Government Affairs Albany Update
March 12, 2010
Lt. Governor Richard Ravitch released a five year plan to address the state’s structural imbalance. The press release is available here; the full report is available here. Its key features include $6 billion in new, short term, PIT-backed borrowing over the next three years; creation of as state Financial
Control Board; new gubernatorial authority to take action to make mid-year budget adjustments; a shift to GAAP accounting and a shift in start of the state’s fiscal year to July 1. The Business Council’s analysis of the Ravitch plan is available here. Our concerns include its lack of specific recommendations on necessary spending cuts – including in big ticket programs like Medicaid and school aid - that would be necessary to close the current and out year budget gaps.
State Comptroller Thomas DiNapoli also released a statement in response to the Ravitch proposal, questioning the use of additional state debt. The Comptroller, who released his own fiscal reform package this week, provided the following “Quick Facts on New York’s Debt”:
- New York’s $3,089 in debt per person is more than three times the national average.
- Over the past five years, State-Funded debt grew by 24.6 percent, increasing from $48.5 billion in SFY 2005-06 to $60.4 billion if SFY 2009-10.
- Debt service is one of the fastest growing categories of state spending and will increase to $7.7 billion by SFY 2014-15, an increase of $1.9 billion, or 31.9 percent, compared to SFY 2009-10 spending.
- Although the state enacted legislation in 2000 to end borrowing for inappropriate fiscal gimmicks and cap debt, $17 billion in State-funded debt has been authorized since 2000 that is excluded from the cap - $7.6 billion was issued for deficit financing or budget relief.
- Backdoor borrowing by public authorities accounts for 94 percent of the state’s current debt burden compared to only 60 percent in 1985. Currently, New York owes $57 billion for debt issued on behalf of the state by public authorities.
The Business Council is opposing S.2245 (Onorato), which is on next week’s Senate Labor Committee agenda. This bill would:
- Increase the maximum weekly unemployment benefit rate in each of the next three years to a maximum of $625 in 2013.
- Increase the taxable wage base from a current level of $8,500 to a maximum level of $13,000 in 2013.
- Starting in 2014, index the taxable wage base and the maximum weekly benefit to increases in the state average weekly wage.
Our memo in opposition is available here. If enacted, this bill would increase employer taxes for unemployment insurance by 14.7% in the first year. In 2008, New York State employers paid $2.3 billion in unemployment insurance taxes. While we acknowledge that UI benefit levels have not increased since 1998, the Business Council believes the solvency issues must be negotiated first to ensure any negotiated benefit rate increase can be sustained without prolonging insolvency issues and that any solutions are equitable in their outcome.
Business Council staff contact: Lev Ginsburg
The Business Council is opposing legislation (S.6236/A.9439), which would impose a fifty-percent franchise tax on corporate-owned life insurance benefits. The bill is on the Senate Investigations/Governmental Operations Committee agenda for next Tuesday. Enactment of this bill, proposed primarily as a state revenue-raiser, would threaten the long-term financial security of small and large companies, which purchase life insurance to compensate against loss of an owner or key employee, as well as, short-term and long-term obligations.