Senate OKs job tax credit, 2% state spending cap

In one of its first orders of business in the new legislative session, the State Senate passed the Job Creation and Taxpayer Protection Act of 2011 on Jan. 19. Supporters of the three-part plan say it will encourage the creation of new private-sector jobs with a tax credit, ensure fiscal responsibility with the enactment of a 2 percent state spending cap and require a two-thirds “super-majority” vote to increase taxes if the Assembly, and then voters, approve a constitutional amendment.

“The people have spoken loud and clear that they want the state to cut spending, stop runaway tax increases and get off businesses’ backs and out of their wallets so they can create new jobs,” said Senate Majority Leader Dean Skelos, a Republican from Rockville Centre. “Today the Senate is sending a clear signal that we share those priorities by making these bills the first ones we act on in the 2011 session.

“For the last two years, these priorities have been ignored,” Skelos added, “and the result was $14 billion in new taxes and fees to pay for spending that taxpayers simply cannot afford, and now we are faced with a deficit that could be as high as $11 billion. This year must be different. We’re pleased to have a governor who shares our objectives and is committed to getting a result, and we also hope the Assembly will join us and pass these bills.”

The legislation includes the following measures:

n Incentives to create new jobs. It would provide businesses with a three-year tax credit of up to $5,000 for each new job created. It would eliminate taxes for small businesses and manufacturers that pay the state’s corporate franchise tax, and roll back the income tax surcharge imposed on them in 2009. It also places a moratorium on new taxes, fees and regulations.

Supporters said that the tax credit could grow by as much as an additional $3,000 per job if new hires are taken from the ranks of the unemployed who are collecting unemployment insurance from the state. Such an incentive, they said, would help reduce both unemployment and the costs borne by taxpayers. If combined with federal job-creation and tax-credit legislation that expired but has been reintroduced in Congress, the plan could save employers thousands of dollars for each job they create.

“This plan will get people working,” Skelos said. “It will give businesses real incentives to create jobs, and would be a change of direction from the tax and fee hikes that gave them an incentive to move out of state. It will get our economy moving in the right direction.”

n A state spending cap. This will be the third time that Senate Republicans have passed a spending cap, which they say would ensure that New York spends no more than taxpayers can afford. The cap, which would be set at 2 percent or 120 percent of the consumer price index (currently 1.9 percent), whichever is lower, would force the state to reduce spending and live within its budget, easing the burden on taxpayers, supporters said.

The proposal would also force the governor to resubmit a balanced budget to address any shortfalls in revenue that occur after the submission of the Executive Budget, and make any necessary spending revisions to reflect declining

revenue.

“This cap would slam the door on massive increases in state spending and the taxes needed to pay for it,” Skelos said. “The family budget is more important than the state budget, and we have to stand up to protect taxpayers.”

The spending cap proposal would give the governor the authority to exceed the cap in the event of a fiscal emergency or other extraordinary circumstances, but the state comptroller would be required to independently certify the financial crisis.

The final piece of the plan is the requirement of a two-thirds vote for revenue increases of any kind. A constitutional amendment would mandate a super-majority in both the Senate and Assembly, rather than a simple majority, for any tax or fee increases.

Passage in both houses would be required for the plan to be put to a vote in November.

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