ALBANY, NY — Lawmakers in Albany approved a $168 budget on March 31, squeaking in before the April 1 deadline. High among Gov. Andrew Cuomo’s goals for the budget were elements that would soften the impact of the Tax Cut and Jobs Act passed in December 2017, which ended the full deduction of state and local taxes from federal tax payments.

The state budget creates an Alternative Employer Compensation Expense Program (ECEP) that will allow employers to opt in. Those who do would be subject to a 5% tax on all payroll expenses above $40,000 per employee. It would be phased in over three years beginning on January 1, 2019. The current personal income tax system would remain in place, and a new tax credit corresponding in value to the ECEP would reduce the personal income tax on wages and ensure that New York State rates subject to the ECEP would not experience a decline in take-home pay. The 5% tax paid by the employee would be tax deductible. Many analysts predict this program will be opposed and potentially prohibited by the IRS and/or the courts.

The same can be said of the program the budget creates to protect the deductibility of property taxes. From Cuomo’s website, “The budget creates two new state-operated Charitable Contribution Funds to accept donations for the purposes of improving health care and education in New York. Taxpayers who itemize deductions may claim these charitable contributions as deductions on their general and state tax returns. Any taxpayer making a donation may also claim a state tax credit equal to 85% of the donation amount for the tax year after the donation is made. Further, the legislation authorizes school districts and other local governments to create charitable funds. Donations to these funds would provide a reduction in local property taxes (via a local credit) equal to a percentage of the donation.”

The budget also found a way to gain new revenue to battle opioid addiction. It creates a new opioid stewardship program to be paid for by companies that manufacture and deliver opioids in the state, and the program mandates that those entities must pay a total of $100 million. The money will be used for the costs of treatment, prevention and recovery services for people with substance abuse disorders.

The budget also included sexual harassment language that Cuomo called the strongest in the nation. It brings several new regulations into play, including the requirement that nondisclosure agreements may not be used to settle sexual harassment claims except when that is the “explicit preference of the victim.” It also prohibits employers from using mandatory arbitration clauses in employment contracts in relation to sexual harassment. The Senate sponsor of the bill, Sen. Kathy Young, called it a victory for women, but not everyone agreed. Some lawmakers wanted the legislation to address all types of harassment, and they wanted funding to pay for new investigations of sexual harassment, but those elements were not in the bill. Sen. Liz Krueger therefore opposed the legislation.

The budget also includes legislation to extend the length of time officials must preserve rape kits; the old time was 30 days, the new time is 20 years, to ensure they are available to sexual assault victims.

The budget legislation also expressly prohibits police and corrections and probation officers from having sexual contact with individuals under their custody.