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Governor proposes flat budget to fill $15B deficit (update)

December 16, 2008
Adirondack Daily Enterprise

ALBANY (AP) - Gov. David Paterson is calling New Yorkers and almost every business sector to pitch in for at least the next couple of years to end what he calls the worst economic downturn since the Great Depression.

His play book is a proposed 2009-10 budget of $121.1 billion, which includes layoffs, a cut in school aid, 88 new or higher fees, and the early release of 1,600 inmates.

The proposal he released Tuesday to the Legislature would increase total spending by 1.1 percent - or $1.3 billion - and close $15.4 billion in deficits over two years.

Article Photos

Gov. David Paterson

The plan includes cutting school aid by 3.3 percent, or $698 million; increasing public college tuition by 14 percent; increasing some motor vehicle and fishing fees; allowing wine to be sold in grocery stores; increasing the sales tax on luxuries; and new state and local sales taxes on music, movie and game downloads through services like iTunes.

Paterson's plan also calls for cutting 3,108 jobs from the state work force of 196,000. Attrition would account for most of the reduction, but the proposal includes 521 layoffs in 2009-10, largely through consolidating state offices.

New York City would get whacked for more than a half-billion dollars in reduced school aid, municipal aid and school tax relief. And because the city's fiscal year is different from the state's, these cuts would hit current operations without time to prepare.

Fact Box

NY Gov. Paterson's state budget in brief

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ALBANY (AP) - Here are some of the key elements of Gov. David Paterson's 2009-10 budget proposal to the Legislature:

-Create a $350 million program to provide lower interest loans to as many as 45,000 college students.

-Increase driver's license fees and registration fees by 25 percent and require new license plates, at a cost of $25.

-Authorize video slot machines for the Belmont Park race track, which Paterson says would generate a franchise payment of at least $370 million in 2010-11.

-Have the state adopt the New York City policy of charging sales tax on personal services such as hair cuts, massages and credit rating services.

-Resume the state sales tax on clothing and footwear purchases under $110, while allowing two tax-free periods a year.

-Put a sales tax on cable and satellite TV and radio.

-No increase in broad-based income tax rates, although New Yorkers will pay more in income taxes through the closing of what Paterson considers loopholes and other measures he said will ensure everyone pays their fair share. That would include a tax on items that can be downloaded, like movies, music and games.

-Proposals to increase the welfare grant in 2010, the first increase since 1990, while making government subsidized insurance available to more of the working poor, in part by ending some anti-fraud measures. The change would provide a family of three with $387 a month by 2012, instead of the current $291 a month. That would benefit about 200,000 households.

-More outreach to make sure returning military veterans and their families get the government services to which they are entitled. This $1.1 million in 2009-10 includes a mobile unit to travel the state.

-Increased assessments and reduced funding for hospitals, clinics and nursing homes that could be passed on to consumers and employers through higher health insurance premiums.

-An ''obesity tax'' of about 18 percent on sugary drinks from non-diet sodas to Gatorade to raise $404 million.

-A 3.3 percent cut in school aid spending, now over $20 billion a year.

-A $620 increase in tuition at the State University of New York. That's about a 14 percent increase. It would increase tuition at City University of New York by $600, about 15 percent.

-Create a $1 million obesity prevention program.

-Lifting the limit on how much state tax can be charged for gasoline. The state's tax was limited to 8 cents per gallon.

-A measure to make it easier for the poor and working poor to get government health coverage by eliminating some anti-fraud measures, including face-to-face interviews, finger printing, and an asset test.

-Allowing 19- and 20-year-olds who do not live with their parents to enroll in Family Health Plus, the state health care plan, under the same rules as if they did live with parents.

-A plan to seek a federal waiver to allow adults at 200 percent of the federal poverty level - about $20,800 a year - to be eligible for Family Health Plus.

-Taking unspent funding for graduate medical education and redirecting it to the state's pool to cover the care of indigents at teaching hospitals. The proposal would save the state $141.3 million in the 2009-10 fiscal year.

-Increasing funds for indigent care in clinics and funding to food banks, pantries, soup kitchens and shelters.

-Increase funding in programs to prevent lead poisoning in children, mostly in poor city neighborhoods. The cost would be $2.5 million in 2009-10, and $5 million in 2010-11.

-Cracking down on failings of the state's Empire Zone program, which provides tax breaks to companies in exchange for creating or retaining jobs. Paterson wants to cut the program in half by requiring companies already getting big, multiyear tax breaks to prove they have created jobs they promised. These actions would be expected to save $272 million in 2009-10 and $292 million in 2010-11.

-Provides a raise for 1,200 state judges, who haven't had one for a decade. It would be provided with a $2.5 billion court system budget, up 1 percent.

-Leaves 213 state parks and historic sites open while reducing services and adding fees for camping, cabin rentals, golf and marina use.

-Calls for legislation requiring deposits on bottles of water and other non-carbonated beverages, with unclaimed refunds supporting the Environmental Protection Fund for buying open space while redirecting real estate transfer tax proceeds from the EPF to the state's general fund.

AP-DS-12-16-08 1751EST

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A look at economic factors weighing on NY budget

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By The Associated Press

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Gov. David Paterson blames much of the need to cut state spending on revenue lost because of the national recession and Wall Street's devastating year. The gloom includes:

-Unemployment is 5.7 percent statewide and is forecast to be 7.1 percent in 2009. The national unemployment rate is expected to reach 6.5 percent next year.

-Wages statewide rose 8.6 percent in 2007, but just 1.2 percent this year and are forecast to drop 3 percent in 2009.

-Personal income increased 6.5 percent in 2007, rose 2.4 percent this year, and is forecast to drop 1.3 percent in 2009.

That translates into about $19 billion in projected state revenue losses from the current fiscal year to 2011-12.

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Source: State Division of the Budget.

''There is no sharing of the sacrifice here,'' said Danny Donohue, president of the Civil Service Employees Association union, which represents state workers who will face a brief delay in pay to save the state money. ''It's working people getting stuck with the bill.''

Paterson used history to underscore his plan, even as it was immediately criticized by lawmakers and lobbyists for nickle-and-diming the middle class.

''In his inaugural address, President Franklin Roosevelt told a nation in the grips of the Great Depression that now is 'the time to speak the truth, the whole truth, frankly and boldly,''' the Democratic governor said.

''He warned the American people must not shrink from 'honestly facing' the dark reality of the country,'' Paterson said. ''Today, we, too, cannot shrink from the challenges ahead.''

Paterson said that while annual spending growth in the last five years averaged 7.8 percent, the first budget he's proposing would increase state operating funds by just a half of 1 percent. That would put state funds - the figure that excludes federal aid - at $79.8 billion, which he said is the lowest figure in 14 years.

The budget is far from final. The Legislature would have to agree to the spending plan due April 1, but Paterson hopes to seal a budget deal earlier to more quickly enact spending cuts attacking the deficits. He has blamed the deficits on decades of overspending, often for special interests led by labor unions, and on the Wall Street meltdown hitting an industry that has provided 20 percent of state revenues in recent years.

''It's going to be a very difficult year,'' Assembly Speaker Sheldon Silver said Monday night after he was briefed privately on the budget. ''But I'm confident the Assembly, Senate and governor will be able to work together.''

Most sectors whose funding would be held flat from the current year say that amounts to a cut, one they can't afford.

''The governor has shifted the unbearable burden of closing the budget gap onto the shoulders of school children, while sparing the wealthiest New Yorkers,'' said Billy Easton, executive director of the Alliance for Quality Education. AQE supported a tax on New Yorkers making over $1 million, which Paterson has so far rejected.

School districts and the New York State Association of Counties have warned that reduced state funding, more unfunded mandates like a 2010 hike in the welfare grant that Paterson proposes, and even flat funding could force higher local property taxes.

''The spending reductions in this budget proposal are painful,'' said NYSAC President Sarah Purdy. ''County leaders are engaged in this process and are willing to work through this crisis together with the governor and state Legislature to continue essential services in a way that does not increase the burden on New York's taxpayers.''

Taxpayers will feel the pinch in several ways. Besides potential increases in local property taxes, Paterson wants to boost income tax revenue by closing what he considers to be loopholes and making other adjustments short of changing the rates. In addition, Paterson proposes eliminating the STAR rebate program - a state subsidy that he said has failed to achieve the promised goal of reducing local school taxes.

He would end the rebate checks sent to homeowners and the corresponding enhanced New York City personal income tax credit. That will save more than $1.7 billion. Paterson would continue at previous years' levels the STAR tax exemption - a savings off tax bills rather than through a rebate check often delivered at election time - and the New York City rebate.

AP-DS-12-16-08 1547EST

 
 

 

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