CAPITOL SOUNDINGS
Special Edition – Tuesday, April 4, 2006

LEGISLATURE ADOPTS ON-TIME BUDGET - New York lawmakers on Friday afternoon completed work on a budget plan for FY 2006-2007.  The budget, approved without the Governor’s direct involvement and likely to suffer line item vetoes, totals $112.4 billion (other estimates indicated the overall total may be as high on $113.5 billion).   
 
Their plan would increase spending by more than $1.6 billion over Gov. George Pataki's proposal and return hundreds of dollars in tax credits and rebate checks to most New Yorkers. Legislative leaders also recommended a 6.9 percent increase in school operating aid statewide.   
 
State Comptroller Alan Hevesi on Monday announced his determination to “certify” the budget – meaning that the plan is in balance and meets the lawful requirements for a budget to be in place – but was critical of the amount of borrowing included in the package.  
 
The Senate and Assembly agreed to a property tax break that would provide rebate checks in the fall to most New Yorkers. The checks would be equal to about 30 percent of their tax break under the state's STAR program, which addresses local school taxes. Senate Majority Leader Joseph Bruno said a typical check, to be delivered just before Election Day, would be about $400 and range from $300 to $800. In addition, they approved a child tax credit of a maximum of $330 per child between ages 4 and 17. The tax credit on personal income taxes would be based on a sliding scale, but families making as much as $170,000 a year with two or three children could qualify, said Assembly Speaker Sheldon Silver.
 
Governor Pataki proposed a $110.6 billion budget last January. The enacted budget – approved by the Senate and Assembly - totals $106 billion and includes a $2 billion to $4 billion surplus. The budget as approved, was the second straight after 20 years of late budgets.
 
But legislative leaders are expected to negotiate with Pataki over the next two weeks on a final budget. Pataki says the Legislature wants to spend too much and that their plan will create budget gaps in the near future.
 
In all, legislative leaders approved what they said were $4.106 billion in tax cuts spread over the next two years beginning with the 2006-07 budget. Lawmakers also rejected what they said would have been another $466 million that would have been taken from taxpayers in fees and taxes under Pataki's budget for the coming fiscal year. That includes elimination of Pataki's proposed $1 per pack increase in the cigarette tax, worth $308 million in revenue.
 
Other tax breaks include:
 
• A cost of living adjustment for the STAR tax break program,
• End of the so-called marriage penalty for couples filing income taxes jointly, and
• Elimination of the 4 percent state sales tax on clothing and footwear up to $110 that Pataki had wanted to extend beyond its expiration.
• Legislative leaders chose to expand a tax break to entice more films and commercials to be produced in New York,
• School tax break for farmers,
• A volunteer firefighters' tax credit,
• A tax exemption for National Guard members, and
• A tax credit to encourage bio-fuel companies to operate in New York.

Legislators also included $170 million for unidentified "member items" or "pork-barrel spending" this election year for programs and projects in their districts.
 
Legislative members formally approved a $1.1 billion increase in school operating aid on top of the current $16 billion. Every school will get some increase, with New York City schools and other high-needs schools getting larger shares.
 
Lawmakers also approved a plan that would provide $6 billion in capital construction aid and financing to New York City schools over five years. Schools outside New York City would share in $1.8 billion in capital funds in the 2006-07 fiscal year. They agreed to spent $254 million to maintain and expand pre-kindergarten classes.
 
Other major elements of the Legislature's plan include no increases in tuition to the State University of New York and City University of New York authorized by Pataki.
 
Now legislative leaders and Pataki will try to work out a final agreement. Pataki could veto elements of the Legislature's adopted budget. "It's wrong in my view to increase spending by over a billion and a half dollars and yet not be able at all to lower the personal income tax rate," Pataki told a Business Council forum Tuesday.
 
Some major thorny issues were removed from the budget process and will be negotiated separately. For example, the Legislature wanted to include $200 million or more for the Environmental Protection Fund, which supports environmental programs and buying open space to keep it from development. Pataki proposed $180 million.
 
Another issue moved outside the budget is the proposal to create an inspector general devoted to rooting out Medicaid fraud and waste, saving the state hundreds of millions of dollars each year.

The Governor has 10 days to issue his approval or vetoes on the various bills that make up the budget package – meaning he must announce his determinations by early next week.  The Legislature has the ability to vote to override his vetoes – if any – and such votes could be taken anytime before December 31st.

LEGISLATIVE BUDGET SUMMARY: MAJOR ITEMS
 
EDUCATION HIGHLIGHTS
 
Record Increase in School Aid -- The budget provides a record increase in school aid of almost $1.26 billion and includes a plan for $2.6 billion in new school construction funds for schools across New York State, with $1.8 billion going to New York City and $800 million to the rest of the state. For New York City, the funds will help finance $11.2 billion in new school construction over the next five years, more than satisfying the recent court ruling. on  
 
Educational Income Tax Credits -- At the Federal level, taxpayers are allowed a personal income tax credit equal to $1,000 per child, phasing out at incomes over $75,000, depending upon filing status and the number of qualifying children. The Legislature's proposal would extend this credit to New York income tax liability In addition, for those low income taxpayers who do not qualify for the credit at the Federal level, the credit would be equal to $100 per child, ages four to seventeen.
 
The education budget also does the following:

• Sound Basic Education -- Provides a funding plan to spend $375 million in Sound Basic Education proposed by the Governor for high needs districts throughout the state;
• Teacher Resources and Computer Centers -- Restores funds to $37 million, an increase of $20.6 million;
• Teacher Mentor Intern Program -- Restores $6 million, a $4 million increase;
• BOCES Aid -- Provides a $58.1 million increase;
• Public Library Aid -- Aid to public libraries is increased by almost $6 million, to a total of $94.6 million and $14 million is included for library capital projects.

HEALTH CARE

Hospitals -- Restoration of $80.6 million in the state budget agreement will maintain the trend factor for hospitals to adjust aid and help them address inflationary cost increases. Also, the budget provides $18.3 million to increase the Hospital Emergency Room Medicaid rate from $95 to $150, while an additional $2 million is provided to increase the Emergency Room physician rate from $17 to $25.
 
Nursing Homes --  To ensure nursing homes will remain open as  population ages and continues to need care, the budget provides $38 million to rebase nursing home aid, which will increase total aid by $450 million when fully implemented. The budget will also restore $72.7 million to maintain the trend factor for nursing homes to adjust aid and help them address inflationary cost increase.
 
Home Care --  In an effort to improve access to home care and ease the reliance on costly institutional care, the budget includes $2 million to increase rates for personal care workers and $8 million for home care workers in rural areas.  Additionally, $25 million in State funding is provided in the health budget for home care recruitment and retention purposes.
 
Transportation -- The State budget provides for an additional $20 million for the Consolidated Highway Improvement Program (CHIPS), which when combined with the $289.5 million included in the Executive Budget, provides a total of $309.5 million for the SFY 2006-07 CHIPS capital program.   The State budget also provides funding for the following items:
 
• $28.9 billion for the Metropolitan Transportation Authority bond authorization;
• $1.85 billion letting level for highway and bridge construction projects;
• $39.7 million in Marchiselli funding for local bridge projects; and
• $22 million in High Speed Rail funding for the construction-reconstruction of rail capital and highway railroad crossings, facilities and intercity rail passenger service improvements to the New York State Empire Rail Corridor between New York City and Niagara Falls.

In addition, the State budget adopted by the Legislature prohibits the Metropolitan Transportation Authority from imposing a $1 per month surcharge on E-Z Pass tagholders and transfers $20 million in Department of Motor Vehicle costs from Dedicated Highway and Bridge Trust Fund to the General Fund, which will free up more money for bridge and highway construction, maintenance and repair.
 
Economic Development -- The State budget provides $1.415 million to each of the five Centers of Excellence, totaling $7.075 million, for support of their operations and also adds a total of $1.5 million ($750,000 apiece) related to the operation of two Gen*NY*Sis centers: the Advanced Biotechnologies Center and the Genesis Center of Excellence for Genomics. In addition, the budget provides funding for two new tourism and marketing initiatives: $1 million for the Explore New York State matching grants program to promote thematically related destinations; and $225,000 for creation of a television documentary on the Erie Canal and development of related educational resources.
 
Environmental Conservation -- The Legislature has agreed to a historic level of funding at $200 million for the Environmental Protection Fund (EPF), including $50 million for land acquisition; $20 million for farmland protection and $7.5 million for municipal recycling.  The EPF additionally includes $3 million for landfill closures; $16.25 million for waterfront revitalization; $17.47 million for municipal parks; $10.25 million for stewardship of state lands; $5 million for the Hudson River Estuary Plan; $2 million for the pesticide database program and $10.98 million for agriculture non-point source pollution projects.
 
Agriculture -- The State budget restores $4.4 million for the Farm Viability Institute; $606,000 for migrant child care and $550,000 for the New York State Apple Growers Association.  The State budget also provides $1 million for agritourism.

Housing and Community Renewal -- The State budget restores $2.27 million for the Rural Preservation Program and $5.04 million for Neighborhood Preservation Companies.
 
GENERAL GOVERNMENT HIGHLIGHTS

Local Assistance -- The budget includes a $137 million across the board increase in local assistance for all cities, towns, and villages outside New York City. The aid agreement gives a 20 percent across the board increase for towns and villages over last year and small cities will receive from 16 to 24 percent over last year. Additional funds are allocated to Rochester, Buffalo, Syracuse, and Yonkers.
 
Shared Services -- The budget includes $25 million in incentives for local governments to share services to increase efficiency and reduce expenses.
 
Homeland Security -- Adds new appropriation authority totaling $10 million to support port security needs in New York City and Buffalo, Ogdensburg, Oswego and Albany.