NYC-WTC_000195490

NYC 9/11 Public Portal Document

mon rate UTILITY TAX UTILITY TAX 1992-2002 calendar The utility tax is projected to 300 account for 1.1 percent of tax revenue in 2002, or $258 million. 250 ict on the Ed, and; Tax Base and Rate: The City 200 3 and the ' ted since ortion of imposes a tax on all utilities and vendors of utility' services, including operators of omnibuses. The tax is sS

4^ 150 100 3ortation levied at a' fate of 2.35 percent on the the State gross incofne of faxpayers. 50 and local Ql------ J-------------- ------- L__------- ------- ------- ------- ------- 2000, the Legislative History: In 1933 en­ 1992 1993, 1994 1995 1996 1997 1998 1999 2000 2001 2002 sales tax abling legislation allowed New York ; FiicalYear ctric and City to levy a gross income tax on nihodity utilities and vendors of utility services. i • ' h \ ; June 1, The current rate of 2.35 percent was imposed on January 1, 1966. Since 1985, utility tax collections have been reduced by the Energy Cost Savings Program (ECSP) which granted a 30 percent rebate on electricity r- .i charges and a 20 percent rebate on natural gas charges to eligible nonresjdential users operating in Brooklyn, Isinesses the Bronx, Queens, Staten Island and Manhattan north of 96th Street. Non-retailers outside the City which f portion relocate to the designated areas (after May 3, 1985) are also eligible. Effective November 1, 2000, legislation fember changed the ECSP rebate on electricity and gas from a discount on all utility charges to a discount solely on 'January ptility delivery charges. The legislation raised the rebate percentage to 45 percent of eligible electricity krevised Charges and 35 percent of eligible natural gas charges in an effort to maintain roughly the same benefit levels, Bously in dollar terms, as previously. Currently, there are 1,551 companies participating in the rebate program. A Lact of similar program, the Lower Manhattan Energy Program, was incorporated into the Commercial Revitalization Program (effective 1995) and focused on stimulating economic development in lower Manhattan. The Kt, will program offers a 12-year (13 years for buildings designated as landmarks) rebate on the electric bills of Bn and building owners who have improved their buildings by at least 20 percent of assessed value. The program reduced utility tax revenue by $8 million in 2TiTiTi] and is expected to reduce revenue by $11 million in 2001 and $13 million in 2002.

The Competitive Business Energy Costs Program became effective in 1987 as part of an effort to lower the cost Of .doing business in New York City. Under this program, the City no longer required utility I corporations selling electricity, natural gas and steam to pay the utility tax on revenue derived from business & ' customers. These savings were to be passed on to businesses through lower utility rates. The program was in effect for only one year and is estimated to have reduced City tax revenue by approximately $30 million in . 1988. The program was subsequently cancelled.

The deregulation of the energy industry and subsequent legislative actions have and are forecast to continue to have a large impact on the utility tax revenue forecast. Beginning in 1997, the Public Service Commission (PSC) and Con Ed, and subsequently other utilities entered into agreements that set a schedule ' for competitive retail access and the deregulation of the electric industry in New York State. The natural gas industry has been deregulated since 1991.

On March 13, 1997, Con Ed and the PSC entered into a settlement agreement with respect to the, PSC’s Competitive Opportunities proceeding, with PSC approval occurring on August 29, 1997. The settlement agreement features a five-year fate plan to facilitate the transition to competition, effective January 1, 1998. The five-year rate plan called for an immediate 25 percent!electric rate reduction for Con Ed’s largest industrial customers, a 10 percent rate reduction for other large industrial and commercial customers (which \ \ ' H 75

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