Paterson, leaders defend state's $131.8 billion budget
Lawmakers will begin voting on the revised plan Tuesday
Published: March 30, 2009, 12:30 am
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ALBANY -- Emerging from a couple weeks of closed-door budget talks, Gov. David A. Paterson and legislative leaders congratulated themselves today for agreeing to a 2009 fiscal plan that closes a deficit that has swelled by several billion dollars just this month.
The governor dismissed suggestions that the $131.8 billion budget, which lawmakers will start voting on Tuesday, grows too much, taxes too much and did not cut enough structural spending.
"We will have a responsible budget," Paterson said.
But even before the voting started, the governor strongly suggested that the Legislature might have to revisit the budget because it might not stay in balance, given the state of the economy. He said if that happens, the state would have to turn to cuts in social spending and even more tax hikes to keep the budget in the black.
The governor also defended the fiscal agreement, which critics are condemning for massive tax hikes in the midst of a recession.
"There are the touch choices that had to be made but we made the tough choices," Paterson told reporters at the Capitol. The budget will require New Yorkers to pay more to go fishing and hunting, drive a car or motorcycle, have health insurance, operate the lights and heat in their homes, buy cigarettes, own a cell phone and drink beer, wine and bottled water.
Single taxpayers making more than $200,000 a year will see a jump in taxes, as will bus companies, nuclear plants, food processing companies, racehorse owners, farmers, pesticide applicators, grocery stores and anyone wanting to open a hospice.
In all, the total number of new taxes, fees and various assessments and surcharges will top $7 billion in the new budget that state lawmakers will vote on beginning Tuesday. The governor’s office put the number at $5.3 billion, but that misses a number of levies.
The higher taxes will help pay for a budget that will soar to $131.8 billion—$10.7 billion more than what Gov. David A. Paterson proposed just three months ago. Federal bailout money accounts for two-thirds of that sharp increase, with the rest coming from new spending and debt.
The higher tax figures do not include the financial hit from some tax breaks being rescinded. Gone, for instance, are the annual STAR property tax rebate checks that arrive each fall right before Election Day. That will cost taxpayers $1.5 billion this year.
When all is counted up, say Republicans, who gleefully note it is an all-Democratic team that put together this budget, the total of new taxes and lost tax breaks will approach $10 billion.
With a $17.7 billion deficit to wrestle—up from $16.2 billion just a week ago — Paterson and lawmakers turned to every possible revenue source to go along with $6.5 billion of assorted cuts to hospitals, nursing homes and other programs. Rounding out the money to fill the gap is $6.2 billion in federal stimulus aid.
But, throughout most of Sunday, no one was certain how much the new budget actually spends. It wasn’t until dinnertime that officials could give the final number, and it was soaring, even by Albany’s standards.
While officials talked of the across-the- board sacrifices, one area of the budget apparently was not being cut— pork-barrel spending for the governor and 212-member Legislature. Both houses are getting $85 million apiece to spread around districts to popular programs, while the governor is getting $30 million, let alone the unknown hundreds of millions more he ultimately controls as the state’s chief banker.
‘Mind-boggling’ taxes
Maybe not surprisingly, no one really wanted to take much credit for this budget at the Capitol. Paterson and the two Democratic legislative leaders—Senate Majority Leader Malcolm Smith and Assembly Speaker Sheldon Silver — were nowhere to be seen Sunday. And most lawmakers weren’t returning until today.
That left the Senate Republican leader alone to shadow-box.
“Quite honestly, the taxes are mind-boggling,” said Senate Minority Leader Dean Skelos. He said he saw no economic development effort to help the state out of the recession. “The taxes and fees are going to be crippling on our economy, particularly upstate and in Western New York,” he said.
Some were taking credit for the higher taxes. The Working Families Party praised lawmakers for raising taxes on upper income taxpayers. That tax alone will raise more than $4 billion this year.
“We wish they had gone further,” said Dan Cantor, executive director of the small but influential party. He said the extra money helped restore cuts that were on the table to everything from hospitals to child abuse prevention programs.
“Most of the states around the country faced with budget gaps haven’t had the nerve to do what the New York Legislature did. They deserve real praise,” he said of the tax hike on wealthier New Yorkers.
If the law is followed as envisioned, the 2009 budget, following a decades-old tradition, will be late again. Bills needed to be printed by Saturday night to be “live” for Tuesday’s voting; not all the bills met that deadline, so the passage, unless Paterson intervenes and gives special permission, won’t be done until Wednesday at the earliest.
The $170 million in legislative pork is spread around to the usual assortment of groups, from Little Leagues to senior centers to legal services for the poor. Among the many beneficiaries in the Buffalo area are the Buffalo Niagara Enterprise ($226,000), Buffalo Suzuki Strings ($10,000), Greater Buffalo Italian Heritage & Food Festival ($4,000), Theater Alliance of Buffalo ($10,000) and the Buffalo Naval Park Committee ($50,000).
The two biggest areas of the budget — health care and education — saw nearly $2 billion restored from what Paterson had proposed. Much of that, for education, is thanks to the federal bailout money; Washington sent the state $1.1 billion to restore school cuts. Hospitals got 70 percent of the $738 million Paterson tried to cut, while nursing homes were cut $224 million, down from the $335 million Paterson proposed, officials said.
Officials said the state’s main education pot, known as Foundation Aid, will be held flat at $14.9 billion, which schools say will lead to thousands of layoffs because of rising costs.
Gone from the budget was Paterson’s plan to save state worker costs. He proposed a freeze in salaries and a one-week furlough, as well as a new pension tier to require new workers to contribute more to their pensions as a way to save money for the state and localities. None made it into the budget, though Paterson recently threatened to cut the work force by 8,900 positions.
Fee increases add up
The biggest new tax is the three-year income tax surcharge on households making more than $300,000 and unmarried filers making more than $200,000. Critics say the $200,000 level in particular will end up capturing many small-business owners— Subchapter S corporations — whose business income counts for tax filing purposes. The state rate will go from 6.85 percent to 7.85 percent; for those making over $500,000, the rate goes to 8.97 percent.
Paterson and lawmakers have turned to a creative assortment of other ways to raise money. There’s a variety of higher fishing and hunting fees, like the lifetime license for small and big game hunting going from $350 to $535. There are new fees for some driver’s license permits and higher renewal fees for commercial driver’s licenses. It will cost $1.25 a month in a new “public safety communications surcharge” for every cell phone.
After pressing the New York Power Authority to kill a $10 million rate hike last week, the new budget raises surcharges on gas and electric utility companies that the industry says will end up costing consumers at least $500 million.
“A 500 percent increase on a hidden assessment in people’s energy bills is going to damage economic recovery efforts and hit those on a fixed income or public assistance the hardest. With people struggling to make ends meet, one wonders whether the Legislature and the governor really exhausted all possible alternatives,” said Kevin Lanahan, acting director of the Energy Association of New York State.
There are higher registration fees for motorcycles, cars, buses and boats. Certain distinctive license plates will cost more, going from $25 per year to $31.50, double that level for those with specially requested numbers or letters.
Stores selling cigarettes will have to pay a fee of between $1,000 and $5,000; that plan comes at a time when the Paterson administration has decided to go slow in efforts to collect taxes on Indian tobacco sales. It’ll also cost a business $250 to $1,000 for every cigarette vending machine it has.
“We have produced a budget that provides a solid foundation to move forward and address the challenges ahead. We have accomplished this with a budget that holds government accountable to the people of New York, and protects those who can not protect themselves,” Paterson said in a statement Sunday night.
tprecious@buffnews.com
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