Department of Economic Development
The enacted budget makes no changes to the Executive Budget (analysis as of 4/2/2007)
The Senate recommends (analysis as of March 16, 2007):
- Cuts $1.4 million in the contractual service appropriation for the Economic Development program.
- Cuts $600,000 from the maintenance undistributed contractual services appropriation for the Economic development program; $200,000 for the International Trade Program and $400,000 for the Pollution Prevention Program which is suballocated to the Department of Environmental Conservation.
- Creates a new independent Upstate Empire State Development Corporation that will serve as an umbrella organization to coordinate upstate economic development and job creation programs. The Corporation will be governed by a 10 member Board of Directors, with nine members from the private sector, six of them appointed by the Legislature. Creates a new Upstate Commissioner of Economic Development who is appointed by the Governor with the advice and consent of the Senate. This language is in the Article VII Education, Labor and Family Assistance bill (S. 2107B).
The Executive Budget recommends (analysis as of February 3, 2007):
A FY 2007-08 workforce of 215, the same level as FY 2006-07, with no change occurring during SFY2006-07.
- The total appropriation for Personal Service is $14.5 million, an increase of 4%. Senate analysis asserts that DED currently has 204 FTEs and will increase by 11 for FY 2007-08. The Assembly analysis concurs with the Executive Budget which indicates that FTE level is 215 and will not change.
- An All Funds increase of $7.7 million, or 20% from SFY 2006-07. The majority of this increase is a $5 million dollar maintenance undistributed in the Marketing program which appears to be targeted completely for contractual services.
- No change in the appropriation in the Minority and Women Business Development Account which is apparently used completely for contractual services. The staff for this function is probably funded under the personal services appropriation within DED’s Economic Development program. The commentary in the Executive Budget for DED states the MWBE Division “will be expanded to provide additional opportunities to the State’s minority and women-owned businesses”. There does not appear to be additional funding for such an expansion in DED’s budget so this issue should be clarified at statewide labor management.
- The appropriation in the Empire State Development Corporation’s (ESDC) budget for Minority and Women Business enterprises is in its local assistance budget and is at the same level it has been for several years. There is no mention in the commentary for ESDC’s budget of expanding their MWBE program.
- Operations in Buffalo will be expanded to support the new ESDC co-Chair for Upstate economic development. The Executive Budget does not detail how this expansion will be implemented as it does not add funding for additional Buffalo staff. This issue should be clarified at statewide labor management.
- An estimated number of employees employed under consulting contracts of 52, which is no change from the prior SFY. The cost per employee appears to have decreased by approximately 17% from $35,635 to $30,321. The purpose and use of these contract employees and whether they can be replaced by state employees should be clarified at statewide labor management.
- Making permanent the general loan powers of the New York State Urban Development Corporation (UDC); PEF has opposed this proposal in the past.
- Authorizing a $300 million Investment and Job Creation Program in the Empire State Development Corporation. Priority will be given to projects that create significant regional economic development benefits or that provide economic benefits to distressed areas, produce long-term employment creation or retention, foster partnerships with local and regional entities, and encourage private sector investment. Projects would be subject to unanimous approval of a newly established Capital Approval Board
- Establishing a new public benefit corporation, the Stem Cell and Innovation Fund Corporation, to implement a new Stem Cell and Innovation program. $100 million is provided in SFY2007-08 to support initial investments in this area. In total, the Executive Budget would provide $2.1 billion over an eleven-year period, including the proposed $1.5 billion bond act for 2008 and an additional $500 million in planned annual appropriations if the bond act is approved.
- Closing several corporate tax loopholes including:
ü Requiring corporations that conduct substantial inter-corporate transactions with affiliated companies to file a combined, rather than separate, corporate franchise tax return.
ü Stopping taxpayer use of corporate status to avoid personal income tax
ü Extension and restructuring of fees for Limited Liability Companies (LLCs).
ü Conforming New York to the practices of 18 other states that have decoupled from the federal deduction related to qualified production activities and require taxpayers to add back this deduction for New York tax purposes.
ü Eliminating the deduction for certain subsidiary dividends received by a parent company from a real estate investment trust (REIT) or regulated investment company (RIC) to ensure that the shareholders of the REIT or RIC pay tax on the income earned by the REIT or RIC. Wal-Mart has used this loophole to significantly reduce the corporate franchise tax they pay to New York State and New York City as well as other states. According to the Wall Street Journal Wal-Mart has used this loophole to cut their state taxes by about 20% over one four-year period.
ü Making permanent current tax shelter reporting requirements that expire on July 1, 2007.
ü Limiting the exemption under the insurance tax for cooperative insurance companies.
ü Making several changes to the way banks are taxed.
Department of Economic Development Program Details-State Operations Enacted Proposed Enacted Change in Percent Program 2006-07 Budget 2007-08 Budget 2007-08 Budget Appropriation Change All Funds $37,327,900 $45,083,000 $45,083,000 $7,755,100 20.8% General Fund $30,913,000 $38,668,000 $38,668,000 $7,755,000 25.1% Special Revenue-Federal $1,000,000 $1,000,000 $1,000,000 $0 0.0% Special Revenue-Other $5,414,900 $5,415,000 $5,415,000 $100 0.0% Personal Services $13,971,100 $14,533,000 $14,533,000 $561,900 4.0% Contractual Services $24,260,000 $24,260,000 $24,260,000 100.0% Administration $4,974,900 $5,537,000 $5,537,000 $562,100 11.3% Personal Service $2,416,000 $2,327,000 $2,327,000 ($89,000) -3.7% Regular $2,300,000 $2,300,000 Holiday/overtime compensation $27,000 $27,000 Nonpersonal Service $819,000 $1,470,000 $1,470,000 $651,000 79.5% Supplies and materials $60,000 $60,000 Travel $40,000 $40,000 Contractual Services $1,230,000 $1,230,000 Equipment $140,000 $140,000 Special Revenue-Other (SRO) $1,739,900 $1,740,000 $1,740,000 $100 0.0% Commerce Econ Dev Asst Acct - (SRO) $900,000 $900,000 $900,000 $0 0.0% Nonpersonal service $900,000 $900,000 $900,000 $0 0.0% Supplies and meterials $20,000 $20,000 Travel $58,000 $58,000 Contractual services $762,000 $762,000 Equip.ent $60,000 $60,000 Public Service Acct - (SRO) $839,900 $840,000 $840,000 $100 0.0% personal service $487,100 $487,000 $487,000 ($100) 0.0% Regular $486,000 $486,000 Holiday/overtime compensation $1,000 $1,000 nonpersonal service $352,800 $353,000 $353,000 $200 0.1% Supplies and materials $6,000 $6,000 Travel $5,000 $5,000 Contractual Services $95,000 $95,000 Equipment $1,000 $1,000 Fringe benefits $236,800 $229,000 $229,000 ($7,800) -3.3% Indirect costs $17,000 $17,000 Clean Air Program $500,000 $500,000 $500,000 $0 0.0% Special Revenue-Other (SRO) $500,000 $500,000 $500,000 $0 0.0% Clean Air Acct - (SRO)