Gov. Andrew Cuomo’s proposed utility tax extension, which would cost taxpayers a projected $3 billion during the next five years, faces the State Assembly this week as business leaders continue to exert pressure on legislators.

The utility tax extension, or the 18-A tax surcharge, is collected on top of basic utility rates. It has been in effect since 2009, but will expire on March 31, 2014, the end of the fiscal year, according to a Feb. 5 New York State Senate press release. Major business associations, such as the Manufacturers’ Association of Central New York and The Business Council of New York State, have lobbied extensively to block the tax extension, according to the press release.

“It’s a broken promise by those who said this tax would be temporary,” Heather Briccetti, president and CEO of The Business Council of New York, said in a March 15 company press release. “In the last two years, the Executive Budget has shown a commitment to fiscal discipline. It should maintain that commitment and allow 18-A to sunset.”

Cuomo unveiled the extension as a part of the executive budget in his Jan. 22 address. In total, the extension would cost $2.8 billion, mostly falling on businesses, especially those who use a lot of energy, according to the New York State Senate press release.

The Senate has already begun voting, while the Assembly will start on Thursday, said Assemblyman Al Stirpe (D-Cicero), who opposes the extension.

The proposed extension is an important source of revenue in the budget. If passed, the surcharge will bring in about $255 million within the next fiscal year, according to a February 2013 Committee of Ways and Means revenue report.

“I don’t think it does anything to enhance energy independence, reduce consumption,” Stirpe said. “If you’re going to do something like that, do it in a way that brings the state forward.”

For homeowners, the surcharge means a separate fee of $55 a year. Small-business owners will shoulder an extra $540 a year and larger business owners $30,000 a year, according to a March 19 press release from Stirpe’s office.

Nuhaila Wazen, a landlord in Syracuse, said she pays $700 a month in water bills. Though her tenants pay for the rest of their utilities, she said she feels even the cost of water alone is too much.

Kristen O’Leary, a sophomore television, radio and film major, pays about $600 in utilities for her 10-month lease, which she shares with four roommates.

“From a student perspective, paying for anything feels like too much,” she said. “At the same time, I understand because it’s paying for the electricity itself, the distribution, how it gets there and so on.”

She said 25 percent of her paycheck goes to paying for utilities, which strained her income further when her hours at work were cut.

“I spend a lot of time outside of school working, basically, to pay for where I live,” O’Leary said.

However, a graduated decrease may be passed instead, Stirpe said. This would gradually lower the current rate of 2 percent until the tax is phased out within “two to three years,” he said.

This would represent a compromise between Cuomo, who is mainly concerned with closing budget gaps, and the Assembly, Stirpe said.

“We’re very close to the businesses and the residents, and have to listen to them every day,” Stirpe said. “So we’re getting a slightly different story in our ear.”

He said distress from business owners might be why Cuomo seems willing to eliminate the surcharge within a few years.

The Manufacturers Association of Central New York and the Business Council have been “begging” Cuomo to reconsider, Stirpe said.

“They are saying that they will not be able to hire as many people as they’d like or make as many investments as they’d like,” he said.

Lobbyists from the Business Council of New York remain stationed in the halls of the New York Capitol, even now, Stirpe said, anticipating a decision by the end of the week.

To recoup lost revenue from eliminating the 18-A tax, Stirpe said the state might have to cut expenses. Income taxes, if the economy improves, would further insulate the budget.

However, he hesitated to make projections, calling it “too soon.” The tax, if passed, would not affect homeowners and businesses until next year.

The prospect of the tax stalling economic recovery makes the need for its expiration urgent, Stirpe said.

Said Stirpe: “We have to do what we can right now.”

Published on March 26, 2013 at 1:00 am

Contact Natsumi: najisaka@syr.edu