2009: Unprecedented Challenges, Unprecedented Opportunities

This year brings us a new president, new federal administration, new Democratically controlled Congress and New York State legislature, and historic economic challenges. President Obama has promised to push through an extraordinary $61.2 billion economic stimulus package to get the country moving forward through its projected multi-trillion dollar deficit and restore taxpayers and businesses back to an even keel.

Everyone has been looking for a federal bailout. Time will tell on an outcome for New York Gov. David Paterson and New Jersey Gov. Jon Corzine, who are among five governors seeking $1 trillion over two years for their states. To put their request into perspective, $1 trillion is equal to 3 percent of the gross national product (GNP).

It isn't as if our metro area governors have not been trying to stem the tide on their own, through newly introduced state budgets and in New Jersey, recently passed pro-business legislation.

New Jersey faces a $2.1 billion shortfall by June 1 in the $329 billion budget that took effect July 1, 2008 and reduced spending by $600 million. On Jan. 5, Gov. Corzine sliced another $812 million just to keep pace. Besides these, he now wants to close the gap with an 18-month wage freeze for state employees, forcing most to renegotiate their union contracts, cut spending across state agencies, and raise taxes on the wealthy, among other cost-savers. He has not ruled out anything, including new taxes, for the new budget he will propose in March.

In the interim, he recently signed into law several Printing Industries Alliance (PIA)-supported measures that will help the printing industry and spur the state's economy:

• Extension of Net Operating Loss (NOL) Carry-Forward Period: extends the NOL carry-forward period for corporate taxpayers to 20 years from its current seven, applicable to NOLS realized in business tax years ending after June 30, 2009.
• Elimination of the "throw-out" rule provision used to calculate corporate business tax. Repeals the "regular place of business" requirement. New Jersey corporate taxpayers no longer need to maintain an out-of-state office with at least one employee in order to apportion out-of-state income.
• Establishment of Main Street Assistance Program. Directs Economic Development Authority to establish a two-year program to provide credit enhancement and up to $50 million in loans and loan guarantees to small and medium-sized businesses eligible to borrow from New Jersey banks.
• Expansion of Urban Enterprise Zone Enhancement. Expands the number of businesses in UEZs eligible for point-of-sale exemption from sales tax for purchases of business equipment and supplies.
• Establishment of a $3,000 grant to businesses for every job they create and keep for a one year and also waiving sales tax to companies making capital investments.

Across the Hudson, Gov. Paterson warned that New York's state deficit over the next three and a half years is expected to hit $57 billion. His call for a Nov. 28th special legislative session fell on deaf ears. Lawmakers, now back in Albany, have their first Democratic majority in the Senate since 1965 (32 Democrats/20 Republicans), with 25 of its members from New York City and two from Long Island. This leaves only five Senators from upstate. Sen. Malcolm Smith replaces Long Islander Dean Skelos (R) as Senate Majority Leader.

Emerging New York State legislative issues anticipated for 2009 are:

• Update Revitalization Proposals: economic relief, job creation
• Workers' Compensation Proposals: lower premiums
• Environmental: "green jobs," environmental justice, expansion of small business pollution prevention programs, electronic waste recycling
• Health: Medicaid reform, expanded policy coverages
• Energy: renewable/alternative energy, expanded greenhouse gas cap initiatives. A draft State Energy Plan will be released for public comment in March, with final plan due by June.