April 8, 2017


State budget won't include proposal to require online stores with New York shopper base to collect sales tax

Kenneth Lovett
New York Daily News

(This article originally appeared in New York Daily News on April 8.)

In a win for online shoppers, the $153.1 billion state budget deal announced Friday night does not include Gov. Cuomo's push to require online marketplaces such as Etsy and Amazon to collect sales taxes.

The decision to kill Cuomo’s online tax proposal was hailed by tech groups, but ripped by New York retailers.

The plan would have required online marketplace providers that process a minimum of $100 million in sales a year from New York buyers to collect sales taxes on behalf of third parties from outside New York who use their platforms to sell goods to state residents.

Sales taxes are already collected when a third-party seller is located in New York, but not when the seller is from outside the state.

Matthew Mincieli, northeast region executive director of TechNet, said had it be enacted, the first-in-the-nation policy would have "set a dangerous precedent across the country."

“We understand states are looking for new revenue sources, but bad tax policy is not the way to go about it," he said.

Internet Association Executive Director for New York State John Olsen said the decision to kill the proposal on top of one to allow ridesharing outside of New York City sends a “clear message that New York State is indeed open for business.”

But Retail Council of New York State head Ted Potrikus accused Senate Republicans who led the charge against the tax proposal of having "caved to the clichéd histrionics and whining of out-of-state dot-coms worth billions of dollars" while ignoring "the very real concerns of brick-and-mortar stores struggling in their own districts."

Cuomo's budget office estimated the change would have generated $200 million in new revenue for the state over the next two years while closing a loophole that critics argued benefits out-of-state sellers over those in New York.

Mayor de Blasio is not happy that a one-year extension giving him control over the city schools, which looked like it would be included in the budget, was ultimately left out. The Senate GOP, which has been warring with the mayor, wants to take it up in June, when the law expires and the mayor’s race heats up.

“The exclusion of mayoral control is nothing more than politics at the expense of students,” said de Blasio spokeswoman Freddi Goldstein.

Citing improvements in test scores, graduation and drop-out rates, Goldstein said that “we cannot afford to go back to the old days.”

NYPD cops are also winners as the budget settles a long-standing dispute between the city and its police union by giving newer officers the same higher disability benefits as older ones.

A de Blasio official said that the city addressed the matter with the union in its recent contract deal, but state legislation is needed to formalize it.

Patrick Lynch, head of the city Patrolmen’s Benevolent Association, said the change “finally makes protecting New York City police officers a priority.”

Lynch, who previously accused the mayor of playing politics with the issue, last year asked Cuomo to intervene.

Currently, cops hired after July 2009 annually receive 50% of their final pay if they suffer career-ending injuries, compared to the 75% benefit more veteran officers get.

Police in New York outside the city get the higher benefit.

The budget also includes the release of $2.5 billion for affordable and supportive housing.

Jolie Milstein, president and CEO of the New York State Association for Affordable Housing, praised the agreement and called for a quick dispensing of the funds.

In addition, the budget revives for five years an expired tax credit for developers who create affordable housing. Multiple Assembly Democrats decried the tax credit as a lucrative giveaway to well-heeled developers while supporters say it will lead to the much needed construction of affordable housing in the city.

After contentious stalks, state leaders agreed to raise the age to 18, up from 16, that youths can be charged as adults — a top priority for legislative Democrats.

A number of Assembly Democrats were glad New York will no longer be among the last two states that charge teens as adults, but openly complained that the bill does not go far enough.

Republicans like Assemblyman Al Graf, who is eyeing a run for Suffolk County sheriff, called it “dangerous legislation” that is “going to make a lot of our neighborhoods very dangerous.”

Cuomo won his push for a free tuition for public college students from households with incomes of up to $125,000 — even as CUNY and SUNY were granted permission to raise their tuitions by $200. The budget also increases state tuition assistance funding for public and private college students, though not those who are the children of undocumented immigrants.

For the seventh straight year, state taxpayer-supported spending will be capped at 2% even while statewide education spending will grow by 4.4%, or $1.1 billion — including $386 million for New York City.

Charter schools will also see more money though a cap limiting how many of the institutions there can be was left in place despite a push by Senate Republicans to lift it.

The budget deal extends a tax on millionaires and funds the first-year of a middle class tax cut approved last year. It provides $200 million to fight the heroin and opioid epidemic.

There’s also money for access projects to Kennedy Airport and the Bruckner Sheridan Interchange reconstruction and $1.4 billion for Cuomo’s “Vital Brooklyn” initiative that will fund wellness and economic development in one of the city’s poorest areas.

Meanwhile, bracing for potential federal cuts, the new deal specifies that if Congress cuts funding to New York by at least $850 million, the governor’s budget director will develop a plan to make spending cuts that will automatically go into effect unless the Legislature imposes its own reductions within 90 days.

The budget also has its share of pork-barrel spending, included another $385 million for the controversial State and Municipal Facilities Program used by Cuomo and lawmakers to fund pet projects throughout New York.

After announcing the deal Friday, the Assembly on Saturday passed the two remaining budget bills.

The tension of the past few weeks was evident as a number of Cuomo’s fellow Democrats bashed him during the debate.

At one point, the Dems were abruptly brought behind closed doors where Speaker Carl Heastie (D-Bronx) asked them to stop criticizing the governor, sources said.

The Senate is expected to return to Albany Sunday evening to give final passage to a budget that will be at least nine days late — the longest delay of Cuomo’s seven-year tenure.

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