BILL NUMBER: S2515

SPONSOR: KRUEGER
 
TITLE OF BILL:

An act to amend the executive law, in relation to cost benefit analysis
of tax expenditures

 
PURPOSE:

This legislation proposes to require the Governor to provide in the
annual Tax Expenditure Report more information -- including cost/benefit
analyses that better gauges the effectiveness and efficiency of each tax
expenditure.

 
SUMMARY OF PROVISIONS:

§ 1. Amends subdivision 1 of Section 181 of the Executive Law to include
the following definitions:

1. "Cost benefit analysis"
              

2. "Cost benefit analysis ratio."

3. "Cost benefit analysis target ratio."

§ 2. Amends subdivision 2 of section 181 of include:

1. A cost benefit analysis of each tax expenditure;

2. A comparison between each tax expenditures cost benefit analysis
ratio and the tax expenditure's target ratio, along with an explanation
for any difference between the two ratios.

3. An analysis of whether each tax expenditure has successfully achieved
the purpose for which the tax expenditure was enacted and currently
serves, including an analysis of the persons or entities that are bene-
fited by the tax expenditure.

4. An explanation of the cost benefit analysis formula applied to each
tax expenditure.

5. An explanation of each tax expenditure's target ratio, including a
description of why the ratio reflects adequate levels of tax relief or
job creation or job retention or investment in the State.

§ 3. Amends subdivision 3 of Section 181 of the Executive Law to include
the following:

1. The Governor shall develop for each tax expenditure a cost benefit
analysis formula for determining the cost benefit analyses ratio.

2. The Governor shall set for each tax expenditure a cost benefit analy-
sis target ratio.

 
EXISTING LAW:

Section 181 of the Executive Law requires the Governor to submit to the
Legislature an annual Tax Expenditure Report no more than thirty days
after issuing the Executive Budget. The report shall contain information
and statements on the provisions of law authorizing the tax expenditures
and cost estimates on them. It shall also include any recommendations of
the Governor regarding continuing, modifying, or repealing tax expendi-
tures.

In cases when the Executive Budget includes proposals to expire, modify
or repeal a tax expenditure, the report shall contain an analysis of the
number and types of persons and entities benefiting or expected to bene-
fit from such tax expenditures, an estimate of the costs of such tax
expenditures for the coming fiscal year, and an explanation of the
reasons for the proposals. The explanation of recommendations shall
include comments on the effectiveness and efficiency of tax expenditures
plus general cautionary and advisory notes concerning limitations of
data, estimation procedures, sampling errors and imputed values.

 
JUSTIFICATION:

New York State has over 484 tax expenditures, some of which date back to
the 1890s. While the Governor's Tax Expenditure Report annually reviews
each tax expenditure's amount of reduced taxpayer liability to the
State, many of them have remained in law with little consideration as to
whether they are fulfilling their objectives to benefit the public.

More than twenty years have passed since the Governor issued his first
Tax Expenditure Report in 1990. Yet New York still needs a more rigorous
tax expenditure review process. This review should employ performance
metrics which weighs economic activity against tax assistance.

Cost benefit analyses on all tax expenditures would give legislators a
clearer understanding of the need to maintain, enhance or sunset them.
The Governor is already required to comment on a tax expenditure's
effectiveness and efficiency, but primarily when recommending to expire,
modify or repeal it.

 
LEGISLATIVE HISTORY:

2017-18 S5015 No Same As - died in committee
2015-16 S3080 No Same As - died in committee
2013-14 S7083 No Same As - died in committee
2011-12 S408 No Same As - notice of committee consideration; discharged
and sent to rules
2010 - S7347 No Same As - died in committee

 
FISCAL IMPLICATIONS:

Slightly higher administrative costs stemming from requirements on the
Executive to perform tax expenditure cost/benefit analyses. Potential
cost savings through changes to inefficient tax expenditures.

 
EFFECTIVE DATE:
This act shall take effect on the first of January next succeeding the
date it shall have become law.