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State Budget Completed, For Now
Governor Paterson, Senate Majority Leader Smith and Assembly Speaker Silver reached agreement on a state budget earlier this month. We previously reported on their preliminary decision to eliminate $1.3 billion in proposed taxes, including the 18% sales tax on non-diet soda and the tax on entertainment related spending (including amusement devices). The final budget deal addressed the remaining issues of interest to our association as follows:
· Expansion of the Tax Department's compliance tools, including requiring banks to report to the state all bank account activity for all sales tax vendors – most of these provisions were not included in the final budget. Eliminating the requirement for banks to report your account activity to the Tax Department is our most significant achievement during this year’s budget process.
· Expansion of the bottle bill to include non-carbonated drinks, water and other containers (does not include wine or liquor bottles) and state confiscation of unclaimed deposits – the bottle bill was expanded to include bottled water and the state will confiscate 80% of the unredeemed deposits.
· Increase tax on flavored malt beverage from 11 cents per gallon (current rate for beer) to $2.54 per gallon (current rate for liquor 24% alcohol or less) – this was not included in the final budget.
· Increase tax on beer from 11 cents per gallon to 24 cents per gallon and for wine from 18.93 cents per gallon to 51 cents per gallon – the final budget increases the tax on beer to 14 cents per gallon and the tax on wine to 30 cents per gallon, substantial reductions from the Governor’s proposal. In addition, a floor tax is payable on the beer and wine in stock as of the effective date of the tax increase (May 1st). A technical error in the budget bill has the incorrect floor tax amount but it is expected to be corrected in an amendment.
· Allows grocery and drug stores to sell wine; requires payment of one-time franchise fee based on gross sales for existing stores and square footage for new stores – this was not included in the final budget.
· A $3 million increase in the State Liquor Authority budget to support hiring 50 new staff to improve license processing and implementation of wine in grocery proposal – all of the additional funds for the SLA were eliminated and, as if that wasn’t bad enough, the budget imposes a mandate on the SLA to improve their information technology without any funding to carry out this requirement.
· Makes Quick Draw permanent, eliminates mandatory one-hour shut-down during the day, eliminates minimum food requirements and eliminates minimum store size requirements – this was not included in the final budget.
While we avoided most of the tax increases aimed at our industry in the Governor’s Executive Budget proposal, it is too soon to consider those threats to be safely put aside. Governor Paterson has made it clear that he expects state tax receipts to continue to fall short of budget projections that will require action in June and perhaps again in October to close mid-year budget deficits. All of the tax increases we have defeated and others that have yet to see the light of day could be on the table later this year if Governor Paterson’s prediction comes true. |
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