What's happening
This bill requires New York State to conduct and report detailed cost benefit analyses for all tax expenditures, including setting target ratios to assess their effectiveness.
Why it matters
Mandates standardized, transparent evaluation. By requiring detailed cost benefit analyses and the creation of specific formulas and target ratios for each tax expenditure, the bill pushes New York State to rigorously assess whether tax breaks and incentives deliver enough public benefit to justify their cost.
Shifts focus to measurable outcomes. The bill emphasizes quantifiable outcomes like job creation, job retention, investment, and targeted tax relief, compelling lawmakers and the public to consider actual results rather than intentions behind tax expenditures.
Enables stronger accountability and policy decisions. By comparing actual benefits to governor-set target ratios and explaining discrepancies, the legislation creates a framework for identifying underperforming tax expenditures, potentially leading to reform or elimination of costly, ineffective programs.
Improves understanding of beneficiaries. The required analysis of who actually benefits from each tax expenditure helps reveal whether these policies serve their intended purposes or disproportionately aid certain groups, informing debates on fairness and effectiveness.
Albany, before your first meeting.
Every bill that moved yesterday, summarized in a sentence and ranked by impact. The Albany Scorecard follows on Sundays.
Free. Unsubscribe in one click. Want alerts on specific bills? Create an account.
Who cares
Headline styles
Analyze Tax Break Benefits
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to budget and revenue
- Referred to budget and revenue
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Analyze Tax Break Costs
In Assembly Committee · Governmental Operations · Sponsor Ron Kim
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2515
2019-2020 Regular Sessions
IN SENATE
January 25, 2019
Introduced by Sen. KRUEGER -- read twice and ordered printed, and when printed to be committed to the Committee on Budget and Revenue
AN ACT to amend the executive law, in relation to cost benefit analysis of tax expenditures
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision 1 of section 181 of the executive law is amended by adding three new paragraphs (c), (d) and (e) to read as follows:
(c) "Cost benefit analysis" shall mean, for tax expenditures claimed by taxpayers subject to articles nine (other than section one hundred eighty), nine-A, thirteen-A, twenty-eight, thirty-two, and thirty-three of the tax law, a method of determining a tax expenditure's benefit to New York state based on the tax expenditure recipient's projected job creation or job retention and/or investment in the state versus the total amount of revenues foregone under the tax expenditure. For tax expenditures claimed by taxpayers subject to articles twenty-two and thirty-one of the tax law, "cost benefit analysis" shall mean a method of determining a tax expenditure's benefit to New York state based on the amount of tax relief a tax expenditure provides to particular classes of persons or entities.
(d) "Cost benefit analysis ratio" shall mean the ratio calculated by a cost benefit analysis of a tax expenditure.
(e) "Cost benefit analysis target ratio" shall mean the cost benefit analysis ratio level that the governor deems to reflect a tax expenditure's adequate level of benefit to New York state when taking into consideration the amount of revenues the state foregoes because of a tax expenditure and the amount of tax relief or job creation or job retention or investment in the state provided or support by the tax expenditure.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08609-01-9
S. 2515 2
§ 2. Paragraphs (f) and (g) of subdivision 2 of section 181 of the executive law, as added by chapter 23 of the laws of 1990, are amended and five new paragraphs (h), (i), (j), (k) and (l) are added to read as follows:
(f) comment, if any, on the effectiveness and efficiency of other tax expenditures; [and]
(g) general cautionary and advisory notes concerning limitations of data, estimation procedures, sampling errors and imputed values, prominently displayed[.]; and
(h) a cost benefit analysis of each tax expenditure;
(i) a comparison between each tax expenditure's cost benefit analysis ratio and the tax expenditure's target ratio, along with an explanation for any difference between the two ratios;
(j) an analysis of whether each tax expenditure has successfully achieved the purpose for which the tax expenditure was enacted and currently serves, including an analysis of the persons or entities that are benefited by the tax expenditure;
(k) an explanation of the cost benefit analysis formula applied to each tax expenditure; and
(l) an explanation of each tax expenditure's target ratio, including a description of why the ratio reflects adequate levels of tax relief or job creation or job retention or investment in the state.
§ 3. Subdivision 3 of section 181 of the executive law is renumbered subdivision 5 and two new subdivisions 3 and 4 are added to read as follows:
3. Cost benefit analysis formula. The governor shall develop for each tax expenditure a cost benefit analysis formula for determining the cost benefit analysis ratio.
4. Cost benefit analysis target ratio. The governor shall determine for each tax expenditure a cost benefit analysis target ratio.
§ 4. This act shall take effect on the first of January next succeeding the date on which it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the executive law, in relation to cost benefit analysis of tax expenditures
Purpose
This legislation proposes to require the Governor to provide in the annual Tax Expenditure Report more information -- including cost/benefit analyses that better gauges the effectiveness and efficiency of each tax expenditure.
Summary of provisions
§ 1. Amends subdivision 1 of Section 181 of the Executive Law to include the following definitions:
Read the full memo (691 words)
1. "Cost benefit analysis"
2. "Cost benefit analysis ratio."
3. "Cost benefit analysis target ratio."
§ 2. Amends subdivision 2 of section 181 of include:
1. A cost benefit analysis of each tax expenditure;
2. A comparison between each tax expenditures cost benefit analysis ratio and the tax expenditure's target ratio, along with an explanation for any difference between the two ratios.
3. An analysis of whether each tax expenditure has successfully achieved the purpose for which the tax expenditure was enacted and currently serves, including an analysis of the persons or entities that are bene- fited by the tax expenditure.
4. An explanation of the cost benefit analysis formula applied to each tax expenditure.
5. An explanation of each tax expenditure's target ratio, including a description of why the ratio reflects adequate levels of tax relief or job creation or job retention or investment in the State.
§ 3. Amends subdivision 3 of Section 181 of the Executive Law to include the following:
1. The Governor shall develop for each tax expenditure a cost benefit analysis formula for determining the cost benefit analyses ratio.
2. The Governor shall set for each tax expenditure a cost benefit analy- sis target ratio.
Existing law
Section 181 of the Executive Law requires the Governor to submit to the Legislature an annual Tax Expenditure Report no more than thirty days after issuing the Executive Budget. The report shall contain information and statements on the provisions of law authorizing the tax expenditures and cost estimates on them. It shall also include any recommendations of the Governor regarding continuing, modifying, or repealing tax expendi- tures.
In cases when the Executive Budget includes proposals to expire, modify or repeal a tax expenditure, the report shall contain an analysis of the number and types of persons and entities benefiting or expected to bene- fit from such tax expenditures, an estimate of the costs of such tax expenditures for the coming fiscal year, and an explanation of the reasons for the proposals. The explanation of recommendations shall include comments on the effectiveness and efficiency of tax expenditures plus general cautionary and advisory notes concerning limitations of data, estimation procedures, sampling errors and imputed values.
Justification
New York State has over 484 tax expenditures, some of which date back to the 1890s. While the Governor's Tax Expenditure Report annually reviews each tax expenditure's amount of reduced taxpayer liability to the State, many of them have remained in law with little consideration as to whether they are fulfilling their objectives to benefit the public.
More than twenty years have passed since the Governor issued his first Tax Expenditure Report in 1990. Yet New York still needs a more rigorous tax expenditure review process. This review should employ performance metrics which weighs economic activity against tax assistance.
Cost benefit analyses on all tax expenditures would give legislators a clearer understanding of the need to maintain, enhance or sunset them. The Governor is already required to comment on a tax expenditure's effectiveness and efficiency, but primarily when recommending to expire, modify or repeal it.
Legislative history
2017-18 S5015 No Same As - died in committee 2015-16 S3080 No Same As - died in committee 2013-14 S7083 No Same As - died in committee 2011-12 S408 No Same As - notice of committee consideration; discharged and sent to rules 2010 - S7347 No Same As - died in committee
Fiscal implications
Slightly higher administrative costs stemming from requirements on the Executive to perform tax expenditure cost/benefit analyses. Potential cost savings through changes to inefficient tax expenditures.
Effective date
This act shall take effect on the first of January next succeeding the date it shall have become law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.