State Budget Update
Date: April 9, 2021
Both Houses of the New York State Legislature have finalized and passed a 2021-22 State Budget. The budget agreement was reached between the Legislature and Governor Cuomo earlier this week. The $212 billion spending plan includes $5.5 billion in federal aid.
We are very thankful that the State Senate restored funding of our apprenticeship program (MIAP) in its one-house budget resolution, and that such funding was included in the final state budget agreement. And while we and the business community oppose the budget’s temporary corporate tax increase, we are relieved that state legislators heard our pleas to have qualified manufacturers remain exempt. We also are optimistic that the new Medical Supplies Act will support manufacturers statewide that have or plan to pivot their productions to meet the needs of the COVID-19 pandemic.
Below, please find a summary of budget items that may have an impact on you and your business.
For more 2021-22 State Budget details, and to read the Governor’s press release, please click here.
New York Medical Supplies Act
All contracts over $50,000 in value made and awarded by a state department or agency for the purchase of personal protective equipment (PPE) or medical supplies will require that these items be produced or made in the United States. The agency or department head has the discretion to waive this provision, however, if it would unreasonably increase costs, PPE or supplies cannot be adequately located in the US, or if it could result in a delay of delivering critical services.
Small Business Recovery Grant Program
The program will provide $800 million in grants for small businesses and not for profits impacted by the COVID-19 pandemic. Grants awarded from this program shall be available to eligible micro-businesses, small businesses, and for-profit independent arts and cultural organizations that do not qualify for business assistance grant programs under the federal American Rescue Plan Act of 2021, or any other available federal COVID-19 economic recovery or business assistance grant programs,
including loans forgiven under the federal Paycheck Protection Program, or are unable to obtain sufficient business assistance from such federal programs, with priority given to socially and economically disadvantaged business owners including, but not limited to, minority and women-owned business enterprises, service-disabled veteran-owned businesses, and veteran-owned businesses, or businesses located in communities that were economically distressed prior to March 1, 2020, as determined by the most recent census data.
Eligible costs include payroll; rent or mortgage (commercial); repayment of local property or school taxes associated with such small business’s location; insurance; utility; personal protection equipment (PPE) necessary to protect worker and consumer health and safety; heating, ventilation, and air conditioning (HVAC) costs, or other machinery or equipment costs, or supplies and materials necessary for compliance with COVID-19 health and safety protocols, and other documented COVID-19 costs as approved by the corporation.
Empire State Development will create an application for this program. We will continue to post more information as it comes available.
Small Business and Arts Relief and Recovery Assistance
The 2021-22 State Budget includes a $1 Billion small business, arts, entertainment, and restaurant relief package to help businesses and other organizations recover from the pandemic.
COVID-19 Recovery Workforce Development & Training Initiative
This funding will provide training in high-growth industries, employer-driven training for low-income workers and funding for small businesses to re-train and hire furloughed or laid-off employees or to hire new employees.
MACNY Line Item – The state budget includes $750,000 for the Manufacturers Intermediary Apprenticeship Program, MIAP.
Pass-Through Entity Tax
The tax law has been amended to create a new elective state Pass-Through Entity Tax by expanding the number of eligible pass-through entities.
Child Care Tax Credit
The 2021-22 State Budget expands the existing tax credit program to incentivize more employers to provide childcare to their employees and expands the number of Excelsior Job participants who are eligible to utilize the new Excelsior Job credits for childcare.
Middle-Class Property Tax Relief
The new state budget will provide a personal income tax credit for homeowners with incomes up to $250,000, and who pay a higher percentage of their income on property taxes. The income tax credits will range between $250 and $350. It also continues the middle-class personal income tax cut program valued at about $400 million.
NYSERDA Renewable Energy RFPs
For RFPs, contracts, etc. issued after October 1, 2021, certain renewable energy projects may have Buy American requirements. NYSERDA also can include a preference for New York equipment and supplies in RFPs.
Corporate Franchise Tax
The measure enacts a temporary surcharge on the corporate tax rate from 6.5% to 7.25% for three years through tax year 2023 for taxpayers with business income greater than $5 million. The rate is unchanged for companies that have income under $5 million. The capital base method increase continues to exempt qualified manufacturers, emerging technology companies, and cooperative housing corporations.
Personal Income Tax Increase
For individual filers, whose incomes are more than $1 million and joint filers over $2 million, the income tax rate will increase from 8.82 percent to 9.65 percent. For filers whose income is between $5 million and $25 million, a new bracket is created at a rate of 10.30 percent, and for those over $25 million the rate will be 10.90 percent.
If you have any questions, please email Tiffany at [email protected].