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1998-99 PROPOSED EXECUTIVE BUDGET
SUMMARY OF KEY ISSUES

Prepared by the staff of The Business Council - January 23, 1998

Issue Areas:

Overview

Key points of Governor Pataki's 1998-99 Executive Budget

Taxes: Continues tax cuts enacted last year, including $380 million that take effect in the coming fiscal year (primarily, starting reductions in the Gross Receipts Tax and the assessments on hospitals/nursing homes). Devotes $100 million to accelerate some of those tax cuts (to be determined in budget negotiations) in coming year. Proposes conformity with federal estate tax exemption for small businesses of $1.3 million. Proposes new requirement that any tax increase over $50 million have two-thirds approval by the Legislature.

Accelerates STAR program.

Spending: Increases overall spending by 7.6% (excluding STAR funding, which pays for a local tax cut, the overall increase is 6.5%). State-funded spending (paid for by state taxes, fees and other charges) would rise 8.5% (excluding STAR, 6.9%). The General Fund, the state's main budget fund, would rise by 2.9% (the figure that some newspaper reports cite). Budget estimates inflation in the coming year at 2.2%.

Economic outlook: Predicts job growth of 100,000, or 1.3%, in 1998.

Surplus: Current fiscal year estimated to end with surplus of $1.8 billion, to be devoted largely to reserve funds and debt payments.

Budget reform: Proposes increase in legal limit on reserve funds; requirement that enacted budgets be balanced; and enactment of Executive Budget if Legislature does not act on time.

Economic development: Increases JOBS NOW fund for major new businesses to $45 million.

Education: Renews Governor's call for authorization of charter schools, legally and fiscally autonomous public schools that would be free from many mandates. Proposes total state spending for school aid of $11.45 billion, an increase of $518 million or 4.7%. Includes major new funding for buildings, including $50 million for school maintenance; thepre-K program created last year; a new summer reading program for fourth-graders; creation of a new 3-7 p.m. after-school program.

Mandates/local governments: Increases general aid by $25 million or 3%; raises exemption from Wicks Law to $500,000; reforms rules for asbestos removal; eases sharing of services.

Environment: Recommends increased fees on industrial air emissions.

Social services: Proposes faster decisions on child support through administrative rulings. Projects continuing decline in welfare caseload.

Miscellaneous: Reduces auto registration fees for passenger vehicles (not including commercial vehicles) by 25 percent for savings to motorists of $50 million. Proposes one new, 750-bed prison.

Taxation

All figures are reductions in revenue for the 1999 State Fiscal Year ending March 31, 1999:

Estate and Gift Tax -- $3 Million

Motor Vehicle Fees -- $49 Million

Pari-Mutuel Taxes -- $1 Million

Personal Income Tax -- $360 Million

Sales and Use Tax -- $25.3 Million

Economic Development

The 1998-99 budget provides nearly $210 million for programs that will help businesses continue to create and retain jobs. Highlights include:

Environment

Governor's Office of Regulatory Reform

Education

The Governor proposes that this increase in State building aid be accompanied by reforms to promote increased cost effectiveness and accountability in school construction. Such reforms include:

New Program Initiatives

Programs recommended for elimination:

School Property Tax Reform

Higher Education

Job Training

Health

Transportation/Construction

Labor

Energy and Telecommunications

Banking

Insurance

Worker's Compensation

Technology

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