State Of Shock: New Taxes, Plenty Of Cuts
Dominate Paterson's Budget Plan
By Brian M. Rafferty
Gov. David Paterson proposed a budget this week that includes some cuts, but also new revenue streams, including expanded sales of alcohol, an increased reliance on gambling and a $1.28 per gallon tax on sugary drinks.
With New York State facing a $7.4 billion budget gap, Paterson has proposed a budget that is less than 1 percent greater than the previous year's, well below the rate of inflation, without dipping into the State $1.2 billion rainy day fund.
"Nearly every activity financed by State government, ranging from aid to public schools to agency operations to capital commitments will face reductions in services from the state," the Governor said. Meanwhile, more than $1 billion will be raised in new taxes and fees, including another dollar tax for cigarettes, the sale of licenses to supermarkets to be able to sell wine, and a tax on sweetened soft drinks, which is expected to bring in a whopping $465 million of the $1 billion in new revenue.
Some Of The Changes
Among many changes proposed, the state will reduce or eliminate its I Love NY marketing program, reduce high-tech funding, limit payments on certain medical expenses, reduce reimbursements to nursing homes, extend surcharges assessed to physicians in hospitals to those performing procedures in ambulatory care centers and offices, eliminate three out of five statewide poison control centers and close some highway rest areas.
"New York State's most vulnerable and least fortunate citizens will suffer," Assembly Speaker Shelly Silver said. "Cuts such as those proposed in summer youth employment, domestic violence programs, childcare services and homelessness prevention will save the state very little but cause many New Yorkers harm."
The soda tax, which is about 1 cent per ounce, would cost an extra 12 cents for a can of soda, and an extra 67 cents for a two-liter bottle of soda. The tax on cigarettes will go from $2.75 to $3.75 - for a total of $5.25 in New York City. There will be new taxes on natural gas producers, and the implementation of drilling in the massive Marcellus Shale natural gas pool below a large swath of central and Western New York.
Liquor licenses, which until now have been limited to one per vendor, will now be able to be sold to the highest bidder, allowing a group or chain of liquor stores to sell alcohol - as well as allowing every bodega and convenience store - as well as supermarkets - to sell wine.
Quick Draw gam
es, which have limited hours set by legislation, will instead be managed by the Division of the Lottery, and could extend to 24 hours a day, expanding into bowling alleys, bars that do most of their business from the sale of alcohol and other establishments.
Unfair To NYC?
City critics did not take long to challenge the Governor's plan.
"Not only is New York City willing to do its fair share to help Albany get out of its financial mess, but we're eager to do so," said Mayor Mike Bloomberg.
Though he said at first glance the majority of the budget seems to be fair in the way they effect the City, the elimination of two years of New York City's revenue sharing payment - more than $650 million, which is 94 percent of the statewide cut and more than 15 times the cut for entire rest of the state together - "appears neither proportional nor fair to New York City."
City Comptroller John Liu criticized the Governor's plan to reduce school aid.
"Some of the initiatives proposed today impose a disproportionate burden upon New York City," Liu said. "The proposed reduction in school aid will affect funding for our City's students at a time when we are still waiting to receive our just due as a result of the Campaign for Fiscal Equity lawsuit, adding insult to injury. In addition, the elimination of more than $300 million from the Aid and Incentives for Municipalities funding will leave an immediate hole in our City's budget."
Liu suggested that Paterson dip into the rainy day fund rather than unfairly burden New York City. "It's time to recognize that it is now pouring rain, and the use of these rainy day funds can and must be managed more tightly."
Effects On Education
"While we agree with the Governor that all sectors of our state need to be part of the solution, his budget proposal cuts school aid by $1.4 billion and leaves the state $4.2 billion below what we originally pledged under our CFE commitment," Assembly Speaker Shelly Silver said. "Four years after the Court of Appeals found that New York was shortchanging the education of our highest-needs children, the Governor's proposed cuts go too far."
Billy Easton, executive director of the Alliance for Quality Education, said Paterson's budget is "a colossal reversal of New York State's commitment to providing every child with a real opportunity to learn."
"The Governor's proposal in essence pries open our school house doors and extracts every dollar from children's education that Albany can put its hands on," he said. "His proposal to extend the full implementation of the Campaign for Fiscal Equity funding to 10 years, from what was originally a four-year commitment, will mean that only a small fraction of today's school children will see the full benefit of New York's promise to deliver a quality education to every child."
"This budget proposes the largest cut to our children's schools in the history of the state," he added, "and yet again asks our children to bear the unbearable burden of balancing the state budget."
Geri Palast, executive director of the Campaign for Fiscal Equity, added, "This means six more years of insufficient resources which will fall most heavily on the neediest schools and students. This cut translates into the loss of teachers, programs, materials and facilities that will rob another generation of children of the opportunity to learn and achieve college and career readiness that will shape both their economic futures and our own."
Paterson's plan to tie the tuition costs for SUNY and CUNY schools to inflation rates, and take it out of the hands of the Legislature "would lead to a stratification of SUNY and CUNY that could put college - or at least certain colleges and certain majors - out of reach of many New Yorkers, especially if there isn't an ironclad, enforceable way to increase financial aid along with tuition, said New York Public Interest Research Group Program Coordinator Fran Clark.
Paterson wants to work with the State's Civic Service unions to make substantive changes to existing contracts. The approximately 94 percent of state employees who are unionized are expected to get a 4 percent pay increase in April 2010. Paterson's plan would, with an agreement from the unions, delay that raise indefinitely and also seek to defer some of the coming year's salary payments until the time when employees retire.
Public Employee Federation President Kenneth Brynien, whose union represents 59,000 state employees, said he is willing to discuss issues that do not involve the contract, but he "cannot and will not go to my members and ask them to reopen the contract we negotiated with the state in good faith when many of my members are sitting alongside more costly private contractors doing the same work."
The Governor has proposed closing two prisons, a mental health ward, a Children and Family Services office and merging of several smaller agencies to reduce redundancies and costs.
"We will seek to preserve the vital services our members provide to the state's troubled youths and ensure that troubled and sometimes dangerous youths are not recklessly cast into our communities without adequate support," Brynien said.
Paterson proposed cutting the Environmental Protection Fund by nearly one third, from $212 million to $143 million - one of the largest cuts to any major program in the state budget.
"That disproportionate cut would come on top of approximately a half-billion dollars that have been redirected from the EPF to other state programs in recent years," said New York League of Conservation Voters President Marcia Bystryn. "The disproportionate cuts being proposed to environmental programs threaten to derail hard-fought progress and further diminish New York's faded status as an environmental leader."
Cuomo Weighs In
Considered by many to be the likely Democratic challenger to Paterson for the Governor's seat this year, Attorney General Andrew Cuomo did not take the opportunity to bash the Governor, but he did issue a challenge.
"The Governor's Executive Budget proposes a number of hard but necessary actions. It also proposes a number of long-overdue reforms in areas ranging from government consolidation to mandate relief," Cuomo said.
"In the past, the good intentions to control spending and reform government that were included in proposed budgets have given way to more spending than the State can afford and rejection of needed reforms in the enacted budget. The real test of this year's budget process will be the ability to rally the public and the legislature to take the tough actions that are necessary for the long-term interests of the State."
Speaker Silver echoed Cuomo's statement.
"Although we disagree with these cuts, we remain steadfast in our commitment to work with the Governor, with the Senate, and with leaders and citizens throughout our state to meet New York's fiscal obligations head-on and in a timely fashion," Silver said.
"In the weeks to come, the Assembly will hold public hearings on the executive budget proposal to assist us in identifying and making the responsible spending cuts that will put our state on sound financial footing and protect the programs and services our working families depend on."
Reach Editor Brian M. Rafferty at firstname.lastname@example.org or (718) 357-7400, Ext. 122.