Governor Kathy Hochul presented her first State of the State address in the NYS Assembly Chamber on January 5, 2022. She will unveil her proposed Executive 2022-23 budget in mid-January. The below summary includes some of those provisions that would impact businesses and economic development and workforce development.

Click here for a complete copy of the State of the State Book.

TAXES

Small Business Tax Relief

$100 million in tax relief by increasing a tax return adjustment (known as a “subtraction modification”) that would reduce a small business’s gross taxable income, as well as from widening eligibility to more entities. Current law allows for a 5 percent subtraction modification for sole proprietorships and farm businesses with incomes of less than $250,000 —benefitting just 5,000 taxpayers each year. The Governor would raise this modification and include other entities with New York source gross income of up to $1.5 million, covering some 195,000 small businesses.

Middle-Class Tax Cuts

Governor Hochul is proposing to accelerate the middle-class tax cut by providing a full benefit of the tax cut two years earlier, fully phasing-in the 2018 middle-class tax cut beginning in the 2023 tax year. Applying the full effective cut to 2023 will accelerate two years of tax cuts, providing $1.2 billion in total relief for 6.1 million New Yorkers.

Property Tax Rebate

The Governor proposes a $1 Billion property tax rebate that will benefit more than 2 million New Yorkers, with low-income households and seniors receiving higher benefits. Eligible homeowners would receive their benefit in 2022.

Increase Existing Tax Credits and Create a New Credit to Support Food Production

New York would increase the existing investment tax credit at year’s end for all state farms, allowing farmers to purchase new equipment that could further automate their farms.

WORKFORCE DEVELOPMENT

Governor Hochul has pledged to overhaul the state’s approach to workforce development to ensure that it reflects the needs of each region. The State will invest in a wide variety of programs with a focus on information technology, life sciences and advanced manufacturing, green jobs, and film production and post-production. These efforts would include both degree and non-degree educational opportunities, internships, and apprenticeship programs.

Create New Office of Workforce and Economic Development at Empire State Development

Office would coordinate the effort statewide through the State’s Regional Economic Development Councils (REDCs), and in conjunction with the Department of Labor (DOL), the State University of New York (SUNY), and the City University of New York (CUNY). REDCs would help determine workforce development funding on a continuous basis to generate a pipeline of new workers for regionally significant industries.

The Office of New Americans’ (ONA) successful workforce development programming would be strengthened, which aims to support new Americans across the career path through a variety of initiatives.

Expand Career Pathways

Expand part-time Tuition Assistance Programs, allowing more parents and dislocated workers to attend school.

Provide financial support for non-degree workforce training at CUNY and SUNY.

Develop public-private funding partnerships to create new internship opportunities for SUNY and CUNY students.

Establish a policy that would enable work experiences to count toward degree credits.

Incentivize concurrent enrollment programs around credit achievement and matriculation.

Provide Tuition-Free Workforce Credential Programs at Community Colleges

Create a financial aid program that fully funds workforce credential sequences at community colleges in high-demand fields. ESD and REDCs would recommend which courses of sequence would be eligible for State funding.

Award Prior Learning Credit Across SUNY and CUNY

SUNY and CUNY will adopt a consistent, statewide policy for crediting relevant prior learning and work experience, supporting credit accumulation, certifications, and post-secondary attainment.
Expand Access to Apprenticeships

Increase funding for apprenticeship programs at SUNY and CUNY.

Extend the Empire State Apprenticeship Tax Credit and further incentivize employers to hire disadvantaged youth.

Support apprentices in high-growth industries, targeting underrepresented groups such as women and people of color.

Create a pre-apprenticeship portal to help more New Yorkers find programs that are right for them.

Support direct-entry pre-apprenticeships as well as organizations supporting pre-apprenticeships.

Make qualified apprenticeship expenses eligible for spending out of college savings (529) accounts.

Extend Tax Credits for Hiring Veterans

Expand the definition of eligible veterans — currently limited to service members who are discharged from service after September 11, 2001 — to a more inclusive definition that includes all service members.

Remove the current distinction between disabled and non-disabled Veterans to allow businesses to get the highest tax credit rate (15 percent of total wages) and the highest tax credit cap ($15,000 per veteran) for all eligible veterans.

Allow credits for the hiring of eligible Veterans who work part time for at least one year, instead of limiting the credit to veterans who worked at least 35 hours each week.

Make New York a Model for the Employment of Workers with Disabilities

Create an Office of the Chief Disability Officer to address the multiple factors preventing more people with disabilities from finding meaningful employment. The CDO and staff would be charged with making specific, action- oriented recommendations around ensuring that businesses remain committed to employing people with disabilities and have the necessary toolkits to do so, and by leveraging federal and state tax credits.

Strengthen Workers’ Rights

Ban Agreements That Limit Workers’ Ability to Move and Work Freely by proposing legislation to eliminate non-compete agreements for workers making below the median wage in New York State and to explicitly ban all “no-poach” agreements under State antitrust law.

Increase Criminal Penalties for Employers Who Commit Wage Theft by proposing legislation to increase criminal penalties for employers who knowingly or intentionally commit wage theft violations to more closely align with penalties for other forms of theft.

CHILDCARE

Increase Access to Childcare for 100,000 Families and Invest $75 Million in Wages for Childcare Workers

Governor Hochul will propose an expansion of access to childcare for 100,000 New York families, by increasing eligibility from 200 percent of the federal poverty line to 225 percent and investing $75 million in better pay for childcare workers.

ECONOMIC DEVELOPMENT

Billion-Dollar Plan to Assist Small Businesses

Funding for Small Businesses of the Future: Initiative to support venture capital and venture debt awards to fast-growing, venture-backed startups that either locate to, or remain and grow in, New York State.

Small Business COVID Capital Investment Tax Credit: This initiative would provide a tax credit to small businesses that took on COVID-related capital expenses, including retrofits, renovations, machinery, and equipment related to COVID safety enhancements.

Seed Funding for Small Businesses: This initiative would provide flexible grants to early-stage small businesses to help those that recently opened get off the ground, despite the COVID-19 pandemic. Priority will be given to socially and economically disadvantaged small business owners.

Small Business Lending Initiative: This initiative would provide reduced interest rate and accessible loans to expanding small businesses by addressing disparities in the traditional loan market, which oftentimes precludes small businesses, particularly socially and economically disadvantaged small businesses, from accessing loans to grow their businesses or take on larger government contracts.

Excelsior Contracting Opportunities Initiative: This initiative would provide State-backed funding and technical assistance to position small businesses — particularly socially and economically disadvantaged businesses — to secure federally funded contracts related to the $1.2 trillion federal Infrastructure Investment and Jobs Act (IIJA). This initiative would also include the establishment of an interagency Excelsior Contracting Opportunities Council — including ESD, NYSDOT, the Thruway Authority, MTA, and the Port Authority of New York and New Jersey — to identify strategies to encourage greater minority- and women-owned small business participation in forthcoming federally funded infrastructure projects across the state.

Semiconductor Industry

Proposal to bring a New National Semiconductor Technology Center and Additional Chip Fabrication Plants to New York State. Governor Hochul will propose funding to support site-readiness investments to encourage semiconductor manufacturers to locate and grow in New York State.

Investment of $500 Million in Critical Offshore Wind Infrastructure

New York would invest up to $500 million in the ports, manufacturing, and supply chain infrastructure needed to advance its offshore wind industry, leveraging private capital to deliver more than $2 billion in economic activity while creating more than 2,000 good-paying green jobs.

RECYCLING

Extended Producer Responsibility Act to Require Producers, Not Taxpayers, to Cover the Cost of Recycling

Governor Hochul is proposing a fundamental shift in the way recyclable materials are thought of, produced, and managed in New York. The proposal would institute an “extended producer responsibility” (EPR) program for packing and paper products, an environmental protection strategy that requires producers — not taxpayers — to cover the cost of recycling. With EPR, producers would become financially responsible for their products through the entire product lifecycle.