The recent passage of the state’s budget, which took effect on April 1, 2018, aims to provide relief to the middle class to combat the change in federal tax law. New York is making a concerted effort to protect municipalities, school districts and citizens across the state’s sixty two counties. The 2019 Budget also provides for a continued and increased commitment to both K-12 and higher education.

The New State Tax Code

To combat the potentially devastating effects the change in federal tax law could have on the middle class, the state’s budget implements innovative measures to combat the federal tax law’s elimination of full state and local deductibility.

• Expanding Charitable Contributions: The 2019 Budget creates two new state-operated Charitable Contribution Funds to accept donations geared toward improving in state healthcare and education. Taxpayers who itemize their deductions can benefit in two ways. First, tax payers may claim these contributions on their federal and state tax returns. Second, tax payers may also claim a state tax credit equal to 85 percent of their donation to the fund(s). This legislation also authorizes school districts and local governments to create similar charitable funds, which would provide a reduction in local property tax via local tax credit equal to the donation to the fund. It is important to note that the United States Internal Revenue Service has yet to offer an opinion on the deductibility of the funds or the acceptability of the procedures for charitable donations to municipalities and school districts.
• Continuation of the Shared Services Program: The 2019 Budget provides for the continuation and three year renewal of the county-wide shared services initiative, a panel which was created to overcome the statutory prohibitions that once prevented municipalities from sharing specific services. The budget also includes $225 million to fund the state’s match of savings from shared services actions included in property tax savings plans.
• Continuation of Local Tax Relief Credit: The Property Tax Credit enacted in 2015 will provide an additional $1.3 million in property tax relief, an average credit of $530. The Property Tax Credit will provide an average reduction of $380 in local property taxes to 2.6 million homeowners in 2018.

Investment in K-12 Education            

The 2019 budget makes an investment in our youth’s future with record funding for education, access to early childhood/pre-kindergarten education and continuation of after school and early college programs. The budget will also impose new transparency requirements on 76 large school districts that receive significant state aid, requiring reporting of school level funding allocation to the State Education Department and the Department of Budget. Education funding highlights include:

• Increase in education aid by approximately $1 billion (3.9% growth) to $26.6 billion for 2018-2019 school year (36% increase since 2012)
• $15 million to expand half day and full day prekindergarten for 3,000 three and four year olds
• $50 million increase in funding to transform high-need schools into community schools
• Continuation and additional $10 million to fund Empire State After School Program for an additional 6,250 students
• Additional $9 million to create 15 new early college high school programs