senate Bill S408

Requires governor to perform cost benefit analysis of tax expenditures

download pdf

Sponsor

Co-Sponsors

Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
view actions

actions

  • 05 / Jan / 2011
    • REFERRED TO FINANCE
  • 18 / Mar / 2011
    • NOTICE OF COMMITTEE CONSIDERATION - REQUESTED
  • 02 / May / 2011
    • DEFEATED IN FINANCE
  • 04 / Jan / 2012
    • REFERRED TO FINANCE
  • 21 / Feb / 2012
    • NOTICE OF COMMITTEE CONSIDERATION - REQUESTED
  • 12 / Mar / 2012
    • COMMITTEE DISCHARGED AND COMMITTED TO RULES

Summary

Requires governor to preform cost benefit analysis of tax expenditures.

do you support this bill?

Bill Details

Versions:
S408
Legislative Cycle:
2011-2012
Current Committee:
Senate Rules
Law Section:
Executive Law
Laws Affected:
Amd §181, Exec L
Versions Introduced in 2009-2010 Legislative Cycle:
S7347

Sponsor Memo

BILL NUMBER:S408

TITLE OF BILL:

An act
to amend the executive law, in relation to cost benefit analysis of tax
expenditures

PURPOSE:

This legislation proposes to require the Governor to provide in the
annual Tax Expenditure Report more information -- including
cost/benefit analyses that better gauges the effectiveness and
efficiency of each tax expenditure.

SUMMARY OF PROVISIONS:

§ 1. Amends subdivision 1 of section 181 of the Executive Law to
include the following definitions:

1. "Cost benefit analysis" 2. "Cost benefit analysis ratio" 3. "Cost
benefit analysis target ratio"

§ 2. Amends subdivision 2 of section 181 of the Executive Law to
include:

1. A cost/benefit analysis of each tax expenditure;
2. A comparison between each tax expenditures cost benefit analysis
ratio and the tax expenditure's target ratio, along with an
explanation for any difference between the two ratios.
3. An analysis of whether each tax expenditure has successfully
achieved the purpose for which the tax expenditure was enacted and
currently serves, including an analysis of the persons or entities
that are benefited by the tax expenditure.
4. An explanation of the cost benefit analysis formula applied to each
tax expenditure.
5. An explanation of each tax expenditure's target ratio, including a
description of why the ratio reflects adequate levels of tax relief
or job creation or job retention or investment in the State.

§ 3. Amends subdivision 3 of Section 181 of the Executive Law to
include the following:

1. The Governor shall develop for each tax expenditure a cost benefit
analysis formula for determining the cost benefit analyses ratio.
2. The Governor shall set for each tax expenditure a cost benefit
analysis target ratio.

EXISTING LAW:

Section 181 of the Executive Law requires the Governor to submit to
the Legislature an annual Tax Expenditure Report no more than thirty
days after issuing the Executive Budget. The report shall contain
information and statements on the provisions of law authorizing the
tax expenditures and cost estimates on them. It shall also include


any recommendations of the Governor regarding continuing, modifying,
or repealing tax expenditures.

In cases when the Executive Budget includes proposals to expire,
modify or repeal a tax expenditure, the report shall contain an
analysis of the number and types of persons and entities benefiting
or expected to benefit from such tax expenditures, an estimate of the
costs of such tax expenditures for the coming fiscal year, and an
explanation of the reasons for the proposals. The explanation of
recommendations shall include comments on the effectiveness and
efficiency of tax expenditures plus general cautionary and advisory
notes concerning limitations of data, estimation procedures, sampling
errors and imputed values.

JUSTIFICATION:

New York State has over 380 tax expenditures, some of which date back
to the 1890s. While the Governor's Tax Expenditure Report annually
reviews each tax expenditure's amount of reduced taxpayer liability
to the State, many of them have remained in law with little
consideration as to whether they are fulfilling their objectives to
benefit the public.

Twenty years have passed since the Governor issued his first Tax
Expenditure Report in 1990. Yet New York still needs a more rigorous
tax expenditure review process. This review should employ performance
metrics similar to the cost/benefit analyses used in the Empire Zones
Program, which weighs economic activity against tax assistance.
cost/benefit analyses on all tax expenditures would give legislators
a clearer understanding of the need to maintain, enhance or sunset
them. The Governor is already required to comment of a tax
expenditure's effectiveness and efficiency, but primarily when
recommending to expire, modify or repeal it.

PRIOR LEGISLATIVE HISTORY:

None.

FISCAL IMPLICATIONS:

Slightly higher administrative costs stemming from requirements on the
Executive to perform tax expenditure cost/benefit analyses. Potential
cost savings through changes to inefficient tax expenditures.

EFFECTIVE DATE:

This act shall take effect on the first of January next succeeding the
date it shall have become law.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   408

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced  by  Sens.  KRUEGER,  MONTGOMERY,  SERRANO  -- read twice and
  ordered printed, and when printed to be committed to the Committee  on
  Finance

AN  ACT to amend the executive law, in relation to cost benefit analysis
  of tax expenditures

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Subdivision  1  of  section  181  of the executive law is
amended by adding three new paragraphs (c),  (d)  and  (e)  to  read  as
follows:
  (C)  "COST  BENEFIT ANALYSIS" SHALL MEAN, FOR TAX EXPENDITURES CLAIMED
BY TAXPAYERS SUBJECT TO ARTICLES NINE (OTHER THAN  SECTION  ONE  HUNDRED
EIGHTY),  NINE-A, THIRTEEN-A, TWENTY-EIGHT, THIRTY-TWO, AND THIRTY-THREE
OF THE TAX LAW, A METHOD OF DETERMINING A TAX EXPENDITURE'S  BENEFIT  TO
NEW  YORK  STATE  BASED ON THE TAX EXPENDITURE RECIPIENT'S PROJECTED JOB
CREATION OR JOB RETENTION AND/OR INVESTMENT  IN  THE  STATE  VERSUS  THE
TOTAL  AMOUNT  OF  REVENUES  FOREGONE UNDER THE TAX EXPENDITURE. FOR TAX
EXPENDITURES CLAIMED BY TAXPAYERS SUBJECT  TO  ARTICLES  TWENTY-TWO  AND
THIRTY-ONE  OF  THE TAX LAW, "COST BENEFIT ANALYSIS" SHALL MEAN A METHOD
OF DETERMINING A TAX EXPENDITURE'S BENEFIT TO NEW YORK  STATE  BASED  ON
THE AMOUNT OF TAX RELIEF A TAX EXPENDITURE PROVIDES TO PARTICULAR CLASS-
ES OF PERSONS OR ENTITIES.
  (D) "COST BENEFIT ANALYSIS RATIO" SHALL MEAN THE RATIO CALCULATED BY A
COST BENEFIT ANALYSIS OF A TAX EXPENDITURE.
  (E)  "COST  BENEFIT ANALYSIS TARGET RATIO" SHALL MEAN THE COST BENEFIT
ANALYSIS RATIO LEVEL THAT THE GOVERNOR DEEMS TO REFLECT A  TAX  EXPENDI-
TURE'S  ADEQUATE  LEVEL  OF  BENEFIT  TO NEW YORK STATE WHEN TAKING INTO
CONSIDERATION THE AMOUNT OF REVENUES THE STATE FOREGOES BECAUSE OF A TAX
EXPENDITURE AND THE  AMOUNT  OF  TAX  RELIEF  OR  JOB  CREATION  OR  JOB

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00741-01-1

S. 408                              2

RETENTION  OR  INVESTMENT  IN  THE  STATE PROVIDED OR SUPPORT BY THE TAX
EXPENDITURE.
  S  2.  Paragraphs  (f)  and (g) of subdivision 2 of section 181 of the
executive law, as added by chapter 23 of the laws of 1990,  are  amended
and  five new paragraphs (h), (i), (j), (k) and (l) are added to read as
follows:
  (f) comment, if any, on the effectiveness and efficiency of other  tax
expenditures; [and]
  (g)  general  cautionary  and advisory notes concerning limitations of
data, estimation procedures, sampling errors and imputed values,  promi-
nently displayed[.]; AND
  (H) A COST BENEFIT ANALYSIS OF EACH TAX EXPENDITURE;
  (I)  A COMPARISON BETWEEN EACH TAX EXPENDITURE'S COST BENEFIT ANALYSIS
RATIO AND THE TAX EXPENDITURE'S TARGET RATIO, ALONG WITH AN  EXPLANATION
FOR ANY DIFFERENCE BETWEEN THE TWO RATIOS;
  (J)  AN  ANALYSIS  OF  WHETHER  EACH  TAX EXPENDITURE HAS SUCCESSFULLY
ACHIEVED THE PURPOSE FOR WHICH  THE  TAX  EXPENDITURE  WAS  ENACTED  AND
CURRENTLY  SERVES, INCLUDING AN ANALYSIS OF THE PERSONS OR ENTITIES THAT
ARE BENEFITED BY THE TAX EXPENDITURE;
  (K) AN EXPLANATION OF THE COST BENEFIT  ANALYSIS  FORMULA  APPLIED  TO
EACH TAX EXPENDITURE; AND
  (L) AN EXPLANATION OF EACH TAX EXPENDITURE'S TARGET RATIO, INCLUDING A
DESCRIPTION  OF  WHY THE RATIO REFLECTS ADEQUATE LEVELS OF TAX RELIEF OR
JOB CREATION OR JOB RETENTION OR INVESTMENT IN THE STATE.
  S 3. Subdivision 3 of section 181 of the executive law  is  renumbered
subdivision  5  and  two  new  subdivisions 3 and 4 are added to read as
follows:
  3. COST BENEFIT ANALYSIS FORMULA. THE GOVERNOR SHALL DEVELOP FOR  EACH
TAX EXPENDITURE A COST BENEFIT ANALYSIS FORMULA FOR DETERMINING THE COST
BENEFIT ANALYSIS RATIO.
  4.  COST  BENEFIT  ANALYSIS TARGET RATIO. THE GOVERNOR SHALL DETERMINE
FOR EACH TAX EXPENDITURE A COST BENEFIT ANALYSIS TARGET RATIO.
  S 4. This act shall take effect on the first of January next  succeed-
ing the date on which it shall have become a law.

Comments

Open Legislation comments facilitate discussion of New York State legislation. All comments are subject to moderation. Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity or hate speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Comment moderation is generally performed Monday through Friday.

By contributing or voting you agree to the Terms of Participation and verify you are over 13.