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1 1 Before the New York State 1 1 BEFORE THE NEW YORK STATE SENATE FINANCE AND ASSEMBLY WAYS AND MEANS COMMITTEES 2 ------------------------------------------------------ 3 JOINT LEGISLATIVE HEARING 4 In the Matter of the 2019-2020 EXECUTIVE BUDGET 5 ON TAXES 6 ------------------------------------------------------ 7 Hearing Room B Legislative Office Building 8 Albany, New York 9 February 12, 2019 2:15 p.m. 10 11 PRESIDING: 12 Senator Liz Krueger Chair, Senate Finance Committee 13 Assemblywoman Helene E. Weinstein 14 Chair, Assembly Ways & Means Committee 15 PRESENT: 16 Senator James L. Seward Senate Finance Committee (RM) 17 Assemblyman Clifford Crouch 18 Assembly Ways & Means Committee (Acting RM) 19 Assemblywoman Sandy Galef Chair, Committee on Real Property Taxation 20 Senator Brian A. Benjamin 21 Chair, Senate Committee on Revenue and Budget 22 Assemblyman Robin Schimminger 23 Senator Diane J. Savino 24 Assemblyman John T. McDonald III 2 1 2019-2020 Executive Budget Taxes 2 2-12-19 3 PRESENT: (Continued) 4 Senator Robert E. Antonacci 5 Assemblywoman Inez Dickens 6 Senator Michael H. Ranzenhofer 7 Assemblyman Edward C. Braunstein 8 Senator John Liu 9 Assemblyman Charles D. Lavine 10 11 12 LIST OF SPEAKERS 13 STATEMENT QUESTIONS 14 Nonie Manion Executive Deputy Commissioner 15 NYS Department of Taxation and Finance 7 11 16 Kenneth J. Pokalsky 17 Vice President The Business Council of NYS 96 102 18 Edmund J. McMahon 19 Research Director Empire Center for Public Policy 119 126 20 Erin Tobin 21 VP, Policy and Preservation Preservation League of NYS 154 22 Warren J. Wheeler 23 Executive Director Scott Shedler 24 1st Vice President NYS Assessors Association 160 164 3 1 2019-2020 Executive Budget Taxes 2 2-12-19 3 LIST OF SPEAKERS, Cont. 4 STATEMENT QUESTIONS 5 Ronald Deutsch Executive Director 6 Dr. Jonas Shaende Chief Economist 7 Fiscal Policy Institute 170 174 8 Natara Feller, Esq. General Counsel 9 New York Retail Choice Coalition 183 10 Cheryl Richter 11 Executive Director Technical Analysis Director 12 Spike Babaian NYS Vapor Association 187 194 13 James S. Calvin 14 President New York Association of 15 Convenience Stores 199 204 16 Reverend Peter Cook Executive Director 17 NYS Council of Churches 207 211 18 Hillary Peckham Owner and COO 19 Etain Health 215 20 Daria Schieferstein Legal Intern 21 Lincoln Square Legal Services 221 226 22 Morris Pearl Chair 23 Patriotic Millionaires 231 236 24 4 1 2019-2020 Executive Budget Taxes 2 2-12-19 3 LIST OF SPEAKERS, Cont. 4 STATEMENT QUESTIONS 5 Dede Hill Policy Director 6 Schuyler Center for Analysis and Advocacy 249 7 Michael Kink, Esq. 8 Executive Director Strong Economy for All 9 Coalition 254 260 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 5 1 CHAIRWOMAN WEINSTEIN: So for those 2 who haven't been here earlier in the day, I'm 3 Helene Weinstein, chair of the New York State 4 Assembly's Ways and Means Committee, cochair 5 of this afternoon's hearing. 6 Today we begin the 13th in a series of 7 hearings conducted by the joint fiscal 8 committees of the Legislature regarding the 9 Governor's proposed budget for fiscal year 10 2019-2020. The hearings are conducted 11 pursuant to the New York State Constitution 12 and the Legislative Law. 13 And we will be hearing, our committees 14 will be hearing testimony regarding the 15 Governor's proposal for Taxation. I should 16 at this point mention that the Taxation 17 hearing will continue tomorrow at 1:30 p.m. 18 in Hearing Room A, where we'll be hearing 19 some testimony from the Governor's office 20 regarding their cannabis proposal that's 21 included in the budget. 22 Now I'll introduce the members from 23 the Assembly who are here, and then Liz 24 Krueger will introduce her members, and Will 6 1 Barclay, our ranker, will introduce his 2 members. 3 So we have, sitting on the lower dais, 4 our chair of the Real Property Taxation, 5 Sandy Galef -- we have a seat up here if you 6 want -- John McDonald, Robin -- everybody's 7 moving their seats. Assemblyman Robin 8 Schimminger, chair of Economic Development; 9 Inez Dickens, Ed Braunstein and Charles 10 Lavine. And as I mentioned, Will Barclay is 11 the ranker -- I'm sorry, Cliff. 12 ASSEMBLYMAN CROUCH: I know we look 13 alike. 14 (Laughter.) 15 CHAIRWOMAN WEINSTEIN: No, I didn't 16 even look. 17 (Laughter.) 18 CHAIRWOMAN WEINSTEIN: It's been a 19 long 13 days. Cliff Crouch is here on behalf 20 of the Assembly minority. 21 Liz Krueger. 22 SENATOR KRUEGER: Thank you. Hi, I'm 23 Liz Krueger, and I'm joined by Diane Savino 24 on the lower level and Jim Seward, the ranker 7 1 on Finance. I think we're the tough souls 2 left for the Senate right now. 3 CHAIRWOMAN WEINSTEIN: And just a 4 reminder, there's a countdown clock. Ten 5 minutes -- you'll have 10 minutes, 6 commissioner. And then the chairs of the 7 committee, if here, will have 10 minutes to 8 ask questions and the answers, and the 9 members will have five minutes to ask both 10 questions and answers. 11 So we have as our first witness at 12 this hearing Nonie Manion, executive deputy 13 commissioner, New York State Department of 14 Tax and Finance. 15 So please proceed. 16 EX. DEP. COMMISSIONER MANION: Good 17 afternoon, Chairs Krueger and Weinstein, and 18 to all the members of the fiscal committees 19 who have joined us today. My name is Nonie 20 Manion, and I'm the executive deputy 21 commissioner at the Department of Taxation 22 and Finance. Thank you for inviting me to 23 testify regarding Governor Cuomo's 2020 24 Executive Budget. 8 1 Our mission at the Tax Department is 2 to efficiently collect tax revenues in 3 support of state services and programs while 4 acting with integrity and fairness in the 5 administration of the tax laws of New York. 6 We administer over 45 state and local taxes 7 and process over 26 million tax returns 8 annually. 9 As a career tax administrator, I am 10 acutely aware of the cascading impacts a 11 seemingly small ripple in the tax code can 12 have on businesses and families. The federal 13 tax changes last year wreaked havoc across 14 the nation. Nowhere has the impact been felt 15 more strongly than here in New York, where 16 the cap on state and local tax deductibility 17 alone has effectively raised taxes for many 18 New Yorkers. 19 The SALT cap, combined with market 20 volatility and the uncertainty created by the 21 federal economic policies, has left New York 22 with a $2.3 billion shortfall as we approach 23 the close of this fiscal year. 24 Fortunately, last year the Governor 9 1 advanced comprehensive legislation to 2 decouple from the new federal tax laws, 3 acting quickly to avoid more than 1.5 billion 4 in state tax increases due to the federal tax 5 changes, and to ensure that our residents 6 could continue to rely on the state tax rules 7 they have come to expect. 8 In this regard, New York is better 9 positioned than many other states, some of 10 which are only now seeing the devastating 11 impact of the federal changes on their 12 residents that have begun filing tax returns 13 under the new regime. 14 The Governor also advanced innovative 15 new programs to help New Yorkers weather the 16 impacts of the SALT cap, including a new 17 employer compensation expense program that 18 has attracted hundreds of employers in its 19 first year. 20 The fiscal discipline of the past 21 eight years has positioned the state well to 22 navigate the turmoil coming from Washington. 23 The 2020 budget continues to exercise fiscal 24 restraint for the ninth straight year, 10 1 allowing the state to close a $3.1 billion 2 deficit, limit state spending growth to 3 2 percent, eliminate structural deficits, and 4 offer much-needed tax relief. 5 This budget proposes making permanent 6 the 2 percent property tax cap that has 7 already saved the typical taxpayer $3,200. 8 The budget also includes measures that would 9 reinforce the progressivity of the state's 10 tax code. It extends the top personal income 11 tax rate for another five years, while 12 continuing the phase-in of the middle-class 13 tax cut that will save taxpayers over 14 $4 billion when fully effective. These cuts 15 will result in an average tax cut of $700 for 16 approximately 6 million New Yorkers, and 17 middle-class tax rates that will be at their 18 lowest in more than 70 years. 19 While the Executive Budget builds on 20 the state's efforts to promote fairness for 21 taxpayers, it is also important that we 22 recognize the need for the Tax Law to evolve 23 with changing times. The 2020 budget would 24 modernize our tax code by requiring 11 1 marketplaces that facilitate sales to collect 2 the tax on those sales, implementing a tax on 3 e-cigarettes and other vapor products, and 4 legalizing and taxing adult use of cannabis. 5 The Governor remains committed to 6 protecting New Yorkers from the negative 7 impacts of the federal tax law. The 2020 8 budget advances additional reforms to help 9 protect taxpayers from the federal tax law 10 changes, including decoupling from the 11 federal tax treatment of state incentives and 12 ensuring that manufacturers continue to 13 qualify for certain state tax preferences.
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