would cause investment to rise by $118 million in 2019 and by $147 million in 2023. The increase in employment and investment would boost real disposable income by $345 million in 2019 and $503 million in 2022”. 

Extending a 0% tax rate to small and medium-sized manufacturers would send a strong signal to manufacturers that New York State is not only open for business but making a solid investment in their economic future.

We are working hard, meeting with legislators and administration officials, to get this change included in the 2019-20 State Budget.

 

 

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Cuomo’s Budget: A Fiscal First Take

E.J. Mc Mahon, founder and research director for the Empire Center describes Gov. Cuomo’s budget as “largely a stay-the-course affair—for better and worse.”  

The official financial plan numbers call for a fiscal year 2020 State Operating Fund budget of slightly more than $102 billion—within the governor’s self-imposed 2 percent spending cap over the current year’s projected $100 billion.

Adjusting for various planned and proposed accounting changes, the apples-to-apples spending increase appears at first glance to be more like 3 percent (see explanation below). However, even with adjustments, it is more restrained than some members of the new Democratic legislative majorities would prefer.

The budget includes a striking new fiscal yellow flag: a sharp decline in personal income tax receipts, now expected to fall $500 million below mid-year projections. The budget narrative says the drop-off  “appeared abruptly” at the end of December and has continued through early January, “a period that is typically marked by a relatively heavy flow of PIT receipts compared to the rest of the fiscal year.”

So what’s going on?  The governor’s financial plan narrative cited “increasing [financial market] volatility in the second half of 2018 [during which major stock indexes dropped 10 percent], driven in part by rising interest rates, trade tensions, and instability in government institutions at home and abroad.” It also pointed to “behavioral changes by individual taxpayers and firms” in response to the new federal tax law and its cap on state and local tax (SALT) deductions.

Read more in the article by EJ McMahon, from The NY Torch, a public policy blog, (to read full article click here)  McMahon was the keynote speaker at The Council of Industry’s Annual Luncheon and touched on some of the points discussed here in his address to our members.

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Cuomo Unveils Plan to Legalize Recreational Marijuana Use

On January 15th, Gov. Andrew Cuomo revealed the details of proposed Cannabis Regulation and Taxation Act, which would restrict access to anyone under 21, automatically seal marijuana offenses on a person’s criminal record. The proposed legislation would impose three taxes on the adult-use of marijuana, which together would generate roughly $300 million in new revenues for the state by the program’s third year. According to Cuomo counties and large cities would be allowed to “opt out” of the retail industry by passing local laws that prohibit marijuana shops from opening within their jurisdictions.

Revenues from the state taxes would go toward administering a regulated cannabis program; data gathering, monitoring and reporting; a traffic safety committee; small business development and loans; substance abuse, harm reduction and mental health treatment and prevention; public health education and intervention; research on cannabis uses and applications; and program evaluation and improvements.

The bill would create a new Office of Cannabis Management (OCM) that centralizes all the licensing, enforcement and economic development functions into one entity. The OCM would administer all licensing, production, and distribution of cannabis products in the adult-use, industrial and medical cannabis markets.

Read the full article from Timesunion.com, by Bethany Bump (click here for full article)

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State of The State Health-care Roundup

From the NY Torch By Bill Hammond (click here for full article)

Health care was the dog that did not bark at Governor Andrew Cuomo’s combined State of State and budget address on Tuesday.

Given the widespread support for a statewide single-payer plan in the Legislature, and the health coverage expansions recently announced by other Democratic governors and Mayor Bill de Blasio, Cuomo might have been expected to respond with a splashy proposal of his own.

Instead, he called for appointing a commission to study “options for achieving universal access” and report back by December – a clear sign that he has no stomach for tackling the issue in this session.

The commission’s mandate, as described near the bottom of his press release, does not mention the concept of single-payer, which has passed the Assembly in each of the past four years, and enjoys broad support in the Senate’s newly installed Democratic majority:

This review process will consider all options for expanding access to care, including strengthening New York’s commercial insurance market, expanding programs to include populations that are currently ineligible or cannot afford coverage, as well as innovative reimbursement models to improve efficiency and generate savings to support expanded coverage.

Cuomo has said he supports single-payer at the federal level, but thinks a state-only plan – conservatively estimated to require a $139 billion tax hike – is not practical.

Also notably missing from his spending plan was any reform of the notoriously dysfunctional $1.1 billion Indigent Care Pool, which theoretically compensates hospitals for charity care but distributes the money with little rhyme or reason.

The health-related proposals the governor did include in his budget were relatively small-bore, such as requiring certain insurers to cover in vitro fertilization, bolstering an existing mandate for coverage of birth control and reinforcing and expanding the state laws that legalize abortion.

Meanwhile, his administration’s efforts to control Medicaid costs – a success story in his early years as governor – show signs of falling apart.

(click here for full article)

 

 

 

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