New York’s FY19 Budget: CRE Impacts
The $168.3 billion budget tries to address SALT deduction losses, public transportation, housing and infrastructure.
NEW YORK CITY— New York’s State Operating Funds spending is $100.1 billion—for the eighth consecutive year maintaining growth at 2%. The state operating funds exclude federal funds and capital, with all funds spending amounting to $168.3 billion for FY 2019.
Highlights surrounding commercial real estate were an integral part of Gov. Andrew M. Cuomo’s budget announcement. “New York will also become the first state to implement new measures to shield families from the devastating federal tax law’s elimination of full state and local deductibility—an economic arrow aimed at the heart of this state’s economy,” says the governor.
The governor says the reduction of the deductibility of SALT taxes effectively raises middle class families’ property and state income taxes by 20% to 25%. He says the state budget allocates funds for the following measures that will assist New Yorkers:
The ongoing phase-in of the $4.2 billion Middle Class Tax Cut is delivering relief to six million New Yorkers, with households saving $250 on average and $700 annually when fully effective.
The state will continue the Property Tax Credit enacted in 2015, which will provide an average reduction of $380 in local property taxes to 2.6 million homeowners this year alone. By 2019, the program will provide an additional $1.3 billion in property tax relief and an average credit of $530.
The budget decouples the state tax code from the federal tax code, which will allow New Yorkers to itemize deductions for state tax returns even if they do not for federal returns. The governor’s office says this will avoid more than $1.5 billion in state tax increases brought solely by increases in federal taxes.
The state also plans to reduce local property taxes with $225 million to fund the state’s match of savings from shared services actions, a program which encourage localities to share specific services.
There are also additional opportunities for federal and state tax deductions for charitable contributions and an alternative employer compensation expense program.
In addition to provisions with tax relief language, in funding education, retirement, childcare, healthcare, business enterprises and other social benefits, programs can assist in supplementing the brunt of having fewer dollars from the loss of SALT deductions or other federally funded benefits.
As subway complaints and bus grievances have raised public concerns in transportation measures, the budget funds the Subway Action Plan. This provides that New York City will fund half of the $836 million plan to make immediate repairs to improve and maintain the subways. It enacts a $2.75 surcharge on for-hire vehicles south of 96th Street in Manhattan to help ease congestion and establish a long-term funding stream for New York City public transportation.
The budget also expands the time of day the New York City Bus Camera program operates and accounts for installing a minimum of 50 new traffic monitoring cameras to enforce bus lane violations to help alleviate congestion and increase efficiency of mass transit service.
It appropriates $8 million to allow the Lower Hudson Transit Link to begin bus service along the Governor Mario M. Cuomo Bridge in 2018.
The budget funds the Consolidated Highway Improvement Program and the Marchiselli program is maintained at $477.8 million. Local PAVE NY and BRIDGE NY programs are each maintained at $100 million. In addition to previously planned amounts, the budget includes $65 million for extreme winter recovery roadway repairs, $20 million in capital funding and $5 million in operating funding for transit systems statewide other than the MTA.
In response to NYCHA tenants’ grievances about neglected housing at egregiously sub-par standards, the budget allocates another $250 million for the housing authority to improve the residents’ living conditions. It also puts in place new oversight measures by statute and executive order.
The budget also includes design-build legislation to expedite the construction of NYCHA developments and for construction of the new jails to replace Rikers Island. This allowance of combined design and construction contracts would also apply to transportation projects including the BQE.