Neil Irwin of the Washington Post reports on the latest economic news from Washington - “The U.S. economy grew at a 3.2 percent annual rate in the first three months of the year, evidence that the economic recovery continues to plug along but that growth is not accelerating in a way that would bring down joblessness rapidly.

The first-quarter gain in gross domestic product represents a deceleration from the 5.6 percent pace of growth in the final months of 2009, and is a bit below the 3.5 percent growth analysts were forecasting.

The growth in gross domestic product, the broadest measure of economic activity, was driven by a 3.6 percent rise in personal consumption expenditures. That is the largest component of GDP and suggests that American consumers are gradually coming out of their shells and returning to stores following the recession that probably ended last year.”

To read more click here.

A Times Union editorial asks the question - Can the legislature come up with real ideas that will put a balanced budget in place before the State runs out of cash?

“No one but the most ice-hearted person could take pleasure from Governor Paterson’s plan to impose a one-day furlough on state workers every week that the budget impasse drags on. A 20 percent pay cut, which this furlough would effectively mean, is a frightening prospect for most working people.

But what, we have to wonder, is a governor to do, with a financial crisis bearing down, a budget agreement nowhere in sight and state unions dug in on their position that their contracts, 4 percent raises and all, are inviolate?

It’s hard to fault Mr. Paterson for proposing such a measure, which would save an estimated $30 million a week and is hardly unheard of in today’s economic climate. More than a dozen states are resorting to furloughs in one way or another to close their budget gaps. So are some private companies.

Time and again, Mr. Paterson’s efforts to close a $9.2 billion budget gap have been rebuffed by lawmakers even as he and Comptroller Thomas DiNapoli warn the state could run out of cash in June — barely four weeks from now.”

To read more click here.

As reported in the stargazette.com, Chesapeake Energy is bringing elected officials, media and landowners from New York across the border to their drill site in Towanda, PA to see for themselves what clean and safe drilling looks like. Chesapeake director of corporate development, Brian Grove stated that “We have gone above and beyond with best management practices, and we want to show that off a little bit. I don’t think our industry has done a good job of demystifying the process.”

It is important that the people who will be living with drilling in their communities see that is it not the evil monster that is depicted in the media. The media often highlights the rare incidences of problems related to drilling and usually does not have the facts straight in this reporting. It is critical that the energy companies gain the trust of communities where they plan to drill and encouraging stakeholders to tour drilling sites is a good step in that direction.

To read more click here.

“Gov. Paterson’s proposed 50 percent cut of business tax credits for the next two years will send a clear message to businesses: don’t invest in New York,” said Kenneth Adams, president and CEO of The Business Council of New York State, Inc.

“Let’s call this what it really is, a $750 million tax increase over the next two years on New York businesses that are struggling to stay competitive and keep New Yorkers working,” added Adams. “This says to businesses that economic development incentives offered by New York cannot be counted on.”

The Business Council’s memo in opposition to the proposal states, “Businesses have made capital investments; cleaned up and redeveloped brownfields; hired workers and increased payrolls; invested in research activities and alternative energy; and made other investments in exchange for tax credits and other incentives that helped make these projects affordable in New York State. It is terrible public policy to again reduce tax credits after business investments and expenditures have already been made – as New York did last year in creating new criteria that eliminated tax credits for already-certified Empire Zone companies. This approach makes New York a less attractive state for new investments and new jobs.”

Read more.

The Business Review of Albany also has a story on this issue.

Read it here.

A. Gary Shilling writes in today’s Wall Street Journal on the need to lower government labor costs.

He writes: “Life is tough and getting tougher for state and local governments. Revenues from personal and corporate income and sales taxes are down and property taxes are weakening. Budget deficits are jumping, and states now issue debt to fund routine expenditures. Meanwhile, pension obligations are underfunded to the tune of $1 trillion, according to the Pew Research Center. States on average have set aside just 7.1% of retiree health care and other nonpension benefits, and 20 states have reserved nothing.”

Read more.

Jacob Greshman writes in the Wall Street Journal about how school districts across New York have violated state law by stockpiling billions of dollars that could have been used to lower property taxes.

“The growth of these cash reserves coincides with a rapid rise in school taxes in suburban and upstate areas over the last decade. During that time, many districts drafted budgets each year based on inaccurate revenue estimates that produced a glut of surpluses.

Instead, districts have tucked away that money in an array of obscure reserve funds totaling $3.3 billion, according to a recent state estimate.”

To read more click here.

Michael Mcauliff and Kenneth Bazinet report in the Daily News - “Senate Republicans blinked Wednesday, ending their risky blockade of a bill to rein in Wall Street.

“I’m very pleased by that,” President Obama said in Illinois, where he learned that Republicans were ending their filibuster.

Democrats rode public anger over Goldman Sachs’ alleged financial shenanigans and pounded the GOP for voting three times in three days against debating the legislation. Obama hammered Republicans over the issue on his two-day swing through the heartland.”

To read more click here.

Eric Anderson of the Times Union writes - “One detail that didn’t get much attention Tuesday when Gov. David Paterson was proposing furloughs and extended legislative sessions was his proposal to cut business-related tax credits by half through 2012, deferring their use until 2013.

That would mean a big boost in state taxes for many businesses. Indeed, the governor estimates that the savings this year would be $100 million, and next year $650 million.

The businesses eventually would be able to claim the credits, but economic developers and the business community said they nevertheless were concerned.

“Deals with the state can’t be trusted,” said Michael Moran, a spokesman for the Business Council of New York State Inc. He said it is these credits that often help make New York more competitive.”

To read more click here.

Governor David A. Paterson was joined today by business leaders and labor representatives to highlight the importance of two critical economic development programs due to expire on May 15. He urged the Legislature to pass reform measures to the Power For Jobs and Energy Cost Savings Benefit programs, both administered by the New York Power Authority (NYPA), to stabilize existing businesses and institutions, promote economic growth and create jobs for New Yorkers.

Kenneth Adams, President and CEO of The Business Council of New York State, Inc. said: “The Business Council supports the Governor’s efforts to create a new, permanent economic development power program, which is needed to protect hundreds of thousands of good jobs and to promote job growth for New Yorkers. This program is vital to support energy-dependent businesses and to promote capital and energy-efficiency investments. The Administration, Senate and Assembly have each introduced legislation that share this important objective. The Business Council shares the Governor’s view that quick action is needed with the current state programs expiring on May 15. We look forward to continued collaborative efforts to enact a new economic development power program.”

Currently, Power for Jobs supports nearly 240,000 jobs at approximately 440 businesses and not-for-profits organizations in every region of the State. Since its inception 13 years ago, the program has provided hundreds of millions of dollars in energy cost savings for its customers, spurring job creation and having a positive economic impact throughout the State. The Energy Cost Savings Benefit program, an umbrella program that merged three older economic programs in 2005, supports another 72,000 jobs at nearly 80 businesses. Over the years, the savings for customers have typically ranged from five to 20 percent for their allocations. In 2009 alone, it is estimated the two programs saved their customers between $50 and $100 million in energy costs.

Failure to extend the Power For Jobs and Energy Cost Savings Benefit programs before May 15 will cause the existing programs to lapse, cutting off the Power Authority’s authorization to continue to support businesses and not-for-profits with discounted electricity and potentially lead to the loss of hundreds of thousands of jobs throughout New York State.”

To read more click here.

Yesterday, Governor Paterson proposed cutting business tax credits by one-half for 2010, 2011 and 2012 (see press announcement here).  The Governor’s proposed legislation is available here and provides specifics on this proposal.

Its key provisions:

• Applies to taxable years beginning on or after 1/1/2010 and before 1/1/2013.
• Specifies tax credits “that otherwise would be used or refunded” during those tax years are deferred to and can be used in tax years beginning after 1/1/2013 and before 1/1/2016.
• The Department of Tax and Finance is authorized to develop implementing regulations, including rules on the extent to which deferred credits can be used in each future tax year.
• Estimates tax payments and first installment payments would be made based on tax liability calculations as if this deferral was in place on the first day of the tax year.
• The bill applies to twenty-nine specified Article 9-A tax credits, and their counterpart credits in Articles 9, 22, 32 and 33, and to four additional credits that are specific to the corporation, personal income and insurance law.  It includes the ITC, Empire Zone credits, brownfield credits, energy credits and others.  The only major business credit excluded from this deferral legislation is the film production credit (under the Executive Budget, the cap on available film production tax credits would increase from $350 million to $420 million for the next five years.)

To find out more about New York State tax law attend the 2010 Annual Conference on State Taxation
May 5-6, 2010 at the Crowne Plaza Albany. For more information click here.