School aid flat, but taxes to rise in new state budget
Budget deal also raises utility tax on wealthy
ALBANY — Lawmakers say a tentative state budget deal would keep funding for public schools flat for the coming year, which districts say could still force thousands of layoffs.
At the same time, sources said negotiators have signed off on a preliminary deal to impose an income tax surcharge on individuals and families making more than $300,000 annually. While Assembly Speaker Sheldon Silver said no final deals have been reached on any potential tax increases, sources indicated it should be resolved today.
If it holds, the income tax hike would be another major retreat for Gov. David A. Paterson, who has been warning for months that the higher levy would drive out wealthy residents to other states.
State budget negotiators are still wrestling over an array of possible tax hikes to impose, while sources said lawmakers beat back most of the changes Paterson wanted to make to the state’s chief economic development program, which has been criticized for failing to produce enough jobs.
A bid to let supermarkets sell wine appeared dead, while the annual STAR property tax rebate appeared in jeopardy.
Numbers were sketchy, and deals were on one minute and off the next Thursday, raising doubts whether an on-time budget can be achieved by Tuesday as lawmakers have been hoping.
And the three men in a room making the deals — Paterson, Silver and Senate Majority Leader Malcolm A. Smith — either would say nothing or, in Paterson’s case, remained out of public view for yet another day this week.
So go the final days of the 2009 budget talks — which have been so covert this year that even the most consummate of insider lobbyists have been left to marvel, while rank-and- file lawmakers found themselves left with table scraps of fiscal details.
The action was frenzied over a host of issues:
• Lobbyists and lawmakers say a plan to raise hundreds of millions of dollars through higher taxes on utility companies — which would pass them on to consumers — has been tentatively OK’d by the governor and legislative leaders. There was movement, however, to carve out telephone companies from the higher taxes. That would save consumers about $100 million in higher taxes but still leave a levy on the other utilities to pass along, totaling more than $500 million.
• The income tax plan on the table would raise upward of $4 billion a year and be set at three different rates at incomes from $300,000 to $500,000, $500,000 to $1 million, and $1 million and above. It would terminate in five years.
• Environmentalists were trying to unearth a plan blocked by many Senate Democrats to expand the state’s bottle bill to include water products.
• Anti-smoking groups were pushing to stop what they said is a deal to cut 20 percent from the state’s tobacco education program, a move they said would keep more New Yorkers lighting up. Retailers, meanwhile, were trying to halt a plan by Paterson to raise the annual fee paid by 28,000 stores selling tobacco products from $100 to up to $5,000.
• Paterson's budget original proposal would have required companies to invest $20 for every one dollar of state tax incentives. That would have kicked out 2,000 companies in the current Empire Zone program, including more than 600 in the Buffalo area.
The new deal calls for companies currently in the Empire Zone program to invest just one dollar for every dollar of state tax incentive, with new companies entering the program investing $20 per state dollar.
The program would be shut off to new companies beginning January 2010, giving state officials time to come up with a new program.
Among the big fights still raging is one over how much money Albany will send to 700 school districts. The federal stimulus package recently approved in Washington has earmarked about $1.2 billion that state officials must use for education spending in New York.
The fight has been over whether Albany can, with a $16.2 billion deficit, find money to add on top of the $1.2 billion, which would restore cuts Paterson proposed and keep funding to schools the same as 2008 levels. But schools, citing rising salaries, health costs and other expenses, say they need another $900 million beyond that level to meet expenses.
Assemblywoman Crystal D. Peoples, D-Buffalo, said the sides have agreed to keep school funding essentially at 2008 levels. “It’s flat, but flat is better than a cut. It could have been much worse,” she said.
Before word of the agreement to keep education funding flat, the Council of School Superintendents released a survey claiming districts—beyond the Big Five, which includes Buffalo — are poised to lay off 7,800 employees. They provided no district-by-district breakdown.
Officials said some districts assumed they’d be getting less than a flat level of funding, meaning the projected layoff number is overstated because it did not assume the flow of bailout money from Washington.
But officials with the group said flat funding will translate into layoffs. And they say they cannot go to property taxes the same way they did in 2003, the last time school funding from Albany was cut. That year, local property tax increases averaged 10 percent. But given the economy and mood of property taxpayers, districts know they can’t approach anywhere near that level this year to make up for getting less aid from Albany than they want.
“If state aid comes up short, that means schools will be making more spending cuts. Since 70 percent of school spending goes to personnel, when big cuts are needed, schools have no choice but to cut jobs,” said Thomas Rogers, executive director of the council.
Health care, the biggest portion of the budget, is still in play.
Negotiators believed a deal was at hand on cuts to hospitals, nursing homes and home care agencies. But a furious lobbying effort by industry groups Thursday appeared to put things in a state of flux, especially among Senate Democrats. One lawmaker said hospitals from around the state reached out to him urging more money to avoid having facilities close.
Carl Young, president of the New York Association of Homes and Services for the Aging, said nursing homes and home care programs were facing about $1.4 billion in cuts. So far in talks this week, $300 million of that has been restored. He is angry that more than $4 billion in extra Medicaid money flowing as part of the federal stimulus aid is being steered to other areas.
"The real impact is going to be primarily on old people," Young said of the fiscal hit he says his industry will take.
The fog was intense. Consider these questions poised to Silver after a Thursday night meeting with Paterson and Smith. Have you agreed on anything at all?
"Yea."
Can you give us any information?
"I think we'll give you all the information at one time."
Have you agreed on the size of the budget?
"No."
So you don't know how much money you have to spend?
"Correct."
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