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Mixed message

For the second straight year, Gov. Andrew Cuomo and lawmakers in Albany stretched the definition of “on-time.” A budget agreement was reached by the April 1 deadline, but not the voting on it.

But one should not be too hard on them for this reason alone. After all, woefully late budgets were the rule until the governor and lawmakers began their current six-year run of punctuality.

The whole process still leaves much to be desired, however. Closed-door negotiations leading to 11th-hour agreements, legislators voting on bills they’ve barely seen—the means is pretty messy.

And the end result? As before, the new budget is a mixed bag, especially as it affects business.

On the plus side, it makes changes to the state’s personal income tax that are targeted to middle-class New Yorkers. Starting in 2018, the rates for some 6 million filers will decline. By 2025, for middle-income married couples filing jointly, the rate will fall to 5.5 percent from 6.45 percent now.

Lower personal income tax rates help make New York a more desirable place to live, which in turn helps employers who need to recruit or retain workers. Unfortunately, the budget deal in other ways will make New York a more difficult place to do business.

The big minimum wage hike—to $15 an hour in New York City and at least $12.50 a hour upstate—means for many companies labor costs will rise substantially over the next several years. We’ve long argued that an expanded earned income tax credit would do more for truly needy working families than a higher minimum wage, with fewer drawbacks for the overall economy, but a higher minimum wage has much more political value.

Then there is the budget’s paid family leave measure. Its cost will be borne by employees through a payroll deduction. But Mr. Cuomo and lawmakers seem to have thought little about the burden this still will place on small firms, which have fewer resources to cover a 12-week absence.

So, did Albany produce another on-time budget? Sort of. Is New York still one of the toughest states for small businesses? Yes, indeed.

4/8/2016 (c) 2016 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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