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2014-2015 Executive Budget

Executive Budget Overview

Governor Cuomo released his 2014-2015 Executive Budget today which proposes a $142 billion spending plan for the current fiscal year.  

The proposed budget has already been widely criticized as neglecting the needs of New York City  while favoring the upstate economy (largely manufacturing- and industrial-based) with a variety of targeted tax credits and economic development incentives. These incentives include (as referenced in the budget proposal) an “Upstate manufacturers” tax credit, elimination of the corporate tax for “Upstate manufacturers”, an immediate repeal of 18-a for “industrial customers”, and a slew of capital investments in “Upstate projects”.

However, the Governor has argued that the downstate region would also benefit from a renter’s tax credit, a reduction in the corporate tax rate from 7.1% to 6.5%, an initiative to expand affordable housing, and more than $4.5 billion in funding for the MTA.   

Governor Cuomo also announced $1.5 billion in state funding over five years to implement a statewide universal full-day pre-kindergarten program. Full-day pre-k was the cornerstone of Mayor DeBlasio’s campaign during which he proposed paying for the initiative by raising taxes on New Yorkers with incomes over $500,000. Mayor DeBlasio has questioned whether the Governor’s proposal would be enough to cover the costs of universal pre-k in the five boroughs and stated that he will still pursue his original plan for New York City.

As expected, the budget proposal also includes an immediate repeal of 18-a for “industrial customers” and an accelerated phase-out for all other customers. Industrial customers has been defined as customers with a monthly peak demand of 1,000kw or more in the last preceding year and a gas customer with an annual consumption in the last year of 100,000 dekatherms. Both will be determined pursuant to the utility’s tariff. Steam customers are not included. The utility is directed to credit the customer at least semi-annually. Additional details about the acceleration can be found below.

Other items of interest include:

• Amending the shared metering law;
• A plan to reduce New York’s energy costs with a microgrid initiative (NY Prize), biomass heating, and a community solar program;
• Funding for the Long Island Office of the Department of Public Service;
• An overall decrease in funding for the Department of Environmental Conservation (DEC);
• Increased funding for the Environmental Protection Fund (EPF);
• Extension and reform of the State Brownfield and Superfund programs; and
• The Reimagining NY for a New Reality initiative aimed at making NY’s infrastructure more resilient and better preparing the State for future extreme weather events.

Additional information on these items and the Governor’s press release can be found below.

Enacted in 2009, and paid by energy consumers through their utility bills, 18-a is set to expire in March of 2017, with scheduled reductions until then.

The Executive Budget proposes an immediate repeal of 18-a for “industrial” customers which would consist of customers with a monthly peak demand of 1,000kw or more in the last preceding year and a gas customer with an annual consumption in the last year of 100,000 dekatherms. Both will be determined pursuant to the utility’s tariff. Steam customers are not included. The utility is directed to credit the customer at least semi-annually in a manner as determined by DPS.

Cuomo’s budget also proposes a gradual repeal of 18-a for all other customers by early 2017 at reduced rates. The reduced rates are as follows: 

2014:     1.89%                    (down from 2%)
2015:     1.13%                    (down from 1.75%)
2016:     .83%                      (down from 1.5%)
2017:     .415%                    (down from .75%)

Shared Metering
The shared metering law will be amended to reduce the “punitive” assessment on landlords where a shared metering condition follows a customer complaint or is discovered by a utility. Currently, in these situations, the landlord is billed and the tenant is credited in the following manner: 1) the estimated amount, up to six years, of the shared area charges; and  2) 12 months of charges for service measured by the shared meter, including usage by the tenant. The second provision is thought to be excessive as landlords frequently petition for a reduction in the billed charges. This bill would reduce the additional assessment to 25% of the charges for service measured by the shared meter for twelve months.

Reduce NY’s Energy Costs
NY Prize
A $40 million competition to build “community grids”. Funding will consist of private investment and federal funding (see below)

Funding to provide technical assistance, financing, and incentives to grow the biomass heating industry.

Community Solar
The State will provide outreach and target funding towards schools and surrounding communities to expand solar deployment.

Pursuant to legislation enacted last year to reform LIPA, $5.5 million in funding will be provided for 39 new employees and the creation of the new LI office of DPS (DPS LI). LIPA’s 18-a collections will be used for this purpose. The new office is empowered to review rates, operations, storm preparedness, and performance.

DEC Funding
Funding is decreased by $43 million primarily because of the completion of projects related to federal stimulus funding.

EPF Funding
Funding is increased to $157 million (from $153 million) for the Environmental Protection Fund (EPF) which provides funds for open space, parks, solid waste and recycling, invasive species, waterfront revitalization, zoos, and numerous other programs across the state. 

Brownfield/Superfund Programs
The Brownfield Program would be extended for 10 years with several reforms. Under the reformed program, remediation tax credits will only cover actual cleanup costs and redevelopment credits will be rationalized to only cover sites that have been vacant for over a decade, worth less than the cleanup costs, or are priority economic development projects.

In addition, the budget proposal includes a new $100 million appropriation to extend the State Superfund cleanup program, including $10 million through the Environmental Restoration Program to address municipally-owned brownfields.

Reimagining New York for a New Reality
The Executive Budget supports a strategy to transform New York’s infrastructure, power systems, transportation networks, coastal protection, weather warning system, and emergency management to better protect the State from future extreme weather. The State is primarily using its share of federal funds appropriated for Sandy, Irene and Lee to implement the program.

Harden the Electrical Grid
The State’s existing electrical grid will be hardened by undergrounding and hardening vulnerable overhead primary wire, elevating low-lying substations, expanding tree trimming, raising power lines for newly elevated homes, and creating a new outage management system on Long Island. In addition, at least ten new “microgrids” will be created next year through private sector investments and “NY Prize”.  The State is seeking Federal support for these $1.4 billion grid hardening initiatives.

Create the SUNY College of Emergency Preparedness, Homeland Security and Cybersecurity
The Executive Budget will establish the nation’s first college of its kind specializing in both academic and professional aspects of law enforcement, security, public and international affairs, counterterrorism, emergency management, cybersecurity and forensics. State funding of $15 million is provided to initiate this project.

Reconstruct and Harden the Mass Transportation System
The MTA is undertaking a multibillion dollar overhaul of New York’s mass transportation systems with investments that will be made in technologies to seal subway and automobile tunnels, increase pump capacity in stations and tunnels, and projects that will protect bus and train yards and the infrastructure that makes the systems run.

A part of this network resiliency initiative is the Penn Station Access Project. The entire Metro-North rail system currently depends on the Harlem River Lift Bridge and the Mott Haven Junction remaining fully operational to provide access into and out of Manhattan.  Using existing tracks, the Penn Station Access Project would establish new links for the New Haven Line that by-pass both of these points of access, allowing commuters and others to still utilize Metro-North services to enter or leave Manhattan in the event of a disaster. To fund these initiatives, the MTA is utilizing approximately $5 billion in current Federal repair and mitigation funding. The additional funding needed to complete the full program is expected to be drawn from funds made available in competitive Federal funding notices.

Strengthen our Airports
The Port Authority is planning over $200 million in projects, with Federal assistance, to install tide gates and drainage, new emergency generation capabilities, elevated fuel facilities, a new signage communications system and a flood wall around critical equipment, in order to make New York’s JFK and LaGuardia airports more resilient.

Safeguard Against Rising Waters
A series of projects totaling $147 million will be conducted along the State’s vulnerable coastlines and waterways, to provide flood control for communities and critical infrastructure. The long-term program will help protect miles of New York's exposed coastlines and waterways via restoration of wetlands and dunes in places like Jamaica Bay and Staten Island.

Establish a State-of-the-Art Weather Detection System
The Division of Homeland Security and Emergency Services (DHSES) will collaborate with an academic partner to secure a private entity to establish and operate a state-of-the-art weather detection system – one of only six such systems in the nation. The system will provide real-time warnings of local extreme weather and flood conditions, and identify threats to the electric system, communities, roads, and bridges. Data will be available for use in predictive modeling and early warnings to prevent loss of life and property. The number of weather stations will be increased from the current 27 to over 100,
creating a highly sophisticated real-time weather reporting network that will accelerate and improve information sharing, thereby assisting emergency responders in responding to extreme weather events. An initial capital investment of $15 million is being sought from Federal funding related to Superstorm Sandy.

Expand State Strategic Fuel Reserves
On Long Island, the State has created the nation's first state-based strategic fuel reserve. To prevent future supply disruptions, the reserve will be expanded statewide to serve emergency responders. The estimated additional $10 million cost is expected to be supported by the New York Power Authority.

Achieve Statewide Interoperable Communications
DHSES is assisting counties in developing a single public safety communications network that will allow all of the State’s emergency responders to seamlessly communicate with each other. The State leads this effort by developing the overall strategy and setting standards to guide regional communications consortia as they create their own systems. DHSES has already awarded $200 million in grants to counties, and will invest another $75 million toward this initiative in 2014-15. This amount includes a new program which will distribute $10 million in annual formula-driven grants to counties to support ongoing operations of public safety communications centers. The results of an analysis of the State's progress toward full interoperability are expected in May, and will identify critical projects to close gaps in the statewide system.

Reimagine Home Construction
The State is proposing to use approximately $1.5 billion in Federal funds to support housing reconstruction programs for homeowner rehab and reconstruction, home buyouts in areas vulnerable to repeated flooding, the construction and rehabilitation of multifamily and affordable housing, and mortgage assistance.

Equip Gas Stations with Back-up Power Capacity
Starting in 2013-14, the State made $17 million available to Downstate gas stations near highways and evacuation routes, as well as additional chain gas stations throughout the region, to install back-up power capacity. In an energy emergency, all strategically located Downstate gas stations will have the capability to deploy back-up power. In 2014-15, this program is being extended to include approximately 241 Upstate gas stations within a half mile of exits on critical highways. Another $3.1 million will be made available through Federal funding related to Superstorm Sandy.

Prepare Citizens for Emergencies
DHSES, in collaboration with the National Guard, will offer emergency preparedness courses to interested citizens throughout the year, with a goal of training 100,000 citizens by March 31, 2015. Support for this initiative will come from Federal homeland security funds.

Protect and Improve Wastewater Systems
Federal funds of at least $1.6 billion will be distributed to counties and municipalities to improve wastewater systems These funds will allow communities to protect against future storms through the construction of dikes, levees, and movable floodwalls.

Foster Community Resilience
The State will expand the NY Rising Community Reconstruction Program with a Phase II that includes an additional 22 communities. Under the current program, 102 communities across the State are creating their own individualized storm resiliency plans.Between the two phases of the program, the 124 participating communities will share in over $650 million in Federal recovery funds to implement approved plans.

Recognize First Responders and Providers
The State will assist more than 600 healthcare and human service providers and other community-based organizations with nearly $250 million in Federal funds to aid in the repair, reconstruction and renovation of facilities, as well as to reimburse those organizations for emergency response costs immediately following the Storm. An additional $200 million in Federal funds will be provided to health and human service providers for unreimbursed operating costs during and after Sandy, ongoing or new services to meet the continuing needs of Sandy-impacted New Yorkers, and other eligible health and social services costs.


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