ALBANY—In response to what he says is an “arrow aimed at New York's economic heart,” Gov. Andrew Cuomo in his annual “State of the State Address” promised New York State will file suit against the federal tax reform law and will also study the feasibility of restructuring the state's income tax revenue system.

Acknowledging the state faces a $4-billion budget deficit and a projected $2-billion cut in federal government assistance, Gov. Cuomo said, “The budgetary and economic challenges we face short-term and long-term are compounded by the federal assault on New York. This is literally going to define the future of this state. President Ford may have metaphorically told New York to drop dead in 1975—but this federal government is the most hostile and aggressive toward New York in history.”

Cuomo promised to challenge the federal tax reform law as unconstitutional that violates the principle of state's rights and the principle of equal protection. He added that the onerous impacts of federal tax reform on New York State constitute “the first federal double taxation in history.”

In terms of the restructuring in how the state secures revenues, the governor explained that his administration is developing a plan to restructure the state tax code to reduce its reliance on its current income tax system and perhaps adopt a statewide payroll tax system as well as reform the carried interest loophole that he characterized as a “Wall Street giveaway.”

He cautioned that the state tax revenue restructuring would be complicated and difficult. “If we do not fix this problem, it is a question of the state of New York's economic viability in the long term. It's a question of our competitiveness, long term,” the governor said. “And preserving the strength of New York State and New York State's economy at a time when we have a federal government that is giving other states a structural competitive advantage against us.”

Among some of the key takeaways from the State of the State address include continuation of middle-income tax cuts; a pledge to file suit if the U.S. Environmental Protection Agency deems General Electric's cleanup of the Hudson River of PCBs as complete; expanding cashless tolling throughout the New York State Thruway system by 2020; continuing his $100-billion infrastructure program by investing $11.7 billion in the state's transportation infrastructure. The funding will allow the State Department of Transportation to pave 2,000 miles of road and repair or rehabilitate 500 bridges, and the New York State Thruway Authority renewal of an additional 170 lane miles, repair or rehabilitation of 25 bridges and the completion of the new $3.9-billion Governor Mario M. Cuomo Bridge in 2018.

Other initiatives include pressing the Port Authority to approve $34 million for the expansion of Stewart International Airport, which would be renamed New York International Airport at Stewart Field and build a new Metro North train station at Woodbury Common Premium Outlets. The state is about to launch a nearly $150-million project to improve access to the shopping center and Route 17. He also says the state will seek ways to redevelop the Red Hook section of Brooklyn and continue to press forward with the possible construction of tunnel connecting Long Island to either Westchester County or Connecticut to help alleviate traffic congestion on the Long Island Expressway.

The governor during his State of the State referenced major capital projects underway at LaGuardia and Kennedy Airports, Penn Station and the Javits Center. He urged the Port Authority to expedite the approval of the development of an AirTrain connection between LaGuardia and Willets Point in Queens that would create access to the number 7 subway line and the Long Island Rail Road, which both offer service to Grand Central, Penn Station and all of Long Island. The project is expected to be developed through a public-private partnership. The Port Authority will begin the environmental review process as soon as possible, with the goal of starting construction in 2019, the governor stated.

The New York Building Congress in a prepared statement praised the governor's State of the State address and in particular his commitment to continue to invest in the state's infrastructure. Carlo A. Scissura, president and CEO of the New York Building Congress, went further noting the governor's support for Amtrak's multi-billion dollar Gateway Tunnel rail tunnel project, which he described as “the most critical infrastructure project in the nation.”

Recently, federal transportation officials have stepped back from what New York and New Jersey officials had believed would be a 50-50 funding arrangement between the states and Amtrak and the federal government.

Instant Insights /

Gov. Cuomo Promises to Sue Feds Over Tax Reform

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