Media Coverage on the Yacht Tax Exemption

March 30, 2015. After the Fiscal Policy Institute issued a media release about the state budget including a sales tax exemption, some of the coverage by media outlets included:

New York Times, March 30, 2015.

“We were simply looking for things like property tax relief for regular folks and we found the yacht exemption. I think it is incredibly sad you have so many New Yorkers who are struggling and this government’s priorities are on a yacht tax credit.” Ron Deutsch, FPI.

New York Daily News, March 30, 2015.

“I guess the yacht lobby is stronger than people thought,” said Mike Murphy, a spokesman for the Senate’s Democratic conference. “It is outrageous that we are giving tax breaks to buy a yacht but couldn’t raise the minimum wage or provide real property tax relief.”

Associated Press/Washington Times, March 30, 2015.

The measures angered those who favored raising the minimum wage or easing the burden of high property taxes as a means to help a broad cross-section of New Yorkers.

Syracuse Post Standard March 30, 2015.

Buffalo News, March 30, 2015.

Newsday, March 30, 2015.

The Atlantic, March 30, 2015.

Times Union, March 30, 2015.

Capital New York, March 30, 2015.

NPR/WXXI March 30, 2015.

Initial Response to Budget Agreement on Revenue Bill: No Property Tax Relief and No Reform of Tax Credits; But Wealthy Get Sales Tax Exemption on Luxury Yachts

March 30, 2015. “It appears our legislative leaders couldn’t agree to provide tax relief to struggling homeowners and renters through a middle class property tax circuit breaker but managed to find the political will to provide sales tax exemptions for people buying luxury yachts. This seems like a case of some seriously misplaced priorities,” said Ron Deutsch, executive director of the Fiscal Policy Institute. “We are also dismayed that the IDA tax credit reform proposal advanced by the Governor did not make it into the final budget.  Not reforming the broken IDA and Brownfield tax credit programs is yet another missed opportunity.”

Deutsch also notes that in addition to dropping the Circuit Breaker, the agreed-on revenue bill omits the Executive Budget proposal to expand the sales tax to marketplace providers (like eBay and Amazon).

It also eliminates many of the various tax enforcement/reform measures that were included in the Executive Budget Proposal including the IDA reform proposal and the reduction in net income tax for small business.

No Sales Tax on Yachts

One of the oddest and most offensive additions to the final revenue bill that was not in the Executive Budget, is Part SS, which exempts from the sales tax “vessels” (defined as “every description of watercraft other than a seaplane used or capable to being used as a means of transportation on water”). The sales tax exemption applies to the value of the yacht above $230,000 ( i.e., exempts purchase price of yachts over $230,000 from the state sales tax).

The Fiscal Policy Institute will release a more detailed analysis of the final revenue bill after a more thorough review.

Op-ed: De Blasio’s welfare reform correction: Critics who claim we’re sliding back to the bad old are blind to reality

March 27, 2015. An op-ed by James Parrott, Daily News.

Some see the slight increase in New York City’s welfare rolls in recent months as cause for alarm, warning that we are on an inevitable slide back to bad old days of chronic government dependency.

In fact, the uptick reflects a long overdue policy correction. Changes underway are about making temporary assistance “a leg up and not a hand out,” which is exactly what welfare should be.

Far from dismantling welfare reform, Mayor de Blasio and Human Resources Administration Commissioner Steve Banks are breathing life into the cadaver they inherited.

Under de Blasio’s predecessor, the city’s welfare policies were broken. During the four years of recession and weak recovery, 2008-11, unemployment doubled and food stamp rolls soared. Mayor Bloomberg’s own poverty measurement charted a 20% earnings decline for low-income families and a sharp poverty rise.

Yet at a time when an increase in the city’s welfare caseload would be expected, the numbers didn’t budge. Bloomberg remained wedded to his predecessor’s policy of thwarting recourse to public assistance.

Want proof of how unfairly stingy the city was? Many applicants who were routinely denied assistance appealed in the state-administered hearings to which they are entitled. The city’s denial was upheld in only 10% of such appeals.

Not a great batting average for a performance-metrics-obsessed mayor. The state eventually threatened to impose its own sanction against the city, a $10 million annual penalty.

Meanwhile, while city public assistance rolls were flat, they surged in neighboring Nassau and Suffolk counties.

This is not a theoretical debate. Half of the city’s public assistance recipients are children. Many of the adult recipients can’t work due to disability, illness or age.

Of the households with an adult who should be engaged in work, an adult is working in 30% of cases, but earning so little that the household still qualifies for cash assistance.

We all know where the mayor stands on raising the minimum wage. For the balance of the roughly 56,000 work-eligible adults, the administration is focused on helping them find work or acquire the skills needed to find and keep a job.

Some welfare-reform types attack this as backsliding to the days when there were a million people on welfare and not much was done to help people earn their own way.

That’s just ridiculous.

Under de Blasio’s two predecessors, a “work-first” mentality prevailed. People got put in jobs no matter how low the pay or poor the prospects for achieving self-sufficiency.

De Blasio and Banks want to help people take care of themselves by customizing assistance to client needs, whether it’s for vocational training, educational credentials or English proficiency.

The new thrust also will phase out the work-for-benefits Work Experience Program and replace it with internships, work study, training or employment vouchers geared to real careers.

That’s not bleeding-heart liberal; it’s pragmatic. Only one in 10 city workers has not completed high school. Yet three out of five of HRA’s employable clients lack a high-school diploma.

Allowing recipients up to age 24 to pursue education, meeting yearly goals and making sufficient progress, is the smart thing to do. Others pursue college degrees, provided they maintain a required grade average and are engaged in work activities for 20 hours per week.

Part of the recent increase in cash assistance rolls takes the form of one-time cash assistance to prevent eviction and reduce homelessness. Given the high cost of shelters, that, too, sounds to me like a smart fiscal strategy, as well being better for families.

A revamped approach to welfare was long overdue. That may mean that cash assistance rolls rise modestly for a period of time. If it reflects a bridge to better long-term outcomes, it’s well worth the cost.

PDF of op-ed

Budget Savings from a Minimum Wage Increase

March 27, 2015. As negotiations over New York State’s budget draw to a close, Governor Cuomo and the legislature are trying to hammer out an agreement to raise the state’s minimum wage, which is currently just $8.75 and is currently scheduled to top out at $9.00 at the end of this year. Both Governor Cuomo and the Assembly have proposed measures to raise New York State’s minimum wage, including a higher minimum wage level for New York City in the Governor’s bill, or, in the case of the Assembly bill, for New York City and the large downstate suburban counties (those with populations in excess of 900,000, i.e., Nassau, Suffolk and Westchester counties).

This policy brief details how, beyond significant benefits for New York’s workers, an increase in New York’s minimum wage will entail significant budget savings for New York State and other levels of government – savings well in excess of $1 billion, depending on the amount of the wage increase. The savings come from reduced costs for public assistance to low-wage workers—in effect a taxpayer subsidy to large low-wage employers—and increased tax payments by workers benefiting from the wage hike. The families of minimum wage workers will be much better off as a result, better able to move toward self-support, and the economy will benefit from increased consumer spending.

Comparison of the Executive, Assembly, and Senate Education Proposals FY 2015-2016

March 24, 2015. The governor’s Executive Budget proposal would increase school aid by $1.07 billion. The increase in school aid is contingent on passage of a package of changes to teacher evaluation, tenure, and other procedures called the Education Opportunity Agenda. The budget also includes an Education Tax Credit which would provide a large credit for donations to schools and the Dream Act which would provide tuition assistance to undocumented immigrants who came to the country as children. The Assembly’s proposed budget would increase school aid by $1.8 billion without contingencies and includes the Dream Act but not the Education Tax credit. The Senate’s proposed budget would increase school aid by $1.9 billion and includes a modified Education Tax Credit but not the Dream Act.

The Executive Budget would also establish a grant program for pre-Kindergarten for 3 year olds and raises the charter school cap and a small increase in funding. Neither the Assembly nor the Senate included the grants for pre-Kindergarten for 3 year olds. Only the Senate would raise the charter cap and increase their funding.

Click here for details on the Executive, Assembly, and Senate education proposals.

Comparison of the Executive, Assembly, and Senate Property Tax Relief Proposals FY 2015-2016

March 23, 2015. The governor’s Executive Budget proposal includes a significant new property “circuit breaker” that would provide relief to households (both owners and renters) whose property taxes are unreasonably high relative to their income. Circuit breakers address a serious shortcoming of the property tax—that payments are not linked to the taxpayer’s ability to pay. The State Assembly’s proposed budget also included the circuit breaker with an important modification—removing the link to the property tax cap. The Senate, in contrast, replaced the circuit breaker with a tax rebate for homeowners only based on the existing STAR exemptions.

In addition, the Executive Budget would make a number of changes to the STAR school tax exemption program including reducing the annual growth in the maximum credit to zero and converting the exemption to an income tax credit for new recipients. The Assembly and the Senate each include some but not all of the changes proposed by the governor.

Click here for details on the Executive, Assembly, and Senate property tax relief proposals.

Policy Brief: Schools and Poverty

March 17, 2015. The state can improve low-performing schools and help students who face learning barriers by increasing funding for key education programs and poverty-fighting efforts. Proposals by the governor and the legislature are a start, but still fall short of what is needed.

In a report issued in February, the state identified 178 schools in 17 school districts as “priority” or “failing” schools. These schools score in the bottom 5 percent in student proficiency tests or have low graduation rates, or both. The school districts that are home to these priority schools teach students who face many challenges.

  • They live in communities that are among the poorest in the state with the least resources to improve local schools. Three times as many school age children live in poverty in districts with priority schools than in other New York school districts.
  • Over three-fourths of the students in priority schools are eligible for the federal free or reduced price lunch program.
  • Many of these students are not proficient in English or are from minority families with disproportionately high levels of unemployment and poverty. More than 9 out of 10 students in these schools are minorities.
To read the full report, click here.

Briefing on Mayor deBlasio’s Preliminary FY 2016 NYC Budget: Addressing Needs and Budgeting Cautiously as the Recovery Progresses

March 10, 2015. FPI’s FY 2016 New York City budget briefing includes:

  • An overview of the Mayor’s Preliminary FY 2016 Budget proposal, with a particular focus on new human services spending initiatives in the context of changes in human services spending in recent years.
  • The social and economic context in New York City at the beginning of 2015: the unevenness of the recovery and wage, income and employment trends. The presentation will review the extent and persistence of low wages in the social services contract sector and discuss changes needed to raise wages in that sector.
  • The impact on New York City and its budget of the Governor’s proposed 2015-2016 Executive Budget.
  • Highlights of FPI’s recent report on NYC tax trends and discuss priorities for NYC tax reform.

PDF of Budget Briefing

Briefing on the Mayor’s Preliminary 2016 NYC Budget

On Tuesday morning, March 10, 2015, the Fiscal Policy Institute presented its annual New York City budget briefing to the Economic Justice and Social Welfare Network at the Federation of Protestant Welfare Agencies. The briefing is open to the public.

The topics covered during the briefing included:

  • An overview of the Mayor’s Preliminary FY 2016 Budget proposal, with a particular focus on new human services spending initiatives in the context of changes in human services spending in recent years.
  • The social and economic context in New York City at the beginning of 2015: the unevenness of the recovery and wage, income and employment trends. The presentation will review the extent and persistence of low wages in the social services contract sector and discuss changes needed to raise wages in that sector.
  • The impact on New York City and its budget of the Governor’s proposed 2015-2016 Executive Budget.
  • Highlights of FPI’s recent report on NYC tax trends and discuss priorities for NYC tax reform.

Briefing on Mayor deBlasio’s Preliminary FY 2016 NYC Budget: Addressing Needs and Budgeting Cautiously as the Recovery Progresses

March 10, 2015. In his briefing of NYC Mayor Bill deBlasio’s second budget, FPI’s James Parrott notes:

  1. several positive budget changes;
  2. strong job and tax growth, but uneven gains for workers and families;
  3. budget outlook improving; and
  4. items still to be addressed on the budget front.