Senate Passes Comprehensive Energy Plan

John J. Flanagan

October 07, 2005

The New York State Senate today passed a comprehensive energy plan that would provide motorists with immediate relief from high gasoline prices, ease the impact of skyrocketing home heating costs on senior citizens this winter and address the state’s long term energy needs by encouraging the use of alternative energy and conservation.

The centerpiece of the Senate energy plan is a cap on the State and local sales taxes on gasoline that would save consumers about $90 million through the rest of this year, and $400 million annually if gas prices remain near $3 per gallon and all localities participate. The New York City council, and many other local government officials, have also asked the Senate to adopt a cap on gas sales taxes. Also, the Senate is proposing to use the windfall in State sales tax collections, resulting from the increased sales taxes on higher priced gas, to provide rebate checks to senior citizens to help offset winter heating costs.

"The high cost of energy is having a major impact on our economy, hurting the bottom lines of small businesses, pinching the pocketbooks of families and threatening the ability of seniors to keep warm this winter," Senate Majority Leader Joseph L. Bruno said. "The Senate plan addresses the immediate need to lower gas prices, the looming crisis of high heating fuel costs and would put long term measures in place to encourage the use of alternative sources of energy and to encourage conservation."

"There are people in media and in government who say the best thing to do about the energy crisis is nothing, and that’s wrong," Senator Bruno said. "People are looking for relief, they are looking for help and they are looking for answers. With our action today, the Senate is providing relief, assistance and answers and I hope the Assembly will support our energy plan."

Senator Bruno said the Senate is also reviewing an energy plan submitted by Governor Pataki.

"As a result of recent natural disasters, crude oil shortages, and increased oil consumption throughout the world, energy prices have skyrocketed," Senator James Wright (R-C-I, Watertown), Chairman of the Senate Committee on Energy and Telecommunications, said. "In response, the Senate has put forth bold new ideas to counteract high prices and looming problems. The enactment of the sales tax cap on gasoline, the creation of the "Senior Heat" program, and a continued focus on new energy technologies will provide relief to consumers in the short and long term."

In addition to the cap on gas taxes and the senior heating assistance program, the Senate energy plan includes bills that would:

> Provide a tax credit for the production of bio-fuel products;

> Extend tax credits for the purchase of alternative fuel vehicles;

> Extend property tax exemptions for alternative energy facilities; and

> Provide a sales tax exemption on Energy Star products, home insulation and newly installed alternative energy systems.

The Senate also passed a resolution, asking the federal government to increase funding for the low income Home Energy Assistance Program, based on anticipated higher costs for home heating fuel this winter.

The Senate energy plan would cap the State and local sales tax on gasoline at a taxable value of $2 per gallon. The cap would save motorists an estimated $45 million through the rest of the year and $200 million annually in State sales taxes, if gas prices stay at about $3 per gallon. The cap covers the local sales tax on gas unless a local government votes to opt out of the cap. If all localities participate, the plan would generate another $200 million in savings. (S.5968, Senator Joseph Robach, R-C-I-WF, Rochester).

"The spike in gas prices has affected everyone, working men and women, businesses, families and our senior citizens," Senator Robach said. "I am happy to sponsor this legislation that will give immediate relief to motorists by capping sales tax on motor fuel and diesel fuel resulting in a significant savings for families annually."

"The State has been profiting from the rise in gas prices because higher prices mean higher gas taxes," Senator Bruno said. "The Senate plan would cap the tax, reduce the cost of gas at the pump and limit the impact on consumers’ wallets."

In addition, the Senate passed legislation (S.5969), sponsored by Senator Carl Marcellino (R, Syosset) to prohibit gas station owners from raising the price of gas more than once a day.

The Senate's "Senior Heat" program would provide $200 rebate checks to eligible senior citizen homeowners to help offset the cost of home heating. Seniors approved for the enhanced STAR school property tax rebate program (at least 65 years old with an annual income of less than $64,650) would be eligible for the Senior Heat program.

The Senior Heat program legislation, sponsored by Senator Nicholas Spano (R-C-I-WF, Westchester), would also provide a $100 refundable State tax credit to eligible senior citizens who rent and pay for their heat.

The Senior Heat program would be primarily funded with revenues from the gas tax windfall, now projected at $42 million, but estimated to grow to $100 million or more by the end of the fiscal year. The program would provide an estimated $140 million in assistance to more than 640,000 senior homeowners and renters. (S.5965, Sen. Spano)

"Last week the Senate Investigations Committee held a hearing on the escalating costs of gas. One thing is clear, we need to heat our homes this winter and it has been reported that heating costs could skyrocket by as much as $350 per household," Senator Spano said. "This tax credit and rebate will help our seniors on a fixed income to stay warm this winter."

"This winter seniors on fixed incomes will face an impossible choice between staying warm and buying food and medicine," Senator Bruno said. "This program will help avert tragedy, and help hard-pressed seniors stay warm, by directing this unanticipated windfall to those who need it most."

In addition to soaring gas prices, the price for natural gas and heating oil has risen dramatically since last winter. According to NYSERDA, the average fuel oil price rose from $1.76 per gallon one year ago to $2.72 per gallon last week -- a 55 percent increase. New York homeowners consume an average 800 gallons of fuel oil each winter. Utilities are already projecting record increases in natural gas costs.

The Senate passed legislation (S.5846A), sponsored by Senator James Wright (R-C-I, Watertown), that would provide manufacturers of qualified bio-fuel products, primarily ethanol and bio-diesel, with a refundable tax credit. The credit would be 15 cents a gallon, capped at $2.5 million per plant, per year for up to four years.

"It is important that we provide incentives for the production of biofuels," said Senator Wright. "In addition to the air quality and environmental advantages, biofuels, such as ethanol and biodiesel, are viable long-term alternatives to petroleum based fuels. Increased investment in biofuels will not only have a positive economic impact on the State, but also assist with our overarching efforts to reduce our dependence on foreign oil."

The Federal Government and industry experts estimate that drivers in New York State would see a minimum savings of eight cents a gallon at the pump if New York State could provide a substantial amount of the ethanol that will be required to be used by the new Federal Energy Act of 2005. It is estimated that the credit will save New York State taxpayers $600,000 in SFY 2006-07 and $10 million a year in SFY 2010-11. As more New York State produced bio-fuels are added to the mix of gasoline at the pump, consumers will see a further easing of gas prices.

The Senate passed a bill (S.5763A), sponsored by Senator Carl Marcellino (R, Syosset), that would extend through the end of 2006, the recently expired alternative fueled vehicle tax credit. The credit would apply to actual alternative fuels such as methanol, ethanol and fully electric vehicles. The bill also reestablishes a State sales tax exemption for the purchase of refueling property equipment. The bill is estimated to provide $3 million a year in credits through SFY 2007-08.

"By encouraging people to purchase alternative fuel automobiles we are improving the quality of life for all New Yorkers," Senator Carl Marcellino (R, Syosset) said. "Whether you are worried about skyrocketing prices at the pump, or you are concerned with doing your part to fight the greenhouse effect, alternative fuel cars are good for your wallet as well as the environment."

The Senate passed legislation to extend for four years, a law that allows localities and school districts to provide a full or partial exemption for real property taxes on land that contains alternative energy generation systems such as wind and solar power and farm waste to energy systems. The law is scheduled to sunset on January 1, 2006. (S.5966, Sen. Flanagan)

"By providing tax incentives we can encourage positive, environmentally conscious ways to produce electricity and fuel," Senator John J. Flanagan (R,C-East Northport) said. "Cutting taxes is an effective way to expand our use of alternative sources of energy and reduce our dependence on foreign oil."

The Senate today passed a measure to eliminate the State sales tax on insulation materials such as high efficiency windows, doors, weather-stripping, pipe sheathing and alternative energy systems in or attached to a building such as wind power or fuel cells. In addition, the bill would provide four sales tax free weeks (one per season) on a variety of energy star products, such as washers, dryers, refrigerators, dishwashers, furnaces and hot water heaters. These measures are estimated to save New York State taxpayers $40 million a year. (S.5970, Sen. Hannon)

"This bill would provide additional incentive for consumers to purchase Energy Star rated products and alternative energy systems so they can save energy and save money," Senator Kemp Hannon (R-C-I, Garden City) said.

The Senate passed a chapter amendment (S.5967) to a law passed this year (S. 2994-B), sponsored by Senator George Winner, (R-C, Elmira), that creates a new fuel cell credit. The law provides tax credits for the purchase of commercial fuel cell generating equipment and encourages their use.

"Emergency electric generators are becoming increasingly necessary as our society becomes more and more reliant on computers and other modern technology susceptible to natural disasters, terrorist attacks and the unpredictability of the power grid," said Senator Winner. "Fuel cells offer a clean, environment friendly, efficient, effective and reliable source of power for electric generators. This legislation encourages the use of fuel cells by helping businesses offset the cost of investing in fuel cell technology."

Earlier this year, the Senate passed legislation (S.785), sponsored by Senator Charles Fuschillo (R-C, Merrick), that would provide a tax credit for businesses that install alternative energy equipment such as wind, solar or fuel cells. This bill would save New York State businesses $15 million a year beginning in SFY 2006-07. The Assembly did not act on this bill.

"This legislation will assist businesses to reduce their reliance on nonrenewable sources of energy by allowing them to save money and to gain some cost certainty in the future," Senator Fuschillo said. "More importantly, this legislation will deliver that same cost certainty to consumers, since prices would not be as affected by foreign energy costs. And all this is accomplished while helping to achieve everyone’s main goal of protecting the environment for future generations."

Earlier this year, the Senate passed legislation (S.5755), sponsored by Senator Nicholas Spano (R-C-I-WF, Westchester), that provides enhanced exemptions for Petroleum Business Taxes on qualifying aircraft flights. The aviation industry would save an estimated $7 million under the bill, but the State revenue impact is neutral.

"The elimination of the petroleum business tax on aviation fuel will benefit New Yorkers by reducing the cost of flights and encouraging airlines to offer more intrastate flights at cheaper prices. With the costs of gasoline skyrocketing, the time to eliminate this tax is now," Senator Spano said.

The bills were sent to the Assembly.