Remove Utility Tax Surcharge Extension

I have joined in Albany with my colleagues as well as many statewidebusiness organizations to urge Governor Cuomo to remove the proposed extension of the utility tax surcharge from his Executive Budget.

The 18-a surcharge, which has increased utility bills for every ratepayer in the state, is scheduled to expire on March 31, 2014. The Governor’s proposed five-year extension would cost businesses and consumers a total of almost $3 billion.

Allowing this surcharge to expire will help our residents and businesses, which, in turn, will further the recovery of our economy. Over the last two years, we worked with the governor to ease the tax burden on our residents and businesses to allow our economy to recover. I am holding firm on that commitment and I urge the governor to do so as well.

The proposed extension would cost energy ratepayers $509 million for this year and the  following four years, as well as $255 million in state fiscal year (SFY) 2018-19. The total impact of the extension would be $2.8 billion, with most of the burden falling on small and large businesses, particularly manufacturers that use large amounts of energy. Senate Republicans said the governor should use the 21-day amendment process to remove the proposed extension from his budget plan. The actual impact on the SFY 2013-14 budget of ending the surcharge would be $236 million, a small amount in the context of a $136.5 billion budget.

According to figures from National Grid, the impact of the energy tax extension on a typical large business is estimated at $30,000 per year. The added cost on a typical small business would be about $540 per year and average household utility bills would increase by $55 per year. 

Imposing a tax on residents and businesses during a difficult economic climate never makes sense, but to do it when our region is trying to recover from a devastating storm is even more egregious. We will be working to make sure this surcharge is not in the state’s final budget.

We were joined at a capitol news conference by representatives of the Business Council of New York State, the National Federation of Independent Businesses, the Manufacturers Association of Central New York, the New York Farm Bureau and AARP. Other businesses groups, including Unshackle Upstate and the Long Island Association, also support the Senate’s call to end the utility tax surcharge as scheduled. 

The energy tax surcharge was imposed in 2009, before I took office. The surcharge was intended to be a temporary measure that would expire on March 31, 2014. However, the 2013-14 Executive Budget proposes to extend the tax surcharge for another five years.

Section 18-a of the Public Service Law authorizes an assessment on utility bills to fund the operations of energy-related agencies and authorities such as the Department of Public Service and the New York State Energy Research and Development Authority.

In 2009, Governor Paterson and Senate Democrats permanently increased the assessment from one-third of a percent to one percent and added an additional one-percent surcharge, making for a total five-fold increase on all ratepayers. The additional revenue raised from the increase is deposited in the state’s general fund. Under the 2009 law, the increase is scheduled to be reduced to one percent in SFY 2014-15.

Sen. Jack Martins is the representative of New York's Seventh Senatorial District. He was elected to the State Senate in 2010 as a Republican from Mineola.