senate Bill S7083

2013-2014 Legislative Session

Requires governor to perform cost benefit analysis of tax expenditures

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Archive: Last Bill Status - In Committee


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

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Apr 24, 2014 referred to finance

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S7083 - Bill Details

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

S7083 - Bill Texts

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Requires governor to perform a cost benefit analysis of tax expenditures.

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BILL NUMBER:S7083

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 484 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.

More than 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 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 on a tax
expenditure's effectiveness and efficiency, but primarily when
recommending to expire, modify or repeal it.

PRIOR LEGISLATIVE HISTORY: S408 2011 New Bill - died in Finance
Committee S408 2012 -died in Rules Committee

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.

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

                                  7083

                            I N  S E N A T E

                             April 24, 2014
                               ___________

Introduced  by  Sen. KRUEGER -- 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
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:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01248-01-3

S. 7083                             2

  (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.

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