Governor and Legislature Are Urged to Resist Taxing Way Out of Budget Problem

Governor Cuomo released his proposed 2021 State Budget this week and not surprisingly, it showed the largest deficit in state history. With the COVID-19 Pandemic now approaching the one-year mark, the far-reaching toll of its economic impacts are being felt at virtually every level of the government.

The Governor discussed two budget scenarios to close the deficit. Under the best-case scenario, Washington sends NYS $15 billion, which would then allow the Governor to fund other programs. This amount may not be realistic, although with Sen. Schumer now the Senate leader and the Democrats in full control in Washington, it isn’t a total non-starter.

The worst-case scenario is that NYS only receives $6 billion. If that occurs the state would be forced to make cuts to local governments. The Governor would only ask for the tax increase if forced to go with the worst-case scenario. The Governor has proposed a hefty income tax increase for those earning over $5 million a year if NYS receives only $6 billion.

The Governor has also proposed allowing sports betting, and legalizing marijuana all of which will boost revenues. He has also called for repeal of the SALT tax which would allow state taxpayers to deduct state and local real estate taxes from their income taxes, another decision that lies with DC.

At the Business Council we will be urging the Governor and Legislature to resist taxing their way out of the budget problem. This will only serve to drive businesses and higher income earners out of the state, a problem that is already at dangerously high levels. In addition, we do not want to see any new regulations that would hurt businesses.

We are hopeful that they will listen to the business community’s ideas of ways to stimulate the economy and create new jobs and give serious consideration to removing costly mandates like the Taylor, Scaffold and Wicks laws that make the state less competitive. The BCW has been consistent that Congress enact a strong relief bill that assists states and local government as well as creating a pandemic liability protection plan for all sectors.

The alternative to not taking such steps is drastic cuts in state aid to communities and programs, or still higher taxes at all levels of the state. Either way, this year in Albany will be challenging in ways not seen before. We’ll be watching closely and are committed to keeping all of our members up to date.

We forward to working with the new Biden Administration to help NYS reemerge from the pandemic. We have had strong, long-time working relationship with Senator Schumer, and we look forward to working with him in his new role as Majority Leader.

Late last week, NYS Department of Labor Commissioner Roberta Reardon released significant new guidance regarding NYS COVID-19 paid sick leave law. In short, the new guidance requires all employers to provide to all employees COVID paid sick leave for up to 3 instances of quarantine. Here’s how it would work:

▪ An employee is quarantined by a public health official. They are entitled to sick leave as required under NYS COVID-19 sick leave law.

▪ An employee who returns to work following a period of mandatory quarantine or isolation does not need to be tested before returning to work, except for nursing home staff. However, an employee who subsequently receives a positive diagnostic test result for COVID- 19 must not report to work. The employee shall be deemed to be subject to a mandatory order of isolation from the Department of Health and shall be entitled to sick leave as required by New York’s COVID-19 sick leave law, whether or not the employee already has received sick leave as required by the law for the first period of quarantine or isolation.

▪ An employee who is subject to an order of quarantine or isolation but continues to test positive for COVID-19 after the end of such quarantine or isolation period must not report to work. The employee shall be deemed to be subject to another mandatory order of isolation from the Department of Health and shall be entitled to sick leave as required by New York’s COVID-19 sick leave law for the subsequent period of isolation.

▪ In no event shall an employee qualify for sick leave under New York’s COVID-19 sick leave law for more than three orders of quarantine or isolation. The second and third orders must be based on a positive COVID-19 test.

Further, if an employer mandates that an employee who is not otherwise subject to a mandatory or precautionary order of quarantine or isolation to remain out of work due to exposure or potential exposure to COVID-19, regardless of whether such exposure or potential exposure was in the workplace, the employer shall continue to pay the employee at the employee’s regular rate of pay until such time as the employer permits the employee to return to work or the employee becomes subject to a mandatory or precautionary order of quarantine or isolation, at which time the employee shall receive sick leave as required by New York’s COVID-19 sick leave law.

This guidance goes beyond even the requirements for health care workers as described previously in these memos and in the Department of Health Guidance issued in June 2020.

▪ It is not necessary to require a negative COVID test to allow employees to return to work.

▪ Any employee who tests positive after a period of quarantine or isolation must not report to work. There is some anecdotal evidence that employees who test positive continue to test positive for a period of time after the end of their quarantine. Be prepared to develop a policy to deal with these employees. Remember – protecting the health of all our workers should always remain a priority.

▪ Employers who keep employees away from the workplace pending a negative test may now be obligated to pay them for that time before the employee uses their own employer provided leave time.

We will continue to discuss with the DOL to seek clarification on these points. In addition, we will be hosting a special webinar to discuss this new requirement and answer your questions.