2020 New York State Budget Recap

April 9, 2020

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What’s In:

Prevailing Wage Expansion

The most troubling piece of the budget includes an expansion of prevailing wage to private construction projects. At a time of great economic uncertainty, this budget fails all New Yorkers by increasing costs on employers and raising the price on new investment in our communities.

The state budget included newly expanded prevailing wage mandates on certain private construction projects. Projects over $5 million dollars which receive at least 30% in certain public funding (tax credits, abatements, PILOTs, capital grants, etc.) will now be required to pay prevailing wage and benefits, beginning in January of 2022. Some projects are exempt, such as historic rehabilitation and affordable housing.

A public subsidy board will be empowered to recommend any necessary adjustments to thresholds, as well as determinations related to applicability of this section to projects undertaken with benefits stemming from certain programs.

A “covered project” shall mean construction project done under contract which is paid for in whole or in part out of public funds where:

The amount of public funds, when aggregated, is at least 30% of the total construction project costs and total project costs are over $5 million

What is considered “public funds”:

Grants from a public entity
Savings achieved from fees, rents, interests or loans
Savings from reduced taxes as a result of tax credits, abatements, exemptions or tax increment financing (IDAs, PILOTs)
Other savings from reduced waived or forgiven costs that would otherwise been at a higher market rate

What is not considered “public funds”:

421-A benefits (NYC)
Funds used to incentivize sewage system development
Tax benefits provided for projects which cannot be calculated at the time the work is preformed (Excelsior Job Credits)
Tax benefits related to brownfield remediation or redevelopment

Certain projects exempt from being considered a “covered project” include: one or two family dwellings, construction on non-profits with gross annual revenue under $5 million, various affordable housing projects, manufactured homes, projects covered under a pre-hire collective bargaining agreement, Downtown Revitalization Initiative projects, renewable projects under five megawatts, FRESH supermarket construction, and historic tax credit projects.

The “Public Subsidy Board”

The “Public Subsidy Board” shall meet on an as needed basis to examine and make recommendations regarding:

The minimum threshold percentage of public funds
The minimum dollar threshold of project costs
Construction work excluded from the project
The definition of “construction”
Whether benefits, monies or credits shall constitute public funds

Prior to any recommendations, the board will be required to hold a public hearing on any changes under consideration. The board can issue binding determinations on any matter related to an existing or potential covered project.

The board may also temporarily delay implementation of these requirements beyond the effective date (January 1, 2022) statewide or in a specific region, based on a review of “well-established” economic indexes and accepted economic factors tied to the construction industry.

The board will consist of 13 members appointed by the Governor:

One member appointed by the Majority Leader of the Senate
One member appointed by the Speaker of the Assembly
The Commissioner of the Department of Labor
The President of Empire State Development Corporation
The Director of the Division of Budget
Two members representing construction employees (labor)
Two members person representing construction employers (business)

Permanent Paid Sick Leave – Unrelated to COVID-19

The budget includes a permanent paid sick leave program taking effect in 180 days. The details include:

Employers with 4 or fewer employees must provide 40 hours of unpaid sick leave
If the business had a net income greater than $1 mil in the previous tax year, they shall provide 40 hours of paid time off
Employers with 5-99 employees must provide 40 hours of paid sick leave
Employers with 100 or more employees must provide 56 hours of paid sick leave

The sick leave must accrue at a rate of no less than one hour for every 30 hours worked. Leave is allowed for a mental or physical illness of an employee or employee’s family member. Leave also covers diagnosis, care or treatment of mental or physical illness for an employee or employee’s family member. Leave is also allowable due to domestic violence, rape, stalking or human trafficking.

An employer may set a reasonable increment of use for time off not to exceed four hours. Unused sick time will carry over to the following year, but the annual hourly caps are still in place. Employers are not required to pay out their employees for unused time. Employers must preserve six years’ worth of accurate payroll records showing the amount of sick leave provided to each employee.

Employers with pre-established sick leave policies that meet or exceed the requirements in this legislation will not be required to provide additional leave.

New York State Buy American Law

The existing New York State Buy American Law was made permanent as part of the budget, but no new products or materials were added to the law. The act requires the use of American-made structural steel and iron for state road and bridge projects costing over $1 million. It forces the Department of Transportation, Office of General Services, State University of New York Construction Fund, Dormitory Authority of the State of New York, Thruway Authority and other agencies to include a contract provision requiring the use of domestic steel and iron.

ABC Empire State advocated against expanding the list given our supply chain integration with Canada.

Rollback of Expanded Paid Time Off for Voting

The budget restores the original two hours of PTO for voting only if the employee demonstrates insufficient time to vote before or after his/her shift.

This was the law prior to the expansion passed in 2019. Employee must notify an employer between 10 and 2 days prior to any election. Last year’s expanded PTO for voting was clearly an overreach given expanded voter access programs also passed last year (early voting, etc.).

Environmental Issues

Creation of the Office of Renewable Energy Siting

Expedites the permitting process for large-scale wind and solar projects
Major rollback of local control established under the Article 10 process

“Restore Mother Nature” Bond Act

$3 billion fund to finance green infrastructure and anit-flooding projects
Amended to allow the budget director to pull it off the ballot if it would interview with state’s ability to obtain other financing needs

Permanent Ban on Hydro-fracking

Enhances the 2014 fracking ban by making it a legislative decision
Expanded to include moratorium on gelled propane hydraulic fracturing

Ban on Polystyrene (Styrofoam)

The ban will begin in January 2022 and prevents food service providers from selling or distributing disposable polystyrene containers. It also bans any manufacturer or store from selling or distributing polystyrene loose fill packaging material in New York State.

No “covered food service provider” shall sell or distribute disposable polystyrene containers (Styrofoam)
No manufacturer or store shall sell or distribute polystyrene loose fill packaging material
Excludes prepackaged food filled or sealed prior to sale and raw food products that will be prepared off premises
A financial hardship waiver may be granted in instances where no alternative product of comparable cost is available and alternative products would create undue financial hardship
Violations of this proposal include: $250 first offense, $500 second offense, $1,000 third offense

Campaign Finance Reform

Consistent with the recommendation of the Campaign Finance Commission that was recently thrown out in court, the budget creates a publicly financed political campaign program. The section of the budget also includes language restricting the state’s minor parties.

The reform will make it significantly harder for third parties to maintain their lines on the ballot. All political parties will now have to score at least 130,000 votes in a statewide general election to remain on the ballot, more than double the current requirement of 50,000. It also imposes new limits on New York’s famously loose rules for fundraising.

What’s Out:

Small Business Tax Cuts

The Governor’s proposed budget called for cutting the tax rate for some of the state’s small businesses. This proposal – while modest in context – was clearly an unfortunate casualty of Albany’s growing revenue challenge given COVID-19.

Cannabis Regulation and Taxation Act

Efforts to legalize recreational marijuana in NYS failed to cross the finish line for a second year in a row. ABC Empire State fought hard to get this provision removed from the budget because a same day reliable test has yet to be created.

We expect this issue to come back up next session and we will continue to push for the same day testing so we can ensure contractors, their employees and people who pass jobsites every day are protected.

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Posted in Member Guides, News, Statewide and tagged Brian Sampson

2020 New York State Budget Recap

As a full-service trade association, ABC offers a variety of information, tools and services to its members.

Membership is available for general contractors, subcontractors, associates and suppliers.

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