New York Gov. Andrew Cuomo on Jan. 6 announced details of a more than $2 billion tax-relief proposal he says is designed to increase economic opportunity and attract and grow businesses across the state.

Cuomo’s office is citing “responsible fiscal management in state government” as the reason why New York has gone from a $10 billion deficit to an expected $2 billion surplus.

Based on current projections, the state will see a surplus of about $2 billion by fiscal year 2016-17 if spending growth is held to two percent annually, according to Cuomo’s office.

Given the projected surplus, Cuomo proposes a more than $2 billion package of tax-relief measures to help New York residents and businesses.

Cuomo’s proposals include a two-year freeze on property taxes, cutting business taxes and treating businesses “more fairly,” a real-property tax credit for manufacturers, and eliminating the tax rate on Upstate manufacturers. The governor also proposes accelerating the phase-out of the 18-A surcharge, which is the two percent temporary utility assessment levied on commercial electric, gas, water and steam-utility bills for industrial customers.

The news release from the governor’s office explains its rationale for the business-related proposals involved.

New York’s corporate-franchise tax is “largely outdated” and its “complexity” results in lengthy and complex audit processes that take businesses years to resolve, Cuomo’s office said.

To streamline the tax structure and provide relief for businesses, Cuomo recommends merging the bank tax into the corporate-franchise tax and lowering the rate to 6.5 percent – the lowest rate since 1968, the office said.

Cuomo also proposes the creation of a refundable credit against corporate and personal- income taxes that would be equal to 20 percent of a firm’s annual real-property taxes. The credit would provide $136 million in tax relief to the manufacturing sector, according to Cuomo’s office.

Additionally, Cuomo recommends the elimination of the corporate income-tax rate for Upstate manufacturers, which is intended to encourage the growth of manufacturing.

The proposal would provide an additional $25 million in tax relief for Upstate businesses and complement the proposal to reduce property taxes on manufacturers, Cuomo’s office said.

Proposals to streamline tax collection will offset any costs of the tax-relief package exceeding $2 billion.

The proposals will increase revenue through improved audits, Cuomo contends.

Local reaction

These proposals stand to have an “immediate” impact on New York’s businesses and residents, including property-tax relief for homeowners, targeted tax reductions for upstate manufacturers, and estate-tax reform that will “greatly benefit” small-business owners, Robert Simpson, president of CenterState CEO, said in a statement issued Jan. 6.

“It is refreshing to start the year with a series of reform proposals that could meaningfully move the state forward economically, instead of preparing to fend off further escalations of New York’s already crushing tax burden,” Simpson said.

CenterState CEO believes the state is taking “great strides” to build a “competitive” business climate. The organization hopes state-government leaders will implement “as many of these measures as possible,” he added.

The proposed elimination of the corporate tax rate for Upstate manufacturers, a 20 percent tax credit of a manufacturer’s property taxes, and the proposal calling for an immediate elimination of the 18-A energy-tax surcharge will send a message that New York wants to grow its manufacturing sector, Randall Wolken, president of the DeWitt–based Manufacturers Association of Central New York, said in a statement.

“It is well-known that manufacturing is the backbone to a thriving economy. Providing New York state manufacturers with the much-needed tax breaks will enable them to do what they do best: create high-quality manufactured goods, sustain and grow family supporting well-paying jobs, and generate much-needed revenue for our state,” Wolken said.

Contact Reinhardt at ereinhardt@cnybj.com

SYRACUSE — The employer mandate in the Patient Protection and Affordable Care Act (the national health-care reform law) takes effect in just over 11 months, and human-resources (HR) professionals should make certain they have an accurate figure on their company’s employee count.

That’s the recommendation from Christian Jones, a labor-law attorney with Mackenzie Hughes, LLP of Syracuse.

The employer mandate is a requirement that all businesses with over 50 full-time equivalent (FTE) employees provide health insurance for their full-time employees, or pay a per month “Employer Shared Responsibility Payment” on their federal tax return.

The provision is most often referred to as “play or pay,” Jones says.

The employer mandate is officially part of the Employer Shared Responsibility provision.

The annual fee is $2,000 per employee if a company doesn’t offer insurance (the first 30 full-time employees are exempt), according to a research CribSheet at the website of the Nashville, Tenn.–based National Federation of Independent Business (NFIB).

The NFIB says it advocates for the nation’s small businesses.

“So … an important first step for all employers is to determine whether they are subject to the employer mandate.  In that regard, employers need [to] determine whether they meet that … 50 full-time employee, or 50 FTE employee threshold,” Jones says.

And if the company uses any independent contractors for work production, the HR department needs to make sure those contractors are properly classified to determine if they are part of the company’s overall employee count, says Jones.

“It’s important for employers to take a close look at their independent contractor arrangements and ensure that the classification is proper. And, if not, that they do properly classify those individuals as employees and include them in their employee count,” Jones adds.

Even though the federal government announced the year-long delay in the employer mandate more than six months ago, Jones recommends HR department begin the employee-count process soon, if they haven’t already done so.

As they’re preparing for compliance with next year’s employer mandate, Jones also advises HR departments that some employees might still be thinking about the individual mandate, which took effect on Jan. 1 but also has a deadline of March 31 for this year’s open-enrollment period.

“I can certainly envision employees perhaps having questions or concerns regarding their ability to obtain healthcare coverage,” Jones says.

In that case, he’d recommend employers provide a notice to those workers who elected not to participate in the employer-sponsored plan to make them aware that they have until the end of March to enroll in a plan through NY State of Health, New York’s health-insurance marketplace.

Contact Reinhardt at ereinhardt@cnybj.com

SYRACUSE — An amendment to New York’s Labor Law that took effect on Jan. 1 could affect how terminated employees negotiate severance packages.

Under the amendment, New York workers who are terminated could become ineligible for unemployment insurance (UI) for a time, if they accept an immediate severance package from their employers.

Under the new law, employees aren’t eligible to receive UI benefits during the weeks they receive severance pay, if their payments exceed the maximum weekly benefit rate, which is currently $405.

Employees will qualify for UI benefits if their initial severance payment arrives more than 30 days after the termination, says Heather Youngman, an associate focusing on civil litigation at the Syracuse office of Albany–based Tully Rinckey PLLC.

The firm’s local office is at 507 Plum St. in Syracuse.

Before the amendment, even if they did accept a severance package, employees were still eligible for unemployment insurance, Youngman says.

“Under the change, if the [New York State] Department of Labor (DOL) determines that an individual has received a severance within 30 days from the end of their employment, and that severance pay is higher than the maximum benefit, which is $405 a week, then the employee can’t collect the unemployment insurance until that severance package is exhausted,” she says.

Companies usually offer severance packages to employees who are under contract or   who have worked for a company for a long period of time. The affected workers are usually professional employees or are “higher-skilled” workers, Youngman says.

“We don’t see a lot of minimum-wage workers being offered a severance package,” she says.

When negotiating a severance package, an employee should seek an extension of health-care benefits, Youngman says.

Other terms could include an employer promising to provide a positive job reference as the affected worker seeks new employment, she adds.

An employer also might promise not to contest unemployment-insurance benefit claims, beyond the boundaries of what’s permitted under the new amendment, she says.

The affected employee might also seek a lump-sum severance payment, or a continuation of payment for an extended period of time.

If the affected employee were to accept an immediate lump-sum payment, that person would be ineligible for unemployment insurance for a number of weeks based upon the maximum benefit amount.

The maximum benefit amount is one of the factors that the DOL uses to consider length of ineligibility, Youngman says.

The DOL also considers how much the employee earned per week in making the determination, she adds.

Gov. Andrew Cuomo last March approved this change to the state labor law in the state’s 2013-14 budget.

The amendments are part of an unemployment-benefit overhaul intended to save employers statewide an estimated $400 million over 10 years.

The law’s new provisions, some of which took effect last Oct. 1 and others that went into effect Jan. 1, will save Central New York employers an estimated $16 million over that period, according to a report from the state Department of Labor.

Contact Reinhardt at ereinhardt@cnybj.com