"2009 Nys Sales Tax"
To: NYS Legislature and Governor Paterson From: New York School Bus Contractors Association (NYSBCA) Date: March 10, 2009 Re: The need for a Sales Tax Credit for the purchase of clean-fuel school buses -- (A.3649/Gantt same as S.1921/Morahan/Diaz) NYSBCA: The New York School Bus Contractors Association represents over 200 hundred bus companies operating over 22,000 school vehicles in over 300 school districts across the state. NY school bus contractors transport over 2 million children a day. The industry employs over twenty thousand people statewide providing safe working environments, highly competitive wages and benefits. The private school bus contractors help school districts control property taxes by saving school districts millions of dollars each year. The Association also represents New York State bus retailers and manufacturers. Sales Tax Credit Legislation: There is an immediate need for a sales tax credit for school bus contractors/operators for the purchase of clean-fuel school buses and other related purchases/services to help the industry deal with uncontrollable and unpredictable costs. The current legislation has been drafted so as to have no impact on the current fiscal year, no impact on 2009-2010, and it is phased-in for subsequent years. Last year, the legislation unanimously passed the Senate and was reported out of Ways and Means to the Rules Committee in the Assembly. Why is this legislation necessary? 1. This legislation will create an incentive for school bus contractors across the state to purchase new energy efficient buses. It will expedite the purchase of clean fuel buses instead of prolonging the use of the current less energy efficient fleets. 2. Create equity within the bus transportation industry: Other non-school bus service companies, such as private coach buses (also known as Omni Buses under NYS Tax Law) currently pay no sales tax. 3. This legislation will help control school property taxes through the competitive bid process. Without this legislation, the increased sales tax costs associated with the new federal standards will be passed along to school districts and property tax payers. 4. Under the current law, school districts that choose to contract their bus services (over 300 statewide) are unfairly penalized by paying sales and compensating use taxes, which they pass on to local property tax payers, and if Governor Paterson’s budget proposal is adopted without removing harmful tax and fee increases they will be penalized even more. 1|P age 5. A sales tax credit will help defray some of the costs imposed by new federal clean bus standards that took effect in 2007. These standards are having a positive effect on the environment, but they are also having a significant financial impact on the school bus contractor industry and local school districts. Financial impact of new federal standards: o New clean diesel school buses cost between 20 and 40 percent more than conventional buses due to new federal emissions standards. o New ultra low sulfur fuel for these buses cost is between 10 and 20 percent more than conventional fuel. o Maintenance costs are expected to increase by as much as 25 percent with the requirement of new clean-bus technology. Benefits of contracted school bus services: Provide safe, reliable, and cost efficient transportation for over 300 school districts in New York State – transporting over 2 million children a day. Provide industry safety standards and training for school districts. Private school bus operators save school districts and property tax payers millions of dollars each year by providing highly efficient school transportation services. On average, school transportation services provided by NYSBCA members cost tax payers nearly 20 percent less than public school transportation services. Provide good-paying jobs with benefits to over twenty thousand New Yorkers. Fiscal Impact: The current legislation’s annual fiscal impact to New York State is estimated to be in the area of $0.00 for 2008—2009 and $0.00 for 2009-2010. 2010-2011 the impact would be $1.2 million, 2011-2012 it would be $4.6 million. There is a similar impact to localities. (According to Deputy Commissioner Robert D. Plattner, NYS Department of Taxation and Finance – Fiscal note dated June 18, 2008.) Also note that the bill memo for 2009 is incorrect and needs to be amended accordingly. There is some debate over these numbers given the industry has dramatically scaled back the number of bus purchases over the last two years. In reality, the state is not receiving the same sales tax revenue it received say three or four years ago, because the industry has significantly reduced the number of new buses it has purchased due to the increased cost of new clean-fuel school buses. Further, it is important to note that although the school bus contractors initially pay the sales tax -- it is actually paid by the school districts/property tax payers when the school district and bus contractor exercise their contractual agreements. Environmental Impact: The proliferation of mass transit clean-fuel school buses will help reduce the industry’s carbon footprint and improve the air. Reduce the negative health effects of diesel exhaust – see NRDC’s website: www.nrdc.org. Greater use of alternative energy sources reduces the industry’s dependence on fossil fuels. 2|P age