2008-10-15 / Front Page

Quinn Proposes Spending Cuts, Business Tax Policy Change As Crisis Response

Updated 10-16-08

Quinn Proposes Spending Cuts, Business Tax Policy Change As Crisis Response   

City Council Speaker Christine Quinn


Acknowledging the depth of the fiscal challenge facing the city, City Council Speaker Christine Quinn on Wednesday, October 15, offered the Citizens Budget Commission a series of proposals and recommendations for how local government can play an important role in helping New Yorkers weather the global economic crisis. Quinn’s speech recognized need for new revenues to maintain essential services; proposed targeted reductions to agency spending, and supported pro-growth tax policies that will encourage job creation and a diversified New York City economy.

“We must fairly distribute the inevitable burden of revenue increases while continuing to promote job growth across the five boroughs,” Quinn said. “In the wake of this crisis, local government must adopt principles that will position New York City’s economy to emerge from this downturn stronger than ever before.”

Included in the speech were ideas for a change to city tax policy through the support of the Single Sales Factor Apportionment for certain businesses and the elimination of the Unincorporated Business Tax for freelancers and sole proprietors earning less than $150,000.

Quinn called for cuts within city agencies while still maintaining our city’s quality of life; new and creative ways to generate revenue by capitalizing on city assets; and cutting the city budget further by confronting the so-called “uncontrollables” of the city budget.
For the first time, Quinn is beginning to outline the council’s budget priorities in October, three full months ahead of the mayor’s preliminary budget address in January. Customarily, the council has until March to deliver a formal budget response.

Changes To City Tax Policy
• Single Sales Factor Apportionment for Qualifying Businesses
To encourage both business growth and economic diversity in New York, Quinn supports a proposal to phase in the Single Sales Factor Apportionment for qualifying businesses. The Single Sales Factor Apportionment tax formula would alter the current three-factor tax formula by taxing a company’s profits only on the basis of its sales within the city.
This policy change–in conjunction with other changes that will conform New York City tax law to the that of New York state–would help a wide variety of businesses; from manufacturing to media and information companies. Twenty-one other states have implemented this approach, and those states produce 40 percent of the country’s gross domestic product. Quinn estimates that over the next 10 years, the Single Sales Factor could generate 27,000 new jobs – many of them in high-paying industries.

• UBT Tax Exemption for Freelancers and Sole Proprietors
A change in tax policy should not benefit just corporations, but also benefit middle class small businesses and the creative talent that makes New York City a cultural capital. Quinn supports the exemption of income up to $150,000 from the Unincorporated Business Tax. The current double taxation of income discourages small business owners and freelancers from locating in the City.

Cuts Within City Agencies
• Make needed cuts within city agencies while preserving essential services and quality of life
One of the most significant challenges the city will face will be in making deep budget cuts while maintaining the quality of life that New Yorkers have and should expect. Quinn identified a range of ideas that will save money and maintain jobs and services. Some examples of potential savings:
• $150 million in specific, non-classroom cuts to the Department of Education budget, including $13 million annual savings from DOE Data Inquiry Teams.
• More than $10 million annually by reducing the number of HRA staff that review eligibility of public assistance applicants to match the actual number of applicants.
• $30 million by reducing the city’s vehicle fleet, and keeping the remaining vehicles on the road longer before they are replaced.

Creative Ways To Generate Revenue
• Develop new ways to capitalize on city assets to generate revenue
Quinn suggested looking beyond traditional revenue sources by selling ad space on city owned assets. “In New York City we see ads on anything and everything that moves,” she said. “Why not explore the possibilities of finding new space to sell advertising on the sides of city owned buildings and city owned vehicles like sanitation trucks? If taxis and delivery trucks are doing it, why not garbage trucks or street sweepers?”

Confronting The “Uncontrollables”
• Reducing Municipal Labor Costs through Gain-sharing
Quinn discussed ways to increase productivity by partnering with the municipal workforce through a gain-sharing approach. “Our city workers should be given an incentive to identify savings in the delivery of city services by allowing them to share a portion of those savings,” she said.

Quinn endorsed CBC Proposals for better capital budgeting to reduce the growth of debt service on the city budget. “Roughly half the city budget is often described as ‘uncontrollable’. In the short run it’s true that we cannot just unilaterally cut our share of Medicaid, or contribute less to our pension funds, or not make a debt service payment. But there are other expenditures that we typically call uncontrollable which don’t have to be,” Quinn said.

A complete text and video of Quinn’s remarks is available at http://council.nyc.gov/html/home/home.shtml.


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