December 15, 2008
Taxes and Fees to Rise $4 Billion in New York Budget
By DANNY HAKIM and JEREMY W. PETERS
ALBANY — Gov. David A. Paterson will propose a $4 billion package of taxes and fees on a range of items, from sugary soft drinks made by Coca-Cola and Pepsi to luxury items like furs and boats, when he unveils his plan to close a deficit that has ballooned to $15 billion, people with knowledge of the plan said on Sunday.
Higher taxes will also be imposed on health insurers and a sales tax exemption on clothing and footwear under $115 will be eliminated, though the administration will propose a two-week holiday for goods under $500, under the budget the governor will introduce on Tuesday.
A number of fees will be increased, with users of the Department of Motor Vehicles and the state parks bearing much of the burden, people with knowledge of the plan said. Tuition at the State University of New York and the City University of New York will also be increased.
The governor’s executive budget, which is subject to approval by the Legislature, is sure to touch off months of protests from an array of interest groups, as well as battles with lawmakers.
One element that Mr. Paterson left out of his budget was any broad-based tax increase affecting people in higher income brackets, a measure that some in Albany believed would be part of the plan. But ever since taking over as the state’s chief executive in March, Mr. Paterson has steadfastly opposed raising income taxes as a way to prop up the state’s worsening finances.
Mr. Paterson said his plan is meant to fill a budget gap totaling $15 billion for the rest of the current fiscal year, which ends March 31, and the following fiscal year. State law requires that the budget be balanced.
Mr. Paterson’s plan relies most heavily on cuts — roughly $9 billion, with the largest amounts aimed at state aid to education and Medicaid. The governor will also propose rollbacks of benefits for state workers, a measure that will almost certainly lead to a standoff with powerful public-employee unions.
The administration is also expected to propose eliminating the controversial Empire Zone program, which offers tax incentives for business development across the state, but has often been criticized for failing to deliver promised job growth.
“It is just prohibitive and it’s painful to have to make some of these decisions,” Mr. Paterson said at an appearance on Sunday night in Manhattan. “I’ve been forced to veto legislation that I’ve sponsored.”
He called tuition increases at state schools “a very hard step to take.”
“We’re going to try to remediate that with some other services to the colleges and universities, but when a person whose whole career has basically been for the advocacy of higher education, such as myself, has to take that kind of step, it gives you an idea of what kind of a number $15 billion is.”
Trying to put the best face on what will be a bleak budget year, the Paterson administration gave a limited budget briefing on Sunday in which administration officials discussed a small number of social initiatives whose financing would be increased. Several of the initiatives were aimed at helping the poor through what is certain to be a trying economic future. “The nation and the state are in midst of the greatest economic crisis we have endured since the Great Depression, and there are families struggling to provide basic needs for their loved ones,” the governor said in a statement on Sunday.
The most significant move was a proposed increase to welfare grants for the first time in 18 years, though more money would not be made available until the beginning of 2010. The administration plans to seek a 30 percent increase over three years, with the eventual cost of the increase exceeding $100 million a year.
The basic welfare grant would eventually rise to $387 a month from $291 for a family of three, or $3,492 per year, where it has remained since 1990.
That the administration was pushing the measure foretold how little money was available this year; the increased welfare grants will have little impact on the budget for the coming fiscal year, which ends in March 2010.
The administration also said it would expand a state-financed health insurance program, Family Health Plus, to cover 19- and 20-year-olds who no longer live with their parents. Enrolling in such programs would also be made easier by, among other things, ending requirements for face-to-face interviews.
Those who provided details about Mr. Paterson’s plan did so on condition of anonymity because the plan has yet to be made public. In describing the fees on nondiet soft drinks, those familiar with Mr. Paterson’s plan called them an “obesity tax.”
Expecting a protracted battle with lawmakers and interest groups, the governor is introducing his budget more than a month earlier than is traditional. Assembly leaders were expected to push for broader-based tax increases to offset cuts to social programs, and spent much of last year advocating tax increases for the richest New Yorkers.
One of the biggest obstacles Mr. Paterson will have to overcome is a Senate narrowly divided between Democrats and Republicans that has yet to settle on a leader for next year, amid continued wrangling among Democrats.
Hospitals, nursing homes and other health care centers, already pinched by the first round of budget cuts earlier this year, are bracing for a fight.
“I expect it to be an unmitigated disaster for health care institutions in New York,” Kenneth E. Raske, president of the Greater New York Hospital Association, said in an interview on Friday. “I expect we will see a significant downsizing of the health care delivery system, and it’s at a time when people can least afford the cutbacks.”
Layoffs among health care workers are seen as likely. A recent survey by the Health Care Association of New York State found that 18 percent of hospitals are considering letting employees go to cope with their financial problems, 30 percent are weighing service cuts and 68 percent are contemplating scaling back improvement projects.
“Our hospital system is already short nurses, lab technicians and physicians,” said Dan Sisto, president of the health care association, a hospital advocacy group. “So it’s very difficult to cut back on a labor force that is already complaining about being shorthanded.”
Education advocates offered a similarly bleak view.
“We understand there will be cuts,” Randi Weingarten, president of the United Federation of Teachers, said on Friday. “The real question is, will there be cuts, not just cuts against growth, but real cuts that will turn back the clock?”
Billy Easton, executive director of the Alliance for Quality Education, an advocacy group, agreed. “School districts now have to plan that they’re not going to get the money that’s due to them.”
Education advocates are particularly concerned that the depth of the expected cuts will risk core educational programs and not just extracurricular activities, which are often the first to be slashed when budgets tighten.
“It takes a lot to help make sure there’s programs for kids,” Ms. Weingarten said, “but it takes very little to have this whole thing collapse.”
ALBANY — Gov. David A. Paterson’s administration unveiled an austerity budget on Tuesday that laid out a painful plan to close the largest deficit in the state’s history, including 137 new or increased taxes and fees and what is sure to be a controversial reckoning with the state’s workforce.
Education aid would be particularly hard hit, with an actual cut of $700 million in state education aid next year, not just a reduction of projected spending growth. Increased aid for operating expenses and pre-kindergarten that had been expected as part of the settlement of a long-running lawsuit of school aid would be delayed by four years under the plan.
Medicaid spending would not be as hard hit; it would still rise by about 1 percent under the plan, although the projected increase for hospitals, nursing homes and other health care providers would be cut by more than $1 billion.
The governor’s spending plan also calls for eliminating or merging seven smaller state agencies, cancel property tax rebate checks, curtail general municipal aid to New York City and close 13 prison camps or detention centers.
“Adjusting our state budget to reflect this new fiscal environment will be an extraordinary challenge,” Mr. Paterson, a Democrat, said in a statement, adding that his budget “begins the difficult process of fundamentally re-evaluating both how we manage government and what the state can afford to spend in a time of plummeting revenue.”
The total state budget, including federal matching funds, would be $121.1 billion under the plan. Spending of state funds would increase by only half a percent under the plan, a turnabout from years of spending rates well above inflation.
Mr. Paterson’s plan would close a $15.4 billion deficit for the balance of this fiscal year, which ends on March 31 of next year, and the following fiscal year. He is introducing his budget more than a month early as the state grapples with a twin calamity — the collapse of its main financial engine, Wall Street, and a deepening recession.
Mr. Paterson’s budget is sure to touch off a contentious fight with the State Legislature, which must approve his budget, and with labor unions across the state that have strong ties to legislators. Negotiations will be hampered by the fact that no clear leader has emerged to guide the Senate next year after last month’s elections left Democrats with a narrow, one seat majority in the chamber.
“It’s an illustration of just how difficult the situation is with the economy and the budget deficit,” said James Tedisco, the leader of the Assembly Republican caucus.
[B]“The good is that he is holding the line on spending,” Mr. Tedisco added. “The bad is that there are $4 billion in new taxes and fees and that will hit the middle class right in the solar plexus.”[/B]
While there were no broad-based income tax increases, there were all manner of new taxes, fees, fines or other assessments, expected to raise $4 billion next year.
The new taxes are likely to touch almost every New Yorker in some way and potentially every day, if you like Coke or Pepsi.
[B]The most notable new tax was an 18 percent levy on sugary, non-diet soft drinks. But there were many others. A tax on car rentals would rise to 6 percent from 5 percent. Taxes on beer and wine would more than double. Licensing fees would increase for private investigators, barbers, bail enforcement agents, home inspectors, notary publics and cosmetologists.
[B]Taxes on gasoline, cable TV, satellite television and radio service, cigars, flavored malt beverages would also increase. And the cost of owning and operating a car would also increase significantly, with 16 fee increases for the Division of Motor Vehicles.[/B]
[B]While there was no increase in income taxes on the wealthy, as has been pushed by Assembly Democrats, the state expects to raise $120 million next year by limiting the amount of money that millionaires can deduct from their state taxes.[/B]
Mr. Paterson also proposed that the state should begin to take the kind of steps that Detroit automakers and other corporations began to take with their unionized workers years ago.
His proposals include 521 layoffs — a modest figure in a workforce of almost 200,000. But he would also eliminate a scheduled 3 percent salary increase for state workers, increase retiree contributions for health care coverage and have state workers defer a week’s pay until they retire. He would also like to create a pension classification for new employees that does not have many of the attractive features that current state workers enjoy. Among other things, it would restore the minimum retirement age to 62 instead of 55.
Unions were bracing for a battle.
On Tuesday morning, before the governor had even spoken, the Web site of the Civil Service Employees Association called Mr. Paterson’s budget “possibly the worst in recent history” that “will hit working New Yorkers hardest.”
In a joint statement, George Gresham, the president of 1199 S.E.I.U. United Healthcare Workers East, and Ken Raske, president of the Greater New York Hospital Association, said “these are staggering cuts that would shatter New York’s health care infrastructure, severely threaten the ability of patients to get access to care, and cause serious harm to communities across the entire state.”
Mr. Paterson, for his part, said his plan “seeks shared sacrifice” and “includes reductions across virtually every area of government.”
By JEREMY W. PETERS and NICHOLAS CONFESSORE
Published: December 17, 2008
ROCHESTER — She talked about her book, about the Bill of Rights. She talked about raising her family. And, echoing her friend, President-elect Barack Obama, she said she could bring change to Washington.
Caroline Kennedy, on her first day touring upstate New York as part of her bid to succeed Senator Hillary Rodham Clinton, was circumspect and, at times, jolted by the tumult she touched off by her visits to the mayors of Syracuse and Rochester.
[B]Responding briefly to reporters who asked about her qualifications to be a United States senator, she described her experience as an author, mother and education advocate.[/B]
“I’ve had a lifelong commitment to public service,” she said, leaving the offices of the Monroe County Democratic Committee. “I’ve written books on the Constitution and the importance of individual participation. And I’ve raised my family. I think I really could help bring change to Washington.”
The mayor of Rochester, Robert J. Duffy, called Ms. Kennedy “delightful,” and the seemingly shy daughter of the late president even cracked a political joke. She told a reporter that Rochester was “great,” and vowed that, if she becomes senator, “I’ll be back as many times as Chuck Schumer,” a reference to the senior senator Charles E. Schumer’s reputation for relentless appearances and news conferences.
The Rochester stop was part of [B]a carefully controlled strategy[/B] to introduce herself to elected officials in parts of upstate and western New York, a first stab at getting skeptical upstate voters used to the idea of being represented in Washington by yet another down-stater.
[B]At first, her aides stopped Ms. Kennedy from answering questions at an earlier appearance on Wednesday in Syracuse.[/B] There, after meeting with Mayor Matthew J. Driscoll, she offered a 30-second statement saying that she would respect the process undertaken by Gov. David A. Paterson to fill the vacancy.
[B]The tour has been kept somewhat secretive, reflecting, in part, the delicacy of the situation. No schedule was given, though details percolated rapidly through political circles in New York. An aide accompanying her said she was headed to Rochester after Syracuse, but declined to say where.[/B]
Technically, there is no seat open, since the current holder, Senator Clinton, has not yet been confirmed as secretary of state. And there can be no true campaign, since there is no true election: the only vote that counts if that of Governor Paterson.
In her brief statement in Syracuse, Ms. Kennedy, 51, said: “As some of you may have heard, I told Governor Paterson I’d be honored to be considered for the position of United States senator. There’s a lot of good people in this community that the governor is considering. He’s laid out a process and I’m proud to be part of that process.”
Secret meetings, brief statements, aides stopping Caroline from saying anything. All for good reason. Even the NY Times bloggers see Caroline Kennedy as a somewhat less annoying version of air-head Sarah Palin.
At least Hillary Clinton competed against Rick Lazio for the Senate seat. Unbelievable that Caroline Kennedy thinks that it should be handed to her! :mad:
The budget is going to suck this year no matter what we do. My personal goal is to see some version of the millionaires tax (short-term) and no tolls on the East-River Bridges. Right now the burden isn't being shared -- its all middle-class fees.
[QUOTE=fukushimajin;2917685]The budget is going to suck this year no matter what we do. My personal goal is to see some version of the millionaires tax (short-term) and no tolls on the East-River Bridges. Right now the burden isn't being shared -- its all middle-class fees.[/QUOTE]
Big mystery why Gov. Paterson never even considered a 'millionaires tax'.
Big mystery why Gov. Paterson never even considered a 'millionaires tax'.
No mystery. He's trying to establish himself as a business-friendly moderate so he stays viable as a candidate for Governor after a career as a liberal. Pataki got away with saying he wasn't raising taxes while he jacked up every fee in the joint for 12 years -- Patterson is hoping to do the same. Shelly Silver is the only one asking for the millionaires tax and who might put the brakes on the tolls.