Council Speaker Christine Quinn called an unannounced City Council meeting Tuesday
morning, rushing council members into the chamber to give the state Legislature
the go-ahead to approve a tax credit for small business owners.
But in so-called typical Albany fashion, the Legislature never moved to vote
on the measure despite the unanimous approval of a home-rule message by the City
Council. The small-business tax credit bill is just one of many pieces of legislation
important to the city that has stalled upstate.
The Tax Credit
About 75 percent of firms in the city have fewer than 20 employees, and they
are subject to double taxation, according to city officials. Owners of S-Corporation
businesses, which have fewer than 75 stockholders and are owned by individuals
who live in the United States, are taxed on their business's profits and again
on their personal income.
For this reason, both the federal government and 39 state governments, including
New York, offer full or partial exemptions from corporate taxes for these businesses.
The city has offered a partial tax break since 1997, which the council was hoping
First proposed by Quinn in her 2006 budget response and again in the
, the legislation would cut $35 million from the personal
income taxes of S-corporation shareholders in its first year and save shareholders
an additional $18 million in fiscal year 2008, according to city officials. By
2010, taxpayers would have saved approximately $110 million.
If the legislature had approved the measure, 100,000 business owners would have
In a prepared statement, Quinn said: "These hard working people are suffering
because of an unfair tax burden. Establishing the new S-Corporation tax credit
will allow small businesses to grow and prosper.”
The home rule message, which enables the Legislature to move forward with issues
affecting only New York City, was approved by a vote of 49 to 0. The council
into a meeting after it received word that the Legislature would move
on the accompanying legislation.
A Short Session
Last week the Senate and the Assembly met for the first time since a special
legislative session to address congestion pricing adjourned in July. After a
quick session meant to address a number outstanding issues, like pay increases
for legislators, the S-Corporation legislation remained in limbo â€“ as did
most other reforms.
In response, Quinn spokesperson Maria Alvarado said in an e-mailed statement, "The
Council is pleased that the S-Corp legislation passed through the Assembly's
Ways and Means Committee, and we thank Chairman (Herman) Farrell and Speaker
(Sheldon) Silver for their work on the issue. We are hopeful that with the support
of Senator (Frank) Padavan and Senate Majority Leader (Joe) Bruno, Albany will
vote to approve this legislation before the end of the year."
The home rule message is good until the end of the year, and city officials hope
the issue will reemerge in Albany, most likely in December. A spokesman for Speaker
Sheldon Silver said the Assembly would take up the legislation before the end
of the year.
For now, S-Corporation tax breaks will mimic
other measures in Albany
: It will remain unresolved.
The Other Albany Agenda
The legislature failed to pass, in addition to small business tax breaks, a number
of the city's legislative priorities last week. Besides
and several of Governor Eliot Spitzer's appointments,
the legislature made little movement on any significant reform.
First, several Manhattan Assembly members have been blocking
amendment to the Hudson River Park Act
that would allow the city to finalize
and construct the last remaining piece of its Solid Waste Management Plan. The
city needs approval to construct the recycling center on the Gansevoort peninsula
near 14th Street. Building the facility, the Bloomberg administration has said,
would disperse the city's garbage evenly throughout the boroughs. That measure
made it to the floor
Reform of the
â€“ a state statute that requires the city to award contracts piecemeal
instead of to one business â€“ was also sidestepped last week. The law, critics
say, increases cost for the city's construction contracts, because it cannot
award projects in bulk.
Another issue left unresolved is the city's 421a program â€“ a program that
, especially affordable ones, by offering tax exemptions
According to Assemblyman Vito Lopez's office, the final amendment to the 421a
legislation, which was approved in
a larger legislative
earlier this year, will be taken up most likely
in December. Though the legislation does not take effect until next year, the
final piece outlining an agreement with the city has yet to be agreed upon. Earlier
this year, residents and city officials were outraged when a large tax break
was created for developer Forest City Ratner and its Atlantic Yards project.
Many attribute the lack
in Albany to an ongoing feud between Spitzer and Senate
Majority Leader Bruno. Although state and city leaders predict the Legislature
will reconvene later this year, whether any of the city's priorities will be
approved, or even voted on, is anyone's guess.
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