With little notice, Legislature passes $10 billion tax break

0

ALBANY — With little public debate, the state legislature passed a bill late in its session last week that has been characterized by opponents as the biggest industry-specific tax break ever granted by the New York government.

The bill would give large private companies up to $10 billion in state tax credits over 20 years to promote the growth of new “green” semiconductor manufacturing projects.

It was introduced by lawmakers last Tuesday at the request of Gov. Kathy Hochul’s office and passed the Senate on Thursday, the last day those lawmakers were in Albany. Around 8 a.m. Saturday morning — after the Assembly voted on bills continuously for 8 p.m. — sleep-deprived lawmakers enduring the grueling schedule passed the measure in their chambers before adjourning.

Watchdog groups have questioned why the bill, whatever its merits, was hastily pushed through Hochul’s office.

“It’s like the ugliest in Albany,” said John Kaehny, executive director of Reinvent Albany. “In this type of fog, the governor’s office can misinform the Legislative Assembly and do anything at the last second.”


This spring, less than four days before the state budget deadline, Hochul announced a deal to subsidize a new $1.4 billion stadium for the NFL’s private Buffalo Bills — a move that also leaves little time for lawmakers to consider a huge private benefit of the state. sector.

The state’s “Green CHIPS” bill is intended to incentivize computer chip makers to build new factories, also known as “fabs,” in upstate New York. The bill would create a new subset of tax incentives the state can provide to chipmakers through its Excelsior business tax credit program.

Hochul’s push came after U.S. Senator Charles E. Schumer of New York pushed to dramatically expand semiconductor production across the country. At the same time, Schumer is keeping tabs on how New York can win the interstate competition for the high-paying jobs.

A spokeswoman for Empire State Development, the governor’s economic development arm, said the bill’s late-session introduction was simply a matter of a “very recently developed” proposal. Spokeswoman Kristin Devoe said the legislation is a way to capitalize on the expected passage of Schumer’s bill through Congress, putting New York “in the best position to stand out from other states and countries trying to to attract the semiconductor industry.”

“With its rapid development and passage comes a number of significant recent developments on Capitol Hill as of late,” Devoe said. “For example, the congressional conference committee on the bill just held its first public meeting on May 12, a little over three weeks ago. The bill was expected to pass by the end of the session to ensure that (New York) is ready for passage of the federal bill.

In addition to semiconductor manufacturers, another beneficiary of the bill will be construction unions, major political supporters of Hochul, and many state legislators. The bill includes a requirement that the prevailing federal wage be paid on new construction projects, which will make potential developments more expensive for businesses to build here. Asked about the reason for the state mandate, Devoe said an effective wage mandate should also be part of the federal bill.

The Assembly passed the measure using a “quick roll call”, where lawmakers are assumed to be in the affirmative unless otherwise specified. The only person recorded in the negative at the time of the vote was Queens Assemblyman Ron Kim, a Democrat.

Democratic Congressman Al Stirpe, the bill’s House sponsor, said in a speech that its passage was the final hurdle to bringing several “massive” semiconductor projects to New York. He claimed the largest would land in his district of the Syracuse area.

The Stirpe district includes the White Pine Commerce Park, which Intel and others have reportedly considered for semiconductor manufacturing. Intel has since decided to build in Ohio.

“For those of you who doubt that we should have tax credits for these types of businesses, this is a transformative industry,” said Democratic Congresswoman Carrie Woerner, whose district includes GlobalFoundries, based in Malta, the largest semiconductor manufacturer in North America. “There’s a reason Saratoga County is the only county outside of New York that’s grown in the last 10 years. And that’s because we have semiconductor manufacturing in the middle of our county.”

The bill was introduced in the state Senate on Tuesday, two days before it was passed. The short interval meant that a “message of necessity” had to be issued by Hochul, a tool for an immediate vote on complex legislation.

The bill, which was placed on the state senate’s “uncontroversial” schedule, passed by a vote of 61 to 2. The only dissenters were two state senate Democrats, James Skoufis and Liz Krueger.

“We owe the people of New York transparency and accountability when we make these kinds of deals,” Krueger said, explaining his opposition vote. “And this will be the biggest New York State has ever done.”

Krueger estimated that with local tax breaks that often accompany state tax breaks, the real cost of the new measure could be more than $20 billion.

According to Reinvent Albany, the state’s Excelsior tax credit expenditures totaled $163 million for the fiscal year ending March. Although this Excelsior program, the new bill would allow the state to offer up to $500 million a year in tax credits to chip companies that build new factories here.

Companies would be required to create at least 500 new jobs; spend at least $3 billion on capital assets over a ten-year period; spend $15 for every $1 of state incentives; and include “sustainability measures” to mitigate the project’s “greenhouse gas emissions impact over its lifetime.” The Hochul administration argues that the state and local taxes generated will more than pay for the cost of the incentives.

States across the country line up in front of chipmakers as Congress debates whether to pass a $52 billion grant package, which would provide companies with billions of dollars to build new chip factories national.

The US House and Senate are still reconciling their differences in their proposals, though lawmakers from both parties support tackling China’s growing influence in the global chip industry.

For potential projects in New York to land some of the expected federal $52 billion, according to the Hochul administration, New York, like other states, will have to offer “some form of state support” to manufacturers of fleas.

Krueger said she expressed concern to Schumer that he was encouraging “range wars between states,” which was forcing New York to give even “more of our tax dollars” to attract businesses that might have been “perfectly happy to come see us right on the federal agenda.” Schumer, the Senate Majority Leader, is the author of the Senate bill.

Kaehny, with Reinvent Albany, notes that the state tax relief takes effect immediately and is not contingent on passage of the Schumer bill. If Hochul signs the “Green CHIPS” bill — but Schumer’s efforts in Congress fail — the tax relief here would remain.

Regarding the state bill calling it a “green” initiative, Kaehny says chipmakers would naturally seek to become more energy efficient over time, regardless of the incentive. of State.

Devoe, the ESD spokeswoman, said both houses of Congress were actively negotiating differences between bills they had passed individually. The Hochul administration is waiting for a compromise.

“As soon as Congress passes the CHIPS legislation, we expect many companies to finalize their location decisions to ‘go in line’ for federal incentives,” Devoe said. “By creating an incentive for these companies as they make location decisions, we can position New York as the best home for many semiconductor manufacturers.”

The office of State Sen. Jeremy Cooney, the bill’s sponsor in the Senate, said the bill was not introduced on behalf of any particular company. Hochul’s office said the same thing.

Competition for chip factories, which can cost anywhere from $1 billion to $10 billion to build and equip, is fierce. The industry is looking to expand its domestic footprint perhaps more than at any other time in its history amid chip shortages and China’s growing influence.

GlobalFoundries received about $1.5 billion a decade ago to build its Saratoga County complex. The company has spent $15 billion and promised to build a second factory there.

EJ McMahon, research director of the fiscally conservative Empire Center for Public Policy, said that after just a few years, the cost of the new legislation “would exceed all direct and indirect public subsidies from GlobalFoundries.”

He criticized the prevailing wage requirement for the benefit of building trades unions, arguing that it would “undermine the state’s ability to truly compete” for chipmakers, while providing a “heavy, direct subsidy and complete to ratepayers for the substantial additional cost of union contractors and labor”. .”

Larry Rulison contributed reporting.

Share.

About Author

Comments are closed.