Budget & Taxes
NY GOV CUOMO PROPOSES $2B IN TAX RELIEF: Last week, ahead of his State of the State address, Gov. Andrew Cuomo (D) announced a $2 billion tax relief proposal that sent the clear message New York's status as a high-tax state will no longer be tolerated. The proposal's assortment of cuts for property owners, renters and upstate manufacturers largely mirrored the recommendations made last month by a panel led by Republican former Gov. George E. Pataki and Democratic former State Comptroller H. Carl McCall.
"The commission fundamentally recognized that New Yorkers need tax relief," Cuomo said. "You have got a lot of hardworking families, a lot of homeowners who are getting crushed in this state by taxation."
One of the ideas Cuomo pitched that was suggested by the panel was a two-year tax rebate for homeowners equal to their property tax increases — effectively a property tax freeze — with the second year contingent upon municipalities' demonstrating they have taken "concrete steps" toward sharing services. As one illustration of the need to consolidate, the governor ticked off a list of the various tax collecting entities in the state.
"Towns, villages, district — water district, sewer district, fire district — another district just to count the other districts," he said, calling the state "government-crazed."
Another of the governor's proposals was a tax credit for homeowners who earn up to $200,000 a year tied to how much they pay in property taxes, a scheme known as a "circuit breaker."
Cuomo also embraced a number of business-friendly proposals, including a reduction of the corporate income tax rate from its current 7.1 percent to 6.5 percent. He also called for an increase in the estate tax exemption from $1 million to $5.25 million, to stop wealthy New Yorkers from having to "leave the state to die." For less affluent residents of that city, he proposed an income tax credit for renters earning up to $100,000 a year. And for the struggling manufacturing businesses in upstate New York, he called for the elimination of corporate income taxes, which are currently 5.9 percent.
The governor's proposals were generally well received by Republican and Democratic legislative leaders, as well as the state's business community. But there were some critics. Edmund J. McMahon, president of the conservative Empire Center for Public Policy, for instance, said he wasn't convinced the property tax measures would have much of an impact.
"These are tiny marginal temporary savings," he said. "They won't do anything to speak of for the economy. They are meant to increase the ability of the governor and Legislature to say they reduced your property taxes." (NEW YORK TIMES, TIMES UNION [ALBANY])
2014 EXPECTED TO BE 'BREAKOUT YEAR' FOR JOBS: After years of tentative growth, the U.S. job market will pick up a bit more this year, according to Moody's Analytics. The global economic forecasting company projects the nation will add 2.6 million jobs this year — up from 2.2 million in 2013.
Moody's forecast is particularly bright for some states. For instance, North Dakota, it said, will continue to have the nation's highest job rate, 3.57 percent, as a result of its ongoing energy boom. Thanks to a boost from its high-tech industry, Arizona will have the second highest rate, at 3.08 percent. Lee McPheters, a Research Professor of Economics at Arizona State University's W. P. Carey School of Business, said his state was ranked 49th for job growth in 2010 and seventh in October 2013, based on his analysis of data from the Bureau of Labor Statistics.
With a projected job rate of 2.75 percent, Texas was third in Moody's rankings, although in terms of sheer number of jobs, Moody's expects it to lead the nation, generating 308,000. And the state already recovered all the jobs it lost during the recession back in December 2011. Rounding out Moody's top 10 are Colorado (2.67 percent), Florida (2.34 percent), Georgia (2.18 percent), South Carolina (2.14 percent), Oregon (2.14 percent), Idaho (2.05 percent) and Utah (1.98 percent). Moody's ranked California 15th in job rate (1.80 percent), but it said the state would see the second largest increase in the number of new jobs (264,000), which it said would be driven by the state's recovering housing market and high-tech industry in Silicon Valley. But unlike Texas, the Golden State still has a ways to go to replace the 1.4 million jobs it lost during the recession.
Moody's outlook wasn't quite as rosy for other states and the nation's capital. It said the shrinking of the federal government would hold job growth in the District of Columbia to 0.75 percent, the lowest rate in the nation. And Illinois, Maine, Vermont, New York, Alaska, Massachusetts, Tennessee, New Hampshire and New Mexico would all see rates of 1.25 percent or lower.
Still, Mark Zandi, chief economist at Moody's Analytics, said 2014 would be a "breakout year." And he predicted the U.S. economy would reach full employment — which he defined as an unemployment rate of 5.75 percent and 64 percent labor force participation — within three years. (STATELINE.ORG)
CA GOV BROWN TO PROPOSE $107B BUDGET: California Gov. Jerry Brown (D) will ask state lawmakers for billions of dollars more for education and debt reduction next fiscal year, according to a spending plan leaked last Wednesday.
The $107 billion budget proposal includes $10 billion in new spending for K-12 schools, $5.8 billion for the state's public colleges and universities and $11 billion for the reduction of the $25 billion "Wall of Debt" the state has built up in recent years from special fund loans, unpaid costs to schools and deferred payments to public pensions and Medi-Cal. Brown also intends to ask for a constitutional amendment to ensure a rainy-day fund for future budget crises and for $1.6 billion to be set aside next fiscal year.
The request for $9 billion more in spending over the current fiscal year's $98 billion level was prompted in part by the $4 billion the state expects to receive in capital gains taxes, according to the plan. (SAN FRANCISCO CHRONICLE)
2014 CRUCIAL YEAR FOR ATLANTIC CITY: This year is going to be an important one for Atlantic City. New Jersey Gov. Chris Christie (R) has given the seaside gambling resort town five years to reverse its declining fortunes or face the expansion of casino gambling to other parts of the state, and 2014 will be the fourth year of that grace period.
"It's obviously a critical year because we need to begin to see progress in Atlantic City or we're going to start considering alternatives," Christie said recently. "That means considering the once-unthinkable: allowing casinos at the Meadowlands sports complex in northern New Jersey and possibly elsewhere in the state."
The city isn't getting the year off to the best start, however. One of its 12 casinos, the Atlantic Club Casino Hotel, is shutting its doors on Jan. 13, as a result of a bankruptcy court ruling. But that news isn't all bad. The casino's slot machines, table games, customer lists, property and 801-room hotel are going to two national gambling companies with casinos in the city, Tropicana Entertainment and Caesars Entertainment, which paid a combined $23.4 million for the Atlantic Club.
But some observers fear that casino's closing could be the first of several in the city that analysts have long said has too many casinos to support the region's shrinking gambling market.
"It is very likely that this same strategy will be used to take out Trump Plaza, perhaps the Golden Nugget and maybe even the Showboat," said Wayne Schaffel, an Atlantic City casino publicist in the 1980s. "It will undoubtedly shore up the balance sheets for the remaining 8 to 11 properties, but it will also take out anywhere from 1,500 to 3,000 rooms. At the end of the day, the winners will be the few remaining casino companies. The losers will be the thousands of employees who lose their jobs; the state, which will suffer from ever lower revenue and taxes, and Atlantic City itself."
Tony Rodio, president of the Tropicana Casino and Resort and head of the Casino Association of New Jersey is concerned that any action by the state in the direction of expanding gambling — legislative approval of a commission to study the impact of gambling at the Meadowlands is reportedly in the works — could jeopardize progress the city is currently making. Among other things, the city has lured private investment in nongambling attractions, including an amusement park, a Margaritaville restaurant and entertainment complex, and outlet shops, and launched a $150 million casino-funded advertising campaign.
"Frankly, New Jersey's gaming industry in Atlantic City is at a crossroads," Rodio said.
Liza Cartmell, head of the Atlantic City Alliance which promotes the resort community, wants Christie to grant a one-year extension on his deadline for the city's turnaround, not only because of the investment in noncasino attractions but also because Superstorm Sandy in Oct. 2012 set back tourism along much of the Jersey shore by at least that long.
"There are people who believe this island, this magical place, is a gem," she said. "It's very rough but it's continuing to be polished. It just needs some time." (ASSOCIATED PRESS)
'AMERICA'S AUTOBAHN' AILING: A Texas toll road known as "America's Autobahn," owing to its 85-mile-per-hour speed limit — the highest in the nation — has run into financial trouble a year after opening. Although billed by its private operator, SH 130 Concession Co., as a way to escape the congested freeway connecting the state's capital city of Austin with San Antonio to the south, the 41-mile stretch of State Highway 130 has failed to attract as many motorists as anticipated. Consequently, the company is working with lawyers to restructure about $1.1 billion of its debt.
The news is the latest in a string of reports of toll-road operations across the country running into financial troubles as a result of heavy debt loads and lower-than-forecast usage. But some say motorists have avoided SH 130 simply because of the cost of using it, which can top $8 for cars $29 for commercial trucks.
"When I talk to truck drivers about the road many say they can't afford it," said John Esparza, president of the Texas Motor Transportation Association. (WALL STREET JOURNAL)
BUDGETS IN BRIEF: A case currently before MASSACHUSETTS' highest court could determine whether cities and towns can tax land owned and protected from development by groups like the Nature Conservancy and the Massachusetts Audubon Society. The case (New England Forestry Foundation, Inc. v. Board of Assessors of the Town of Hawley) revolves around how publicly accessible and active conservation land must be in order to qualify for a tax exemption (BOSTON GLOBE). • Republican legislative leaders in MICHIGAN, anticipating a budget surplus this year and next totaling close to $1.3 billion, want to pass a broad-based tax cut for state residents this year, possibly a reduction in the personal income tax rate from 4.25 percent to 3.9 percent over four years (CRAIN'S DETROIT BUSINESS, STATE NET). • Pot shops in COLORADO reportedly did over $1 million in business on Jan. 1, the first day of legalized recreational marijuana sales in the state (9NEWS.COM). • Slightly less than half of the recipients of the 266 economic-development incentives awarded by OHIO that expired in 2012 fulfilled their hiring promises and other commitments, according to a report from the state's attorney general, Mike DeWine. The report stated the compliance rate for recipient companies was 54.9 percent, down from the previous-year's rate of 63.5 percent (COLUMBUS DISPATCH).
- Compiled by KOREY CLARK
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