Tax Watch

Senate Republicans and business groups today urged Gov. Andrew Cuomo to remove a proposal to extend the utility tax surcharge from his 2013-14 budget proposal. The 18-a surcharge is scheduled to expire March 31, 2014, and the governor wants to extend it for five years.

The cost to businesses and consumers would be $2.8 billion—$509 million each year for five years plus $255 million in the 2018-19 fiscal year, according to the Senate GOP.

Lawmakers and businesses are asking the governor to remove the proposed exemption in his 21-day amendments. The governor presented his budget last month and can make adjustments to it through the amendments.

“Allowing this tax surcharge to expire will make New York more economically competitive, reduce costs on businesses, help expand our economy, and create new private sector jobs,” Senate Majority Leader Dean Skelos of Nassau County said in a statement. “This is a key element of our job creation agenda for this year. New Yorkers already pay some of the highest utility rates in the country and this is an opportunity to give them a break and bring those bills down.”

Citing figures from National Grid, Republicans said the energy tax extension would cost a typical large business about $30,000 a year. A small business would pay roughly $540 more a year, and a residential household, $55 more.  

The surcharge was implemented in 2009 and is scheduled to go from 2 percent to 1 percent in the 2014-15 fiscal year. 

Money raised through the assessment funds 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. Lawmakers and then-Gov. David Paterson permanently increased the rate from one-third of a percent to 1 percent, and they added an additional 1 percent surcharge. The additional revenue raised from the increase goes to the state’s general fund.

18-a assessment letter by