The Empire Page

Only in New York do you pay more for something while it’s actually getting cheaper. Take electricity -- State and local governments have increased taxes and fees on electricity in the past few years to more than make up for the 18 percent drop in wholesale electricity prices since 2000.

A new report by the Public Policy Institute (PPI) -- the research affiliate of The Business Council of New York State -- shows that taxes are now at least a quarter of the average New Yorker’s electric bill and rising. Entitled Short-Circuiting New York’s Recovery-How Energy Taxes Contribute to High Electric Rates in New York, the report suggests that just when New Yorkers ought to be getting a break on their energy bills, government has installed a feeder cable right to its treasury.

New York’s power industry paid an estimated $6.367 billion in state and local taxes, assessments and fees in 2009 -- $853 million more than the total it paid in 2008. The increase is notable: in 2009 state and local governments in New York raised taxes on electricity by more than 15% -- and did this during the worst economic crisis since the Great Depression.

Of course, residential and commercial customers have to pick up most of this tab.  In 2009, that was more than $500 million per month added to New Yorkers’ electric bills by state and local governments.

New York’s electric industry is by far the highest taxed in the nation. State and local gross receipt taxes, sales taxes, fees to develop the “green economy”, income taxes, taxes on capital and, above all, property taxes help make New York’s electricity prices the third highest in the US.

These staggering energy taxes create a host of negative consequences. Energy is one of the major cost factors that make New York State one of the least favorable locations in which to start or locate a business. As a result, New York loses essential jobs, opportunities for entrepreneurship and the ability to attract major new investments.

Fuse-blowing taxes on energy have a particularly damaging effect on new economy industries in New York, including biotechnology and, ironically, alternative energy manufacturing and green-tech companies. Many innovation firms like these are energy intensive and thus energy cost-sensitive. They are also the very same firms with high-paying jobs and positive local economic impacts that other states and nations seek aggressively to attract.

For New York State’s manufacturers, exorbitant electric bills are an especially damaging blow. When officials in Albany ramp up energy taxes as they did in 2009, manufacturers -- especially large energy users -- become even more uncompetitive. 

The PPI report recommends four steps New York can take to lower electric bills --

The Legislature should reject any proposed new taxes or fees on energy. The Executive Budget calls for an increase in local utility taxes that should be rejected.

Fees that were meant to fund regulation of the industry but have been increased and diverted to plug holes in the general fund should be rolled back.

Other energy-related fees should be dedicated to efficiency, alternative energy innovations and environmental protection, not general fund spending.

And New York needs to reduce its sky-high property tax burden.

Economic recovery in New York depends on private sector job growth, and new job creation requires affordable energy.  It’s time to stop using energy companies as back-door tax collectors.  Instead we need to lower energy costs and power up job creation.

The full report is available at: http://www.ppinys.org/

Kenneth Adams is president and CEO of The Business Council of New York State, Inc.