SUMMARY OF THE GOVERNOR'S PROPOSED
2005-2006 BUDGET
Prepared by the staff of The Business
Council
January 21, 2005
Overview and Issue areas:
Overview
Governor's budget would invest in Upstate jobs,
cap medicaid growth.
Plan would accelerate phase-out of income-tax hike, but also increase
other taxes, fees.
Governor Pataki has proposed a 2005-06 budget that includes funding for
his new Upstate economic-development plan, Medicaid cost-containment measures
designed to contain growth in local taxes, a faster phase-out of the 2003
personal income-tax surcharge, and a variety of new increases in taxes and
fees.
The proposed budget would increase state-funded spending by 5.4 percent,
which is about twice the projected rate of inflation for 2005. Without
proposed changes in Medicaid and other programs, spending would rise by
billions more, the Governor's Budget Division said.
Some members of the Legislature immediately said they plan to propose
to increase spending beyond the amount proposed in the Executive Budget.
The budget would spend a total of $105.5 billion, including federal funds.
The Governor said his proposal closes a budget gap of $4.2 billion and
increases the state's "rainy day" fund to $864 million, the maximum allowed
by law.
The Governor's release noted that the state Division of the Budget (DOB)
is projecting annual growth of state tax receipts of 10.2 percent in 2004-2005
and 6.5 percent in 2005-06. DOB is also projecting 5 percent annual growth
in New Yorkers' personal income, and an improvement in job growth from
0.4 percent in 2004 to 1.1 percent in 2005. The national job-growth rate
for the 12-month period ending in November 2004 was 1.6 percent.
The budget would also put all programs and funding for the Health Care
Reform Act (HCRA) on budget, a reform that The Business Council and other
advocates of fiscal restraint have long advocated.
The Governor said that all of the state's educational, environmental,
and health-care goals "depend on two important factors-the fiscal strength
and integrity of our state, and an economic climate that encourages job
creation, growth and investment."
The Governor's executive budget would:
- Cap local Medicaid costs to provide relief to county property taxpayers
and protect localities. The Governor said this would generate more than
$2 billion in local government savings over the next three years. Some
of the savings would go directly from the state to homeowners and farmers,
but not to most businesses. "New York State has the most expensive Medicaid
program in the nation that-if left unchecked-would exceed $47 billion
next year, far more than any other state," the Governor's release said.
The Governor's budget proposes reducing the growth in Medicaid spending,
"right-sizing" the state's health-care system, making new investments
in health-care facilities, and improving long-term care options for
seniors.
- Under the Governor's proposal, the state would:
- Accelerate the state takeover of Family Health Plus programs,
which the Governor said would save local governments $312 million
in 2005-06 and $576 million in 2006-07.
- Create a bi-partisan Commission on Health Care Facilities in the
21st Century to consider options for eliminating excess capacity
in New York's health-care system.
- Increase, by $1 billion, health-care spending by creating a new
Health Care Efficiency and Affordability for New Yorkers (HEAL-NY)
program for facility improvement, reconfiguration and consolidation,
and for upgrades to information and health care technology and promotion
of efficient operations.
- Extend HCRA payments and programs through June 30, 2007.
- Close Medicaid loopholes that the Governor said allow individuals
to refuse to contribute any of their assets towards the cost of
health-care services.
- Create a preferred drug program for Medicaid, which would seek
to reduce costs by limiting physicians' options in prescribing drugs
for patients. Eliminate several optional Medicaid programs for adults.
- Increase state spending on schools by $526 million, the largest increase
ever proposed by any governor. The Governor also proposed capping the
growth in local school budgets. The Governor noted that New York's taxpayers
already pay enough taxes to support the nation's highest per-pupil spending
on schools. "The challenge now facing us is to apply these resources
to ensure that every child in every school receives the quality education
they need to succeed in the 21st century," the Governor said.
- Provide funding for Operation SPUR, the Governor's seven-point plan
for targeted economic development in selected Upstate communities through
various tax cuts and tax credits, including a single sales factor tax
reform, which would base corporate taxes for manufactures on just one
factor, in-state sales. Operation SPUR also includes a new exemption
from the state's alternative minimum tax (AMT) that will apply to a
company's entire state tax liability.
- Enacting the single-sales factor tax reform for manufacturers. This
reform would base corporate taxes for manufacturers on just one factor,
in-state sales. Corporate taxes are now based on three factors: in-state
jobs, payroll, and property. Because state taxes now increase as in-state
jobs and sites increase, companies are effectively encouraged to put
jobs and plants elsewhere.
- Offer a new property-tax relief rebate program for county taxpayers
in counties that hold growth in their general-fund budgets at or below
prescribed levels. Most homeowners would get a property-tax rebate of
$50 under the program.
- Propose new incentives to encourage consolidation of local governments
and improved management in local governments. The Governor's budget
would increase state aid to localities to more than $1.9 billion, which
the Governor said would be the biggest increase ever. The new Aid and
Incentives for Municipalities (AIM) program would reward improved local
fiscal performance with state funding increases of nearly $164 million
over the next two years.
The Governor also said he is advancing a budget-reform plan that
would:
- Require binding revenue forecasts by an independent body if Legislature
and governor don't agree.
- Establish legislative conference committees to reconcile differences
on the budget to ensure active participation by individual legislators
and enhance public debate.
- Require "sunshine" reporting that would provide all legislators an
assessment of the multi-year financial impact of proposed budget changes
before any vote on the budget.
- Require the Legislature to enact a balanced budget as certified by
an independent entity.
The Governor's Executive Budget also:
- Renews his call for constitutional debt reform, including a ban on
"back-door" borrowing.
- Urges unspecified reforms to the state's Empire Zone program.
- Enact public-employee pension reforms that would save local governments
an estimated $621 million in 2005-06.
- Implement sweeping mandate relief for localities, including full repeal
of the Wicks Law. The Wicks Law requires local governments and school
districts to use more than one contractor on any public construction
project with estimated costs of $50,000 or more. The requirement significantly
inflates the costs of any public construction project in New York State.
- Allocates $36.6 billion to a five-year transportation capital program
and financing plan.
- Allocates $2 million to create a new Office of Educational Accountability
and Efficiency.
- Creates a competitive matching capital program for private colleges.
The Governor's press release and Executive Budget documents are available
at www.budget.state.ny.us
Taxation
TAX REDUCTIONS
Strategic Partnership for Upstate Resurgence (SPUR)
Creates a new economic program outside the twelve-county Metropolitan
Commuter Transportation District (MCTD) for investments in a certified
(by Empire State Development) SPUR community. The SPUR program comprises
seven benefits – five of which are discussed under the "Economic
Development" section and two of which are discussed below.
Single Sales Factor Apportionment (SSFA)
Article 9-A taxpayers who are "manufacturers" (defined as
taxpayers who derive at least 50% of their gross income from manufacturing
activities as listed under the Investment Tax Credit) who make a $25,000,000
depreciable investment (need not be a "manufacturing" investment)
in a certified SPUR community are allowed to elect SSFA for their New
York State tax return in the year of the investment – and for nine
years thereafter so long as the taxpayer continues to own the investment.
The election is effective for tax years beginning 1/1/5 and thereafter
and is projected to reduce Article 9-A taxes by $4,000,000 in FY2006 and
by $7,000,000 in FY2008. [Taxpayers may elect SSFA in an eleventh year
if their employment is up by 100 jobs in a SPUR community(ies) in the
eleventh year over the number of jobs in the SPUR community(ies) before
the qualifying investment. Taxpayers may elect SSFA in the twelfth and
succeeding years if their employment is up by 100 jobs both in a SPUR
community(ies) and in New York State over the number of jobs, respectively,
both in the SPUR community(ies) and in New York State before the qualifying
investment. Alternatively, the taxpayer may make another qualifying $25,000,000
depreciable investment to begin the ten-year cycle anew.]
Minimum Taxable Income Alternative Tax
Article 9-A taxpayers who are "manufacturers" who make a
SPUR-qualifying $25,000,000 depreciable investment will have their Minimum
Taxable Income tax rate reduced from 2.5% to 0% in the year of the investment
– and for nine years thereafter so long as the taxpayer continues
to own the investment. The reduction is effective for tax years beginning
1/1/5 and thereafter and is projected to reduce Article 9-A taxes by $5,000,000
in FY2006. [Taxpayers may qualify for the tax rate reduction in the eleventh
and future tax years as described above under the Single Sales Factor
Apportionment item.]
Personal Income Tax Surcharge Brackets
Reduces the 7.25% and 7.7% tax brackets added by the Legislature in
a June 2003 veto override to 7% and 7.6%, respectively. The reductions
are effective for the 2005 calendar year; the brackets are scheduled to
expire with the 2006 calendar year. [The lower bracket's tax rate had
been 7.375% in 2004 and 7.5% in 2003.] The reductions are projected to
reduce Article 22 (Personal Income Tax) taxes by $190,000,000 in FY2006.
Sales and Use Tax Two-week Exemptions for "Energy Star"
Items
Creates two seven-day periods of exemption from the State Sales and
Use Tax (with authority for localities to do likewise with the local Sales
and Use Tax) – which match the proposed two periods for clothing
priced under $250 – for new, not used, "Energy Star" appliances.
"Energy Star appliances" are defined as: non-commercial refrigerators,
non-commercial combination refrigerator/freezers, dishwashers, clothes
washers, ceiling fans, ceiling fan light kits, and room air conditioners
which qualify for and are labeled with an Energy Star label by the manufacturer
pursuant to an agreement among the manufacturer, the U.S. Environmental
Protection Agency, and the U.S. Department of Energy. The exemption is
projected to decrease State Sales and Use Tax revenues by $4,000,000 in
FY2006 by $4,200,000 in FY2008.
TAX INCREASES
Real Estate Investment Trust (REIT)
Amends Articles 9-A, 32, and 33 of the Tax Law to disallow the 60
percent exclusion of dividends received from a Real Estate Investment
Trust subsidiary. The tax increase is effective for tax years beginning
1/1/5 and thereafter and is projected to increase Article 32 (Bank) Taxes
by $50,000,000 in FY2006.
Business Capital Alternative Minimum Tax
Amends Article 9-A of the Tax Law to increase the maximum amount of
the Business Capital Alternative Tax on non-"manufacturers"
from $350,000 to $1,000,000. ("Manufacturers" are defined as
taxpayers who derive at least 50% of their gross income from manufacturing
activities as listed under the Investment Tax Credit.)The tax increase
is effective for tax years beginning 1/1/5 and thereafter and is projected
to increase taxes by $26,000,000 in FY2006.
Permanent Sales and Use Taxation on Clothing Under $110
Reimposes the State Sales & Use Tax on clothing priced under $110
on 6/1/5 (when the temporary suspension of the permanent exemption had
been scheduled to expire); repeals on 6/1/5 the ability of localities
to resume their exemptions of the local Sales & Use Tax for clothing
priced under $110; creates two seven-day periods of exemption of the State
Sales & Use Tax (with permission for localities to do likewise) for
clothing priced under $250. The two periods would commence on the last
Monday of January and end on the first Sunday in February and commence
on the Tuesday immediately preceding the first Monday in September and
end on the first Monday in September. These changes are projected to increase
State Sales & Use Taxes on New York consumers by $455,900,000 in FY2006
and by $604,800,000 on an annual full-year basis.
County/Town Cooperative Insurance Company Premiums Tax Exclusion
Repeals the premiums tax exclusion for county/town cooperative insurance
companies effective for tax years beginning 1/1/5 and thereafter and is
projected to increase Article 33 (Insurance) Taxes by $18,000,000 in FY2006
and annually thereafter.
Alcoholic Beverage Tax on Wine
Quintuples the Alcoholic Beverage Tax on wine from five cents per
liter to twenty-eight cents per liter effective 6/1/5 and is projected
to increase Alcoholic Beverage Tax receipts by $37,700,000 in FY2006,
by $43,700,000 in FY2007, and by $44,500,000 in FY2008.
Limited Liability Company Filing Fees
Creates permanent limited liability company filing fees of $100 per
member (up from $50) with a minimum total fee of $500 (up from $325) and
a maximum of $25,000 (up from $10,000) for subchapter K limited liability
companies and limited liability partnerships and extends the filing fees
to single member limited liability companies which are disregarded entities
for Federal Income Tax purposes. These increases match increases that
had been imposed by the Legislature via a June 2003 veto override and
which expired 12/31/4. Also, imposes a filing fee on a limited liability
company owned by a husband and wife as community property in states other
than New York if the llc has income derived from New York sources. These
increases are effective 1/1/5 and are projected to increase taxes by $22,000,000
in FY2006.
Education
The Governor proposes an overall net increase in education aid of $526
million which would bring state aid to education up to $15.9 billion for
the 2005-06 school year. This increase is comprised of two components
- $201 in regular school aid and $325 million for a new Sound Basic Education
(SBE) Aid program to be funded by Video Lottery Terminals.
Nearly 86% of the Sound Basic Education Aid Subsequent funds would be
targeted to 207 high needs school districts with 60% going to New York
City.
The Governor also recommends simplifying the school aid formula by consolidating
six existing aid programs in a new $8.4 billion Flex Aid formula.
Approximately 70% of the Flex Aid increase (which is $122 million of
the overall $526 million) would be targeted to the 207 high-needs school
districts, but all school districts would be provided with at least a
.5% increase. Flex Aid increases would be allocated using measures of
educational and economic need, including a poverty measure and a regional
cost factor.
The following six aid categories would comprise Flex Aid:
- Comprehensive Operating Aid
- Extraordinary Needs Aid
- Educationally Related Support Services Aid
- Limited English Proficiency Aid
- Summer School Aid
- Minor Maintenance Aid
Most other aid categories continue to be funded at 2004/05 levels.
The Governor would eliminate BOCES Aid for routine administrative services
and require BOCES contracts for telecommunications and other services
to demonstrate savings compared to existing state contract prices available
through the Office of General Services.
The Governor continues to recommend that school construction be exempted
from the Wicks Law and makes a variety of other proposals related to containing
school construction costs.
The Governor also recommends a new Star credit, paid to homeowners as
an income tax credit in school districts that keep their spending within
a proposed spending cap.
New proposals include recommendations for:
- Performance Funding
To provide additional state aid prospectively to school districts
that demonstrate improved performance on statewide achievement tests
and graduation rates.
- Academic Achievement Awards
Recommends $500,000 to support 25 Pathfinder Awards and 25 Trailblazer
Awards to schools across the state to recognize educational performance
and operational efficiency.
- Fund for Innovation
A new $15 million program to provide the Big Five City schools with
additional resources to create public/private partnerships that integrate
technology into the classroom.
The Governor also recommends creating a new office of Educational Accountability
and Efficiency headed by an Executive Director appointed by the Governor
to conduct comprehensive reviews of education spending across the state;
to track and report on educational performance and review and approve
school improvement plans; and provide assistance in the closure and/or
reconfiguration of schools that don't meet state educational standards.
The Governor also recommends transferring the State Museum, State Library,
and State Archives to a new entity to be called the New York Institute
for Cultural Education.
HIGHER EDUCATION
Recommends restructuring the Tuition Assistance Program (TAP) to provide
awards in two components:
- beginning in 2005-06, TAP awards would be provided to first-time
students as a "base" award equivalent to one-half of the current TAP
award and
- a "performance" award equivalent to the remaining one-half of the
award. The performance component would be paid upon degree completion
and would be equal to the remaining half of the award, plus any accrued
interest on loans needed to finance the awards. Pending receipt of their
"performance" awards, students would be expected to finance the costs
through federal loans, or state loans when federal loans have been exhausted.
The Governor's budget recommends a gross operating budget of $2.9 billion
for SUNY state-operated colleges, an increase of $183 million which would
come from a mix of investments, taxpayer support, enhanced administrative
efficiencies and increased tuition revenues.
The Governor recommends a gross operating budget of $1.3 billion for
CUNY Senior Colleges, an increase of $88 million which would also come
from a mix of sources similar to those for SUNY.
The Governor proposes legislation to allow the SUNY and CUNY Boards of
Trustees to establish tuition charges based on the costs of educating
students at various campuses and would allow an number of other tuition
policy changes to be made by the respective boards of trustees.
The Governor maintains SUNY/CUNY Community Colleges state operating aid
at $2,235 per student, with additional funding provided for enrollment
growth - $.7 million for SUNY community colleges and $2.4 million for
CUNY community colleges.
The Governor recommends a $250 million Public/Private Higher Education
Capital Matching Grand Program that provides $150 million in competitive
matching grants t public and private colleges, and allocates $100 million
formula-based matching grants to private colleges.
The Governor also recommends a new program to increase the number of
successful and timely graduations at New York's public and private colleges
called "Partnership to Accelerate Completion Time (PACT).
Unrestricted Aid for Independent Colleges and Universities is maintained
at the 2004/05 level $42 million.
The Governor recommends cutting the HEOP (Higher Education Opportunity
Program) by half to $10.5 million.
The Liberty Partnerships Program is recommended to stay the same as in
2004/05 at $10.9 million.
The Science and Technology Entry Program (STEP) and it's collegiate counterpart
(CSTEP) are recommended to be funded at the 1004/05 level of $9.5 million.
Economic Development
Staff Contact: Ken Pokalsky
Power for Jobs
The program is extended through December 31, 2006; NYPA is authorized
to contribute a minimum of $75 million during FY 2006 to support the program;
all program participants will be allowed to extend their benefits using
the reimbursement methodology authorized in 2004 instead of a straight
contract extension.
Operation SPUR
The Strategic Partnership for Upstate Resurgence, or SPUR, program, contains
a number of major incentives:
- Community Criteria - SPUR communities will be designated pursuant
to rules developed by UDC. Legislation sets forth very broad criteria,
including: location outside the twelve-county MTA commuter district;
consideration of employment and population growth and the impact [of
such designations] on agribusiness.
- A manufacturer that makes $25 million or more in investments within
a single SPUR community can elect to use single sales factor apportionment
in calculating their state income taxes for a period of ten years; the
SSF election can be extended if the taxpayer also increases and maintains
a 100 job increase within SPUR communities in aggregate, and a one hundred
job increase in statewide employment. These taxpayers are also exempted
from the alternative minimum tax in years for which they qualify for
(even if they do not elect to use) the SSF allocation. See TAXATION
section for additional details.
- A one-time wage tax credit of between $1500 and $3500 per new employee,
available to manufacturers that created 50 or more new jobs within a
SPUR community, and whose state-wide employment is also at least 50
jobs greater than in its base year. The level of credits are determined
based on the level of wages paid the new employees. The credit that
can be claimed in any tax year is limited to 50 percent of a businesses
tax liability for that year. A "new business" may treat 50 percent of
any carry-over credit as a refundable tax overpayment.
- An additional tax credit would be available to a newly established
business that is both located within a SPUR community and is "affiliated
with" a Center of Excellence. The credit would be calculated based on
the company's operating loss; would be capped at $1 million per year
and $5 million in aggregate for that taxpayer; with unusable credits
treated as a refundable overpayment in the year that they are earned.
- Operation SPUR funding programs include:
- $100 million in grants or loans to support the development of industrial
facilities, business parks and incubators, including infrastructure
development; site acquisition, preparation and development. Retail
and personal service facilities are ineligible.
- $40 million for downtown and rural commercial center redevelopment
projects, and for development of "tourism destinations."
- Generally, eligible projects must have a minimum $500,000 cost,
with a two-thirds matching funds requirement.
- Other Operation SPUR programs include: $10 million in Training Grants
targeting incumbent workers; Workers Comp cost-control assistance including
workplace safety programs and fraud prevention efforts, to be implemented
through the State Insurance Fund.
Empire Zones
Empire Zone changes included in the FY 06 budget proposal are similar
to the administration's '05 proposal, with several significant exceptions
noted below:
- The Empire Zone program is extended by five years, to March 31, 2010.
- The benefit period for Qualified Empire Zone Enterprizes (QEZEs)
certified after April 1, 2005 will be reduced from fifteen to ten years.
- The employment test for QEZE qualification, and the calculation
of real property tax credits, are modified for all entities entering
the program after April 1, 2005, for "new companies" as defined in
the Act, and for utilities that qualified as QEZEs prior to that date.
QEZEs certified prior to April 1, 2005 are allowed to apply for permission
to calculate their status and real property tax credits based on pre-existing
statute.
- Zones designated pursuant to census tract eligibility criteria must
be designated within a four-mile "super-boundary" drawn around eligible
census tracts.
- Local zones based on county-level criteria are required to have at
least 60 percent of their acreage within no more than six "targeted
areas," defined as census tracts with high unemployment and poverty
rates.
- The Department of Economic Development is authorized to annually
designate up to one square mile of non-contiguous areas as state-level
Empire Zones, for projects outside the MTA service area that will create
300 or more new jobs, or projects located within distressed census tracts
that create at least 100 new jobs.
- The Department, in conjunction with the Department of Agriculture
and Markets, is also authorized to designate up to one square mile of
agricultural Empire Zones, to promote the production and/or processing
of crops, livestock or livestock products (including biofuels). Designations
must include at least four counties.
- More specific requirements are imposed for local zone development
plans;
- Authorization for Zone Capital Corporations is repealed.
Technology/Development Funding
The budget establishes a new $250 million New York State Technology and
Development Program to be administered by the Urban Development Corporation,
authorizes UDC to issue bonds to finance the program. Funds will support
priority high technology and economic development projects, including
significant regional economic development projects. A similar proposal
was included in the Governor's FY 2005 budget proposal.
Javits Expansion/Jets Stadium
The budget authorizes the Urban Development Corporation (UDC), or other
public authorities if appropriate, to issue $300 million in bonds to finance
the State's share of construction costs for the New York City Sports and
Convention Center, which would include a 2.2 million square foot facility
that will house a 75,000 seat stadium and 180,000 square feet of exhibition
space on New York City's West Side, adjacent to the Javits Convention
Center.
UDC Loan Authority
The budget would make permanent the general loan powers of the New York
State Urban Development Corporation (UDC), currently set to expire July
1, 2005. Absent enactment of this bill, the UDC will only be able to make
loans in connection with certain State-funded economic development programs
that include loan authorization.
Medicaid
New York's Medicaid program, already the most expensive in the
nation, will exceed $47 in 2005-06. The Governor is proposing a series
of measures to bring that number down, including:
- Capping local government Medicaid payments, effective January 1, 2006,
at a growth rate of 3.5% or actual costs, whichever is less. The capped
growth rate will be lowered to 3.25% in 2007, and then to 3 percent
for 2008 and years thereafter.
- Initiate a full state takeover of local Medicaid costs effective January
1, 2008. Create a Task Force to examine all issues related to the takeover.
- Accelerates the takeover of local Family Health Plus costs and changes
co-payments for enrollees to make it consistent with Healthy New York.
Would not allow businesses with more than 50 employees to put their
employees in Family Health Plus.
- Eliminates two optional Medicaid services for adults - private practitioner
dental and other practitioners, including private duty nurses, audiologists
and psychologists.
- Implements a Preferred Drug Program for Medicaid.
- Closes existing Medicaid loopholes which allow individuals to refuse
to contribute any of their income and assets towards the cost of health
care for a spouse.
- Imposes an assessment on hospital and nursing home revenues.
- Lifts the limitation on the number of disease state management pilot
programs.
Health Care Reform Act (HCRA)
The Health Care Reform Act, first passed in 1996 and amended
in 1999 and 2002, is due to expire on June 30, 2005. The Governor proposes
a number of changes to HCRA:
- Extend HCRA for two years to June 30, 2007.
- Establish a new Commission on Health Care Facilities in the 21st
Century to make recommendations for rightsizing hospitals and nursing
homes that are no longer needed. The Commission will be comprised of
15 voting members, appointed by the Governor and legislative leaders.
The Legislature would have thirty days to reject the Commission's final
recommendation in its entirety. Absent the legislature's rejection,
the Commissioner of Health would be authorized to proceed with the necessary
activities to carry out the Commission's recommendations.
- Brings all HCRA revenues and expenses on-budget.
- Recommends a $1 billion capital grant program over the next four years
to improve and "rightsize" the state's health care infrastructure. The
funds will support facility improvement, reconfiguration and consolidation;
upgrading information and health care technology; and enhancing the
efficiency of facility operations.
- Increases the tax on hospital bills from 8.85% to 8.95%, the money
used for bad debt and charity care. Also increase the tax employers
pay for graduate medical education to raise another $50 million.
- Authorizes the Commissioner of Health to implement changes to the
distribution of bad debt and charity care reimbursement.
- Invest HCRA money in disease management, rural health access and various
reform studies.
- Dedicate proceeds from the conversion of any not-for-profit insurer
to for-profit status, to HCRA.
- Gives the Commissioner of Health the authority to collect ambulatory
care data for hospital-based outpatient and freestanding clinics.
- Establishes a Pay for Performance demonstration program. Will establish
a workgroup to study clinical measure criteria.
- Extends the Excess Medical Malpractice program for two years.
Health Insurance
Recommends various changes to the early intervention program
- similar to previous years - to increase private insurance reimbursement
of services and imposing a family financial contribution.
Small Business
Operation SPUR (Strategic Partnership for Upstate Resurgence)
Created to encourage investment and job creation in targeted cities and
rural communities across upstate. See Economic Development.
$3.5 million in new funding to support wine industry marketing and promotion.
Environment
REGULATORY FEES
Air Permit Fees
The maximum Title V permit fee would increase from $45 per ton of emissions
to a maximum of $58 per ton; a minimum fee of $1,250 would apply to all
Title V facility. Changes will increase fee income by $3,614,000 per year.
No increase or change is proposed for state facility permit fees.
Pesticide Fees
This budget extends the expiration date for the registration of pesticides
from July 1, 2005 to July 1, 2008. This will "preserve" $1.8 million in
recurring revenues for State fiscal year 2005-06.
Wetlands Fees and Regulations
The budget proposes to extend the state's freshwater wetlands regulatory
program to wetlands less than 12.4 acres in size that are deemed to be
of local significance, or are "isolated" from waters of the U.S. It also
increases maximum civil and criminal penalties for the violation of wetlands
regulations; eliminates the Freshwater Wetlands Appeals Board; establishing
freshwater permit fees of $50 for minor projects and $100 for major projects;
establishes tidal wetlands permit fees of up to $200 for minor projects
and $900 for major projects. Fees are expected to raise $1 million annually,
and be used for new wetlands program-related staff.
ENVIRONMENTAL SPENDING
State Operations
The operational budget for the Department of Environmental Conservation
is proposed at $427 million, a 2 percent increase over the proposed FY
2005 budget; staff positions would remain about the same at 3,352. Air
and water programs would receive a net increase of 24 positions; fish
and wildlife management would receive a net increase of 7 positions; 24
positions would be eliminated from CWCA bond act administration.
Superfund/Brownfields
Appropriations are set at $135 million, the same as in 2005, with $185
million in reappropriations from the 1986 bond act to continue ongoing
cleanup programs.
Environmental Protection Fund
The budget proposes to increase the EPF to $150 million, a $25 million
increase over recent levels. The EPF receives revenues from the state
real property transfer tax, and is used for a wide range of projects including
state land purchases, local solid waste management projects, historic
preservation projects, and others.
ENVIRONMENTAL TAX CREDITS
Green Building Tax Credit
This credit, originally adopted in 2000 with $25 million in available
credits extended over a nine year period (2001 through 2009), will receive
another $25 million in available credits to be made available from 2005
through 2009. Credits are available for new or modified buildings that
meet specific energy, building material, property management and other
criteria, and are available for a "base building," "whole building," or
"tenant space." The Green Building credit program is Section 19 of the
Tax Law
Clean Vehicles Tax Credit
The budget would revise and extend the existing tax credits for electric
vehicles, qualified hybrid vehicles and clean-fuel vehicle refueling property
through December 31, 2006, and allows the existing sales tax exemptions
for these products to expire on February 28, 2005.
Biofuel Credit
Creates a new tax credit equal to fifty percent of the costs associated
with the production for sales of at least 10,000 gallons of "biofuel,"
including "biodiesel" and "ethanol," with these new credits to sunset
on December 31, 2009.
Energy
Power for Jobs
The program is extended through December 31, 2006; NYPA is authorized
to contribute a minimum of $75 million during FY 2006 to support the program;
all program participants will be allowed to extend their benefits using
the reimbursement methodology authorized in 2004 instead of a straight
contract extension.
Clean Air
The budget proposes that $51.6 million be used for clean air
programs to limit pollution from industrial and commercial sources, automobiles
and heavy-duty vehicles. In addition, the alternative fuel vehicle tax
credit will be reformed and expanded.
Green Buildings
Provides for an additional $25 million in tax credits for the
construction of environmentally friendly "green" buildings.
Bulk Purchasing of Electricity
The Executive Budget proposes to expand OGS's role to include
the bulk purchase of electricity for state agencies.
Biofuels
Creates tax credits of up to $1 million
for investments in biofuel production facilities.
Transportation
All Funds 2005-06 will increase by $385,909 million to $5,632,086 billion
New five-year transportation capital plan of $36.6 billion, including
$17.4 billion for DOT capital programs and $19.2 billion for the MTA programs.
2005-06 highway and bridge construction contract level will be $1.65 billion
CHIPs and Marchiselli local transportation programs
Authorizes the 2005-06 CHIPs program at $276.7 million and the Marchiselli
local capital highway assistance program at $39.7 million, unchanged from
the 2004-05 enacted budget.
Industrial Access Program - $9 million
Increase the Dedicated Highway and Bridge Trust Fund Bond Cap from $10.25
billion to $16 billion
Implements a variety of additional fees:
- increase passenger vehicle registration fees by 33 to 75 percent
- waives registration fees for hybrid and alternate-fuel vehicles
- increase registration fees for all commercial vehicles by 25%
- increase registration fees for commercial trailers by 25%
- increases original title application fee from $10 to $50
- increases original title application fee for manufactured and mobile
homes from $25 to $125
Authorizes limited design-build project delivery processes
Allows the DOT to undertake twelve and Thruway Authority five. Design-build
contracts combine the designwork and construction activities into a single
contract. Design-build bills were introduced in 1999 and 2001 but were
never enacted.
Establishes the Transportation Facility Development Partnership Program
Allows the DOT, the Thruway Authority and MTA to enter into agreements
with public or private entities for the delivery of transportation
facilities or services. Public or private entities could acquire,
design, finance, construct, improve, operate and maintain transportation
facilities, provide transportation services and impose user fees for
the use of the facilities or services.
Construction
Wicks Law Exemption
This reform would provide school districts with an exemption from
Wicks Law requirements that mandate the use of multiple contractors for
school construction projects.
Education Aid and Construction
The building aid formula would be modified to include a simplified reimbursement
method that provides realistic allowances for construction costs and student-based
space needs; and centralized technical expertise and assistance would
be available to school districts from the Dormitory Authority of the State
of New York (DASNY), to provide advisory services on efficient construction
practices and designs.
Targeted Assistance for NYC School Construction
Designed to assist New York City in addressing its pressing school facilities
needs by increasing statutory bonding authorization provided to NYC's
Transitional Finance Authority for school construction projects; implementing
a new State matching program to recognize costs that fall outside current
cost allowances; streamlining existing procurement processes for cost-efficiency;
and authorization of Advisory State reviews of NYC school buildings for
cost and allowance conformity.
Green Buildings
Extension of the "Green Buildings" program to allow for an additional
$25 million in tax credits.
Emergency Construction Contracts
Make permanent the authorization for awarding emergency construction contracts
of up to $200,000 without competitive bidding.
Telecommunications
Cellular Surcharges
Fully dedicates cellular surcharges to the development of local
E-911 systems and to the completion of the Statewide Wireless Network.
Labor & Human Resources
Staff Contact: Tom Minnick
The state Labor Department has almost 66% of its workforce financed by
Federal grants and 34% by fees and assessments. Less than one percent
of the positions are supported by State tax dollars from the General Fund.
There are three unemployment Insurance Telephone Claim Centers and eight
employment service regional offices that oversee employment services staff
at 103 locations throughout the State. Overall employment levels will
move from 4,138 to 6,236 employees in 2005-06. The all funds appropriation
will be reduced from $5,911,567,100 to $4,951,016,500, a reduction of
$960,550,600.
In fiscal year 2005-06, legislation will be introduced that transfers
both the Workers' Compensation Board and the Vocational Rehabilitation
services of VESID (State Education Department) to the Department of Labor.
The Division of Human Rights, charged with investigating and resolving
complaints of illegal discrimination, promoting human rights awareness
through education and acting as a resource in the prevention and elimination
of discrimination, will see an increase of $640,000 in their all funds
appropriations in 2005-06. It will take them from $18,314,000 to $18,954,000.The
Division operates from its main office in the Bronx and from nine regional
and two satellite offices across the state. In 2005-06, the Office of
Temporary and Disability Assistance will continue to assume partial responsibility
for basic administrative functions of the Division such as personnel and
finance. Full time equivalent positions will remain at 203. The Division
continues to make progress in reducing the number of open cases. Open
cases totaled 5,695 as of November 2004 down from 16,880 in January 1995.
Consumer
- Allow the direct shipment of wine to individuals in New York State
from out-of-state wineries.
- Increase the excise tax on wine from 5 cents to 28 cents per liter
and use the portion of the increase paid by New York wineries to promote
New York wines.
- Replace the permanent clothing and footwear sales tax exemption with
two $250 exemption weeks.
- Provide two sales tax exemption weeks for certain "Energy Star" items.
- Restructure and expand the alternative fuel vehicles program.
- Increase the maximum civil penalty for unfair and deceptive business
practices and false advertising.
Workers' Compensation
The Governor has proposed transferring the Workers' Compensation Board
to the Department of Labor. The rational noted in the summary states,
"This transfer will permit WCB to continue to carry out its current functions
while combining with DOL to improve its efficiency." The actual bill language
states, "Notwithstanding any provision of law to the contrary, the workers'
compensation board, as previously established pursuant to article 8 of
the workers' compensation law, shall be transferred to the department
of labor, however, such board shall continue to have and exercise all
functions, powers, duties, obligations and assets it had and exercised."
The Governor also proposed a "new workers' compensation disability benefits
program." This program offers businesses in SPUR communities a targeted
Workers' Compensation workplace safety program. The program also provides
fraud prevention efforts. The State Insurance Fund will provide SPUR businesses
access to Workers' Compensation experts and safety specialists. Custom
tailored safety action plans will be provided to these businesses in order
to reduce their cost.
Financial Services
Real Estate Investment Trust
Amends Articles 9-A, 32 and 33 of the Tax Law to disallow the
60 percent exclusion of dividends received from a Real Estate Investment
Trust subsidiary. The tax increase is effective for tax years beginning
1/1/05 and thereafter and is projected to increase Article 33 (Bank) taxes
by $50,000,000 in FY '05-'06.
Insurance
Licensing fees
Licensing fees for agents and brokers are doubled - from $20
to $40. The fee for a nonresident reinsurance broker and agent license
is increased from $100 to $500. These fee increases are proposed to take
effect on April 1, 2005.
Cooperative tax exemptions
Removes the tax exemption for certain insurance companies that
are currently exempt as county cooperative insurance corporations.
DMV data searches
Department of Motor Vehicle data search fees are increased from
$5 to $7 (electronic) and from $6 to $10 (manual).
Wrap-up Insurance
Authorizes the use of wrap-up insurance by state agencies, public
authorities and municipalities.
Occupational Safety & Health
The Governor's proposal calls for the elimination of the Hazard Abatement
Board. It also would add a compliance assistance component to the existing
Office of Safety and Health Training and Education Program.
