Lab technicians work at Amneal Pharmaceuticals' South Yaphank plant on...

Lab technicians work at Amneal Pharmaceuticals' South Yaphank plant on Nov.13, 2013. Credit: Newsday / John Paraskevas

Manufacturers will no longer pay New York State's corporate income tax for the first time since 1917, under a provision in the newly adopted state budget.

Ending the tax could help to keep some manufacturers from leaving here for Texas, Florida, the Carolinas and other states with lower costs, local business leaders said Tuesday.

Manufacturers had been paying 5.9 percent on their earnings. Other types of corporations will continue to pay income tax, which was lowered from 7.1 percent to 6.5 percent in the 2014-15 state budget.

The budget was approved by the State Legislature Monday night, minutes before the new fiscal year started at 12:01 a.m. Tuesday.

Elimination of the income tax on plants was "a welcome relief for the region's firms," said William Wahlig, executive director of the Long Island Forum for Technology, which helps local factories increase efficiencies.

"Hopefully, many will reinvest into their companies through new hiring, capital equipment or process improvements, making Long Island a stronger competitor in the world market," he said.

When Gov. Andrew M. Cuomo proposed lifting the tax in January, he excluded factories in Nassau and Suffolk counties and in New York City and its northern suburbs. But Republicans in the State Senate and business groups such as the Long Island Association pressed for the inclusion of the downstate areas.

LIA president Kevin Law said Tuesday ending corporate income taxes for manufacturers "will boost production of New York goods while creating new jobs, which is why we advocated for the cut to apply statewide."

The move comes as both the state and region continue to struggle to maintain factory jobs. Manufacturing payrolls totaled 73,400 in February on Long Island, down from 87,400 10 years ago, according to the state Department of Labor.

Speaking after an event at LIU Post in Brookville Tuesday, Cuomo said plants were crucial to New York State's economic health. "They provide good quality jobs to a very important sector of our society. Cutting taxes, we believe, helps lure businesses here; it certainly keeps businesses here."

Separately, the new state budget provides a 20 percent tax credit for manufacturers on the property taxes they pay for buildings, whether owned or rented in New York.

The new spending plan also restores $150 million to Cuomo's regional economic development councils, which recommend projects to Albany for state business aid. He proposed the funding in January, but majorities in both legislative houses did not include the money in their budget proposals.

Legislative sources said Tuesday the governor lobbied for the funding, and the Senate and Assembly acquiesced in return for his support of some of their spending priorities.

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