Printing Industries Alliance (PIA) is pulling out all the stops to overturn a provision contained in the current NYS Assembly budget that would repeal a state sales tax exemption on all printed promotional materials (direct mail, advertising, catalogs, etc.). Section 1115(n) of the New York State Tax Code has been in effect since 1989 and was enacted, ironically, to stem the loss of sales for Empire State printing firms at that time. Given today’s business climate, a repeal now is sheer madness. PIA, and the former Association of Graphic Communications, fought hard years ago to get the exemption into law and will not let go of that victory for printers and direct mailers easily.
Despite the attempt to help plug the state’s massive deficit by overturning the exemption, its repeal will not result in a revenue gain for New York, and in fact, may reduce revenue overall. An economic analysis conducted by Printing Industries of America indicates that the effect of this action would be a significant loss of sales for printing firms due to the 8-9 percent cost increase associated with application of NYS sales and use tax, and will cause a potential loss of 4,200 well paying jobs within the printing industry and related sectors.
Hundreds of thousands of dollars are often won or lost on price differences of a thousand dollars or less. All it takes for a print-ready job is for a client to hit “send” and the work goes out of state or country—and with it jobs and tax revenue, something NYS can ill afford.
A broad coalition of groups dedicated to keeping the exemption in place has been spearheaded by the Alliance and the Direct Marketing Association. Groups involved include: The Business Council of NYS, Mailing & Fulfillment Service Association, NY Letter Carriers Association, Quad Graphics, RR Donnelley, Valpak, Valassis, NY Press Association, American Association of Advertising Agencies, Manhattan Chamber of Commerce, Queens Chamber of Commerce, The Conservative Party of NYS, National Federation of Independent Business, Publishers’ Clearinghouse, Free Community Newspaper Publishers of NYS and International Paper.
As a result of these efforts, numerous meetings with key decision makers and a heavy letter-writing campaign to elected officials, many Senators have indicated their support to ensure the repeal is not included in a final budget bill. A “letter of support” to deleting the provision from the Assembly bill, initiated by Assemblyman Robin Schimminger, has been signed by a number of his colleagues. The collaborative efforts have earned a bevy of major articles published in the Albany Times Union, Buffalo News, Printing News and other outlets.
There is still a ways to go yet on this issue—some insiders are now saying it will be June until a final budget is passed. But with the continued assistance by industry professionals and their clients, PIA is “cautiously optimistic” that this provision can get knocked out before a final budget is enacted, allowing the existing exemption to be maintained.
• NYC Mandated Paid Sick Leave Bill
Although the 5-Boro Coalition, which includes PIA and over 20 other organizations, was successful last year in stemming the tide against passage of a mandated paid sick leave bill, the measure’s sponsor, Councilwoman Gale Brewer, has reintroduced a new version. PIA and other business groups testified against it at a May 11 hearing at City Hall.
• Legislation Introduced To Expand
Acting upon recommendations made by his MWBE Task Force, Gov. Paterson submitted a program bill to the Legislature which would improve MWBE access to procurement processes while simultaneously promote the use of MWBE and non-MWBE firms that have sound diversity practices.
Key provisions of the legislation would:
Require the Director of the Division of Minority and Women Owned Business Development to set regulations requiring state agencies to assess the diversity practices of contractors submitting bids or proposals in connection with the award of a state contract, where “practicable, feasible and appropriate.”
Require appointing officials to consider the prospective diversity of a public authority board when making a determination to appoint a member.
Increase from $100,000 to $200,000 the amount of goods and services the state can purchase without a formal competitive bid process from MWBEs and small businesses, or when they are recycled.Enhance the penalties for contractors that willfully or intentionally disregard their responsibilities to utilize MWBE firms. Such enhanced penalties include disbarment of contractors from submitting bids to any contracting agency for a period of up to one year, or up to five years if a second violation occurs within a five-year period.
The legislation would also require that each state authority’s procurement guidelines do the following:
Require that the evaluation criteria for awarding any procurement contract (other than contracts required by law to be awarded to the lowest responsible bidder pursuant to sealed bids) include an assessment of the proposer’s diversity practices to the extent practicable, feasible and appropriate
Designate one or more senior staff of the authority to oversee the authority’s programs established to promote and assist participation by MWBE enterprises in the authority’s procurement contracts and to promote sound diversity practices on the part of other contractors, suppliers and consultants engaged by the authority
Require broad outreach to MWBEs
Establish appropriate goals for participation by MWBEs in procurement contracts awarded by the authority
Enhance reporting with respect to the utilization of MWBEs and the submission of an annual report by the Director assessing the effectiveness of each state entity’s MWBE program.
Require that the annual procurement report prepared by every state entity include a listing of all contracts entered into with a certified MWBE, including the subject matter and value of such contracts and a summary of all complaints referred to the Director (DMWBD).
• Unemployment Insurance Payroll Tax Hike
PIA joined forces with the NJ Business & Industry Association, other business organizations and Gov. Christie to soften the blow of a $1 billion payroll tax increase for employers on July 1. Because of the insolvency since last spring of the UI Fund, under law its financial condition will trigger an automatic tax hike that will cost an average of $400 per employee, and even up to $1,000 per employee, if immediate action is not taken. The State’s UI Fund has been paying out more in benefits than it takes in and had borrowed $1.2 billion from the federal government to pay off benefits to currently laid off workers to meet its obligations. New Jersey cannot afford, given its fiscal crisis, to continue borrowing.
Currently, New Jersey employers pay an average tax of about $770 per employee (between $90 and $1,603 per worker.) New Jersey and Pennsylvania (along with Alaska) are the only states where employees contribute to the UI Fund as well (about $119 annually in the Garden State). When the Fund dips below statutorily designated levels, an automatic tax increase is triggered—this time for July 1. While the average employer will see a 52 percent increase ($400 per employee), others may experience, dependent upon their rating experience, a 225 percent payroll tax increase with an additional tax liability potentially exceeding $1,000 per employee.
With unemployment now hovering around 10 percent, Gov. Christie has proposed some steps to remedy the situation which PIA, NJBIA and others are now supporting:
Multi-year Phase-in: Amend state law to provide for a multi-year phase-in of the tax increase, thus providing needed funds but avoiding the $1 billion tax increase July 1. This will allow employers to predict how much to budget each year for the payroll tax increases and not have to take it in one huge lump.
Modify UI Benefits: New Jersey’s UI benefits should resemble those of other states in our region like New York by prohibiting claimants who have been fired for misconduct from collecting benefits; requiring a one-week waiting period for the payment of benefits; and freezing the automatic escalator.
Federal Assistance: Encourage Congress to extend the waiver of interest payments on UI loans, fully fund extended benefit payments and forgive the federal UI loans that have already been accrued.
To ensure the future solvency of the UI Fund and avert the impending tax hike to our member firms, PIA has urged that these changes be implemented and adopted into law quickly by the state legislature.
• Possible Repeal of State Sales Tax Exemptions on Catalogs and Direct Mail Advertising in Pennsylvania
Gov. Rendell’s new budget proposal, released in March, contains repeal of 74 current state sales tax exemptions, including one for catalogs and direct mail advertising. Fortunately, the state sales tax exemption on machinery and equipment for manufacturers remains intact, with no plans for change. PIA is working closely with our sister affiliate for Pennsylvania, Graphic Arts Association to keep the sales tax exemption for direct mail in place so that industry-related firms in the state that count on this segment of business for their livelihood will not be adversely impacted.
Vicki R. Keenan is the vice president of Printing Industries Alliance. She may be reached at vkeenan@PIAlliance.org or (908) 233-4124.