2000-2001 PROPOSED BUDGET SUMMARY

Staff Contact:

Prepared by the staff of The Business Council January 14, 2000

OVERVIEW
Construction
E-Commerce
Economic Development
Education and Job Training
Energy
Environmental Conservation
Health
Labor & Human Resources
Small Business
Taxation
Transportation

OVERVIEW

Governor Pataki announced Tuesday a proposed new state budget that would cut energy taxes on manufacturers retroactive to January 1, provide other new tax cuts, and restrain the growth of state debt.

The Governor emphasized the importance of limiting new debt in the coming year. His budget proposal includes steps to pay down some of the state's existing debt; to reduce the level of new borrowing from previously estimated levels; and to enact legal limits on future debt while restricting it to capital purposes.

Total spending would increase 4.3 percent under the Governor's budget, not counting the money the state will spend on the STAR school-tax refund program.

State-funded spending (total expenditures minus federal funds) would rise by 3.5 percent, again excluding the STAR program. Including the school-tax refunds, the overall budget would rise by 5.5 percent, and state-funds spending by 5.1 percent.

The Executive Budget's financial plan projects a year-end State surplus of $625 million for the fiscal year ending March 31, 2000. The Budget calls for all of this surplus to be earmarked for the following specific fiscal reserves: $75 million to the State's Tax Stabilization Reserve Fund (the "rainy day" fund) in 1999-2000; $250 million to the State's Debt Reduction Reserve Fund; and $300 million to help ensure that the newly proposed tax cuts included in the Executive Budget will be paid for and implemented as scheduled.

Following are the specific budget summaries by means of issue area.

TAXATION

Alcoholic Beverage Tax

Accelerate theSmall Brewers' Excise Tax Exemptionto 1/1/0 (from 4/1/1) the 1999-enacted doubling (from 100K barrels to 200K barrels) of the beer excise tax exemption. This would provide nearly one million dollars in tax savings.

Corporations and Utilities Taxes (Article 9)

Repeal the Section 186 Franchise Tax on Energy Utilities. [This is currently at 3/4 of one percent on the Gross Earnings (Receipts) and its repeal will shift these utilities to Article 9-A (income-based franchise tax).] No effective date is stated; however, January 1 of this year is a likely date since its adoption reduces projected revenues for FY 2001 from $196 million to $0 and energy companies are subjected to Article 9-A taxation for taxable years commencing after 12/31/99.
Phase down and eliminate over a six-year period the Section 186-a Gross Receipts Tax on the costs of energy. Industrial purchasers are exempted as of 1/1/0 — a credit is hinted to accommodate the retroactivity; $56.8 million is the tax savings projection for FY 2001 and $150 million is the savings projection when fully effective.
Eliminate the Section 189 Gas Importation Privilege Tax. No effective date is stated; however, April 1 of this year is the apparent date since its adoption reduces projected revenues for FY 2001 from $29 million to $0.

Corporation Franchise Tax (Article 9-A)

Switch energy utilities (i.e., those subject to Section 186 Franchise Tax on Energy Utilities — the 3/4 of 1% portion of the GRT) to taxation hereunder for taxable years commencing 1/1/0.
Upstate Urban Job Creation Tax Credit: Designed for cities outside the twelve MCTD counties, a credit @ $1,000 (if new jobs pay $8 and up per hour) or @ $500 (if new jobs pay under $8/hour) for each job over the initial 25 created by employers who either open new companies or expand existing businesses that create more than 25 new, full-time jobs maintained for a minimum of two years. The credit is good against a firm's franchise tax liability, that is, Articles 9, 9-A, 32, and 33, and takes effect on 1/1/2. It is estimated to provide twenty million dollars in annual tax relief.
Brownfield Clean-up Credit: Establish a tax credit effective 1/1/0 equal to the amount spent voluntarily to clean up brownfields. The credit would have an aggregate maximum of $40 million.
Green Buildings Tax Credit: Establish a credit effective 1/1/1 for building owners for the incremental cost of making a new or existing building meet higher environmental and health standards. A maximum of $25 million in tax savings could be realized over the life of the credit.
Small Business Tax Rate Reduction: Phase in a tax rate reduction to 6.85% effective in calendar tax year 2002 for corporations with under $200,000 net income. This should produce five million dollars in tax relief when fully effective.
Elimination of S Corporation Differential Tax: Phase in elimination of the entity-level tax on S corporations becoming effective for most companies in 2002 and providing $35 million in tax relief.
Upstate High Technology Enterprise Zones: High technology companies which locate or expand in the fifty counties of New York outside the Metropolitan Commuter Transportation District would be eligible for the following package of incentives:

Tax credit that rebates all energy GRT and GIPT payments (§§ 186, 186-a, and 189).
Large technology firms that increase their employment by ten percent above their current Statewide employment numbers would receive an enhanced Qualified Emerging Technology Tax Credit of $2,000 per new employee; smaller firms would double their existing credit to $2,000 per new employee.
New Research and Development Credit modeled on the Federal credit for research and development costs.
Refundable credit for interest paid on business investment loans for projects — making the cost of capital essentially interest-free for a one-year period.
When fully effective, this package would generate $80 million in tax savings.

Transportation Infrastructure Tax Credit: Taxpayers who invest in large transportation infrastructure projects, with values of at least $10 million, will receive a credit based on the increase in their payroll over a base amount. In addition, the corporation must add at least 1,000 new jobs Statewide. This new credit would be retroactive to 1/1/0.
Biotech Refundable Credit: Allow biotechnology corporations a partial refund of unused tax credits.

Metropolitan Commuter Transportation District Surcharge

The reduction of §§ 186, 186-a, and 189 taxation results in a $39 million tax savings upon application of the MCTD surcharge of 17%.

Petroleum Business Tax

Eliminate on 4/1/1 the minimum taxes on petroleum businesses ($25/month) and aviation fuel businesses ($2/month). This change has no discernible impact on tax revenues.

Sales and Use Tax

Simplify effective 3/1/1 the current farming exemption by uniformly exempting all farm-related purchases of property and services used in the daily operations of farms. This would provide twelve million dollars in State and local tax savings when fully effective, but none in FY 2001.
Internet Web Hosting Equipment Exemption: This new measure would exempt any equipment used in development of facilities used to support Internet web sites. This new credit would become effective on March 1, 2001 and would provide $9 million in tax savings when fully effective, but none in FY 2001.

Other

Real Property Taxation: Switches over a ten-year period energy companies to same basis as other commercial enterprises.
Rail Access Tax Initiative: Establish substantial real property tax reduction to rail companies that operate in upstate New York and, beginning in 2001, provide seven million dollars of annual State transition aid to localities for five years to help offset the real property tax reduction.
Expanded STAR Exemption for Farmers: Grant STAR eligibility to farmers whose primary residences are part of their incorporated farming businesses. The expansion would become effective in 2001 fiscal school years and would provide one million dollars in annual real property tax savings.
Job-Creating Tax Reduction Fund: Earmarks a $25 million pool of funds that would be used for new tax cuts designed to stimulate job growth and economic development across the State as to be determined by the Governor and Legislature.
Provide STAR benefits directly to non-senior citizen homeowners, "ensuring taxpayers are not shortchanged by school districts. This new measure ... would protect and simplify STAR savings by cutting out the middlemen — school districts — that have in many cases used STAR savings to mask increased spending and increased school property taxes. The Governor's plan would deter further erosion of STAR benefits by requiring the State to mail a STAR "Rebate Check" equal to the full amount of STAR tax savings directly to homeowners. In addition to having the State pass on STAR benefits directly to the homeowner, the Governor is also proposing two other reforms that would further strengthen the State's efforts to protect every homeowner's STAR benefits, including a cap on excessive school spending increases and proposals to better inform school voters."
Increase the maximum authorized 911 surcharge that counties may charge from 35¢/access line/month to $1/access line/month.

EDUCATION
Staff Contact:

Governor Pataki's Executive Budget contains Schools 2000, a comprehensive set of initiatives and reforms to empower parents, children, and families, create safe schools, ensure that all our children have qualified teachers, and insist that failing schools are held accountable.
With the past three years of record school aid increases education funding has increased by $2.2 billion or 22 percent. Total spending per pupil now exceeds $8,900 - the third highest in the nation.
Schools 2000 includes an additional $355 million increase for 2000-01 that would bring State support for public schools to $12.9 billion.
Consistent with the work of the Task Force on School Violence chaired by Lieutenant Governor Donohue, Schools 2000 includes initiatives to ensure children can learn in a safe, secure environment. These measures range from authorizing teachers to remove disruptive students from the classroom to a placing a new emphasis on character education in the K-12 curriculum.
Schools 2000 also includes a new $25 million "Teachers of Tomorrow" initiative which will include funding for 5,000 scholarships — modeled after the National Guard scholarship program — to attract 50,000 new teachers over the next decade into teaching in areas with shortages.
For the 2000-01 school year, building aid would increase by $210 million, or 23 percent, to a total of $1.1 billion.
Increased building aid will be accompanied by reforms in cluding a blanket exemption for all school districts from Wicks Law requirements.
Textbook aid increases by an additional $29 while computer hardware and software aid grows by $15.5 million.
The 2000-01 Executive Budget eliminates State support of the $67.5 million Teacher Support Aid program.

Governor Pataki's Schools 2000 agenda includes a number of reforms that include:

Providing Safe and Secure Schools

Each Board of Education would be required to establish a detailed student code of conduct including appropriate standards for student language, dress and behavior as well as procedures relating to discipline, detention, suspension and expulsion.
Each school district would be required to develop a school safety plan in consultation with law enforcement agencies that will include items such as crisis response and management, and building access and security.
Teachers would be given the authority to remove disruptive pupils from the classroom for up to 10 days.
A uniform, statewide incident reporting system would be created to provide a comprehensive database on violent crimes in public school districts, including corrective actions taken by the schools.
All prospective school employees and candidates seeking educational certification would be fingerprinted for purposes of obtaining a criminal background check.
Teachers and administrators would receive mandatory training in school violence prevention/intervention, and such training will be a prerequisite for the certification of prospective teachers.

Other issues

Access to DASNY: Allowing school districts access to the Dormitory Authority for construction management.
Alternative Certification: To increase the supply of teachers for identified shortage areas, alternative credentialing routes would be provided for those persons having appropriate life experience and education.

Meeting Higher Standards

A new higher standards "set-aside" would require low performing school districts to dedicate a portion of their operating aid to needed academic support services. This mandatory set-aside would be phased out as performance improves.
A $40 million "Reading for Results" initiative would fund a range of early grade reading initiatives beginning in the 2001-02 school year.
Funds now provided for Categorical Reading and Improving Pupil Performance would be redirected to support a Reading 2000 program that focuses on strengthening reading skills for children in grades 2-4 in the Big Five City schools.
Funding of $10 million, an increase of $5 million, is recommended for after-school programs that provide school-age children with opportunities to learn and play in a supervised setting during non-school hours.

Expanding School Choice

New York's first three charter schools opened in September, 1999.
In 2000-01, a number of additional charter schools will open across the State. The Charter Schools Institute (CSI) of the State University of New York has approved five more schools to open in September 2000 and additional schools will be authorized in the coming year.
The Governor is providing $6 million in State support for the Charter School Stimulus Fund including $3.85 million to help meet capital funding needs.

Pre-K

Expands State support for Pre-kindergarten programs from $85 million to $120 million in 2000-01.

Improved Accountability

Capping school district spending increases to ensure that savings from STAR are not eroded by excessive school spending.
Under the Governor's proposal, a school district's annual spending increase could not exceed 4 percent or 120 percent of the increase in the CPI for the prior year, whichever is less, without a two-thirds majority vote. (Spending increases attributable to enrollment growth, voter-approved capital projects, court orders and certain other purposes allowed for contingency budgets would be excluded from the increase limitations.)
School districts will be required to disclose the following additional information to voters, prior to school budget votes:

How tax increases affected STAR savings for a typical home in the prior year, and how a proposed budget would affect STAR savings in the coming year; and
How a proposed school budget compares to the maximum contingency budget that would be allowed should the proposed school budget be defeated.

The following legislative actions are recommended to provide an enhanced level of accountability of the Board of Regents and SED to the Executive:

Authorize the Governor to select the Chancellor of the Regents from among the members of the Board of Regents;
Authorize the Governor to review and approve the candidate nominated by the Regents as President of the University of the State of New York;
Authorize the Governor to nominate members of the Board of Regents from a list of candidates developed by a "blue ribbon panel" for submission to the Legislature for final approval; and
Curtail the State Board of Regents' powers to unilaterally impose costly regulatory mandates on school districts.

HIGHER EDUCATION

Nearly $6.7 billion in total funding is included for services and programs at public and private institutions of higher education.
The Governor's Executive Budget includes $2.7 billion for State University of New York (SUNY) and City University of New York (CUNY) operations in the coming year.
SUNY's operating budget of $1.7 billion.
CUNY's operating budget for senior colleges totals $1 billion.
The Executive Budget does not anticipate an increase in the undergraduate resident tuition rates of $3,400 at SUNY and $3,200 at CUNY.
The 2000-01 Executive Budget recommends $575 million for the Tuition Assistance Program and reflects continuation of the current award levels.

ECONOMIC DEVELOPMENT
Staff Contact: Ken Pokalsky

New Economic Development Initiative - The Executive Budget proposes a number of new tax credit, tax reduction and financing initiatives to promote economic development and job creation. These include:

Manufacturers would be exempt from the gross receipt tax on electricity purchases effective January 1, 2000. Overall, the GRT on utility and telecommunications services will be reduced from the current 3.25 percent to 2.5 percent in year one, and fully phased out over a six-year period.
The budget recommends an additional 200 megawatts of low cost power through the "Power for Jobs" program.
New businesses in designated "upstate high technology enterprise zones" would be eligible for research and development tax credits; credits for interest paid on investment loans; and would be eligible for the "Power for Jobs" program.
A $1,000 per job "upstate urban job creation tax credit," would be available for new or expanding businesses that create a minimum of 25 jobs.
A $25 million pool of funds would be used for new, as yet unspecified, tax cuts designed to stimulate job growth and economic development across the State. Program details would be developed through budget negotiations with the state legislature.
Up to $40 million per year in tax credits would be available for the voluntary cleanup and remediation of brownfield sites.
$10 million would be used to establish the Biotechnology Industry Growth Fund, which would provide small and start-up companies with capital to commercialize innovations.
$1.7 million for the Empire State Technology Employment Incentive Program, to help high tech companies attract graduates from the State's engineering, computer science and applied science programs.
$300,000 for the Cornell University Nanobiotechnology Center, for research and development of commercial applications for miniature biomedical devices.
$5 million for the joint State University of New York at Albany/ Rensselaer Polytechnic Institute Focus Center-New York semiconductor research program.
$5 million to support university-based technology transfer initiatives.
A "Green Buildings Tax Credit," to encourage the construction and rehabilitation of environmentally-sound buildings. To be eligible, buildings would have to meet new standards for energy efficiency, material content, building systems and other criteria. This program would become effective January 1, 2001; total tax credits are capped at $25 million over the life of the program.
A "Transportation Infrastructure Tax Credit," to encourage businesses to make investments in transportation infrastructure projects. To qualify, a company must invest at least $10 million and demonstrate that the project would result in the creation of more than 1,000 new jobs. The tax credit is equal to the cost of the company's investment. This new credit would become effective

The Executive Budget proposals regarding core economic development programs included:

$96 million for programs that provide financial assistance to businesses, municipalities, and not-for-profit organizations for projects that will create and retain jobs. This includes $42 million for the "Jobs Now" program and $37 million for the Empire State Development Fund.
$4.5 million to promote New York's improved business climate to attract out-of-state investment.
$3.1 million for the local administrative costs of the Economic Development Zones program, including $180,000 in additional funding to support six new Zones that will be designated in 2000-01.
$7.3 million for military base economic development re-use and retention initiatives.
$25 million annually for the Industrial Access Program, which promotes job creation and retention by encouraging business expansion through highway, rail and port projects.
$38 million to help local and state airports match new Federal aid that is anticipated from re-authorization of the Federal aviation program.

SMALL BUSINESS

Small Business Tax Rate Reduction: This measure would reduce taxes on small businesses by $5 million by lowering the corporate franchise tax rate imposed on small business from 7.5 percent to 6.85 percent. This tax cut would phase in as the Governor's corporate tax cut is implemented to assure that the State's small businesses continue to enjoy a tax advantage.
Elimination of S Corporation Differential Tax: S Corporation are allowed to pass through all of their income to investors, so that it is taxed only once as personal income. New York currently imposes an additional entity-level tax on S Corporations. This proposal would eliminate the separate S Corporation Differential Tax, thereby assuring that this income is taxed once. This new measure would become effective for most companies in 2002 and would provide $35 million in corporate tax relief to small and mid-sized businesses.
Farm Equipment Sales Tax Exemption: This proposal would simplify the current farming sales tax exemption by uniformly exempting all farm-related purchases from sales tax. This proposal would exempt all property and services used in the daily operations of farms across the State, including motor vehicles, electricity, natural gas, and other utility services. This new exemption would become effective March 1, 2001, and would provide $12 million in State and local sales tax savings.
Accelerated Small Brewers' Tax Exemption: This new proposal would accelerate the effective date of the exemption from the beer excise tax for small brewers that was included in the 1999-2000 State Budget. The 1999-2000 budget included a doubling of the exemption from the beer excise tax from 100,000 to 200,000 barrels, effective on April 1, 2001. This measure would accelerate the effective date to January 1, 2000, and provide nearly $1 million in tax savings to small brewers.
Expansion of the Earned Income Tax Credit (EITC): The EITC will be increased from 22.5 percent to 25 percent of the Federal credit, effective January 1, 2001.
Sales Tax Exemption for Clothing and Footwear: Clothing and footwear priced under $110 will be exempt from State sales tax, beginning March 1, 2000.

ENVIRONMENT

Refinancing of the State Superfund, with $138 million annually in funding - funded through a combination of General Fund resources, industry fees, and fines and cost recoveries - commencing in Fiscal 2002. The budget also calls for $12 million in tax credits for brownfield clean-up in Fiscal 2001- growing to $42 million when fully effective.

Comment - The Business Council strongly opposes the new hazardous waste program fee surcharges proposed by the Governor, which top off at $360,000 for generators of more than 10,000 TPY. All generators of greater than 1,000 TPY would be subject to surcharges of at least $85,000 per year. At the other end of the spectrum, small to mid-sized facilities (generators of 15 to 100 TPY) would be subject to increases of up to nineteen times their current assessments.

Brownfield tax credits would be available to non-responsible parties only, and would apply both to remediation and redevelopment costs. The Business Council is concerned with "recapture" provisions that are tied to remediation agreement reopeners.

Creation of a Hudson River Institute for Riverine and Estuarine Research and Education, with $1 million in the new budget for Institute development.
$222 million in new funding from the Clean Water/Clean Air Bond Act for priority projects to restore brownfields, ensure safe drinking water, clean up our air and water resources and support local landfill/recycling projects.

Comment - The brownfield funds provided by the CCA bond act are for municipally-owned sites, only.

$125 million in new funding from the EPF for important on-going environmental programs, such as land acquisition, the Hudson River Estuary Plan, the Hudson River Park project and infrastructure and stewardship projects at State parks and lands.
More than $260 million in new State and Federal funding for the Clean Water State Revolving Fund low-interest loan program to build and rehabilitate municipal sewage treatment and water pollution control facilities.
$40.5 million to support the State's efforts to control pollution from vehicles and industrial or stationary sources of air pollution.

Comment - This refers to the overall Division of Air budget. There is no proposal to increase Title V permit fees in the new budget. They will remain fixed at $45 per ton.

$34.5 million for the oil spill prevention and cleanup program.

Comment — Licence fees on major oil storage facilities were doubled as part of last year's budget, to $.08 per barrel. Oil Spill Fund expenditures in the proposed budget reflect these increased revenues.

$4.6 million to fund the New York City Watershed Agreement, a $3 million increase over 1999-00. Funds would be used for enforcement, water quality monitoring, technical assistance, establishing a master plan and zoning incentive program and grants to watershed communities.
$3.6 million to develop and operate a pesticides sales and use database.

Comment - This is an annual appropriation to finance the database created by the 1997 Pesticide Use and Reporting Act.

ENERGY

The Governor's plan includes phasing in the complete elimination of all gross receipts taxes on energy (GRT).
Also, the elimination of PBT Minimum Taxes: This new proposal would eliminate the minimum Petroleum Business Tax, thereby eliminating the filing burden on fuel companies and aviation businesses.
The Governor is also proposing an expansion of the "Power for Jobs" program by an additional 200 megawatts of low cost power to business in upstate New York.
Also, the Governor is proposing the phasing in (over a ten year period) a property tax structure for all energy corporations that is currently enjoyed by commercial enterprises.

TRANSPORTATION

The Executive Budget proposes a new, five-year transportation plan that includes $14.3 billion for Department of Transportation capital programs and more than $2.3 billion in support for the capital programs of transit systems throughout the State.

Highlights of the 5 year DOT capital plan include:

$8 billion for highway and bridge construction contracts, averaging $1.6 billion annually;
$1.29 billion for local capital programs, including the CHIPS and Marchiselli programs;
The CHIPS operating program would total $23.9 million for 2000-01, a $34.9 million reduction from 1999-00 that reflects elimination of CHIPS operating aid to counties and New York City. These jurisdictions would continue to receive their share of CHIPS capital aid which would total approximately $79.5 million for counties and $49.9 million for New York City in 2000-01. CHIPS operating and capital aid for towns, villages and other cities would remain at 1999-00 levels.
$80 million for a new rail freight and passenger program that would preserve and improve the State's rail system.
$125 million for the Industrial Access Program, which promotes job creation and retention by encouraging business expansion through highway, rail and port projects.
$38 million to help local and State airports match new Federal aid that is anticipated from re-authorization of the Federal aviation program.

The new five-year capital plan provides transportation with $2.34 billion to support transit capital programs. This State assistance would fund bus acquisitions, maintenance facilities, subway improvements and commuter rail enhancements. Specifically, the plan includes:

Nearly $2.2 billion in State support for the Metropolitan Transportation Authority's (MTA) capital program, including more than $800 million in newly dedicated State funding.
$146 million in State aid for the capital programs of other transit systems throughout the State. In addition, a portion of transit funding would be used to enhance operating aid for these systems.
$203 million for operating expenses of the Department of Motor Vehicles (DMV).

Also of note is the proposed;

Transportation Infrastructure Tax Credit: This new tax credit would encourage businesses to make investments in the transportation infrastructure across the State and promote the creation of thousands of new jobs. To qualify for the tax credit, a company must invest at least $10 million towards a transportation-related project and demonstrate that the project would result in the creation of more than 1,000 new jobs. In return, the company would receive a tax credit that is equal to the cost of the company's investment in a given transportation project. This new credit would become effective January 1, 2000.

CONSTRUCTION

Two areas of note in the Budget as they relate to construction are the Wicks Law as it applies to school districts and school district access to the Dormitory Authority for construction management.

The Governor is proposing granting access to DASNY for school districts in regards to expertise in construction management.
In addition, school districts will be granted a blanket exemption from existing Wicks law requirements.

Also, in relation to construction are;

Refinancing of the State Superfund, with $138 million annually in funding - provided equally through a combination of State support, industry fees, and fines and cost recoveries - commencing in 2001-02. The plan also calls for $12 million in tax credits for brownfield clean-up in 2000-01, growing to $42 million when fully effective.
Green Buildings Tax Credit: This new tax credit would encourage the construction and rehabilitation of environmentally-sound buildings by providing a credit for the development of "green buildings." This measure would promote improved environmental standards, increase energy efficiency, and create awareness of new technologies. This new credit would become effective January 1, 2001 and would provide up to $25 million in tax savings over the life of the program.

E-COMMERCE

The following are all new initiatives included in the Governor's Executive Budget.

Enhanced Qualification Emerging Technology Tax Credit (QETC). Large technology companies that increase their employment in the zone by 10 percent above their current statewide employment numbers would receive a new credit of $2,000 per new employee. Smaller companies would see a doubling of their existing credit to $2,000 per new employee.
New Research and Development Credit. Qualified companies would receive a credit modeled on the current Federal credit for Research and Development costs.
Interest-free Investments. New high-technology companies would receive a refundable credit for all interest paid on business investment loans for projects in the zone, making the cost of capital in the zone for these firms essentially interest-free.
Web Hosting Equipment Sales Tax Exemption: This new measure will exempt from sales tax any equipment used to construct and develop facilities used to support Internet web sites. This new credit becomes effective on March 1, 2001 and will provide $9 million in tax savings.
The Biotechnology Industry Growth Fund: Biotechnology will be a top industry sector in the future - generating billions of dollars in investments and hundreds of thousands of jobs world-wide. The Governor's new $10 million Biotechnology Industry Growth Fund will provide start-up companies with a source of needed capital with which to commercialize innovations that emerge from a laboratory - turning ideas into high wage jobs.
The Investment Tax Credit (ITC) Program: In conjunction with the Biotechnology Industry Growth Fund, this initiative will enable biotechnology companies to take greater advantage of the ITC - fostering the growth of these companies and stimulating job creation.
The Empire State Technology Employment Incentive Program: New York's high tech companies need highly educated employees. In order to encourage graduates of the State's leading engineering, computer science, and applied science programs to make their careers in New York, this powerful new recruitment tool will enable employers in targeted industries to offer prospective employers cash incentives worth $3,400 annually for four years.

LABOR & HUMAN RESOURCES
Staff Contact: Tom Minnick

For the Department of Labor, the All Funds appropriation recommendation is down $37 million from 1999 to $$3, 521,668,000 from $3, 558,644,700. This breaks out to State Operations appropriations up by $168 million while Aid To Localities is down by $205 million. Employment in the Agency remains stable at just under 4600 with 2 positions added at the Employment Relations Board.
Major activities at the Agency include the continued establishment of telephone claims centers to process unemployment insurance claims. Currently, three centers operate in Troy, Endicott and New York City. Additional centers in New York City and a location not yet determined will be opened by late summer. Some Community Service Centers around the state have closed as these new telephone centers have opened.
With the federal Workforce Investment Act (WIA) replacing the Job Training Partnership Act (JTPA) on July 1, 2000, the Agency has been working on establishing the new state and local Workforce Investment Boards and continuing to assist with the expansion of local One-Stop Employment Centers that offer a wide variety of employment services to those seeking employment opportunities.
The Division of Human Rights has a recommended increase in appropriations of $1, 428,000 to $14, 186,000 for 2000. Processing both new and backlog cases, and funding to upgrade the Division's information technology systems remain a priority of the Division. The increased funding will also be used to preserve necessary staff threatened by reductions in federal funding. Staffing levels remain stable with one position being added to the Division's Administration. The new staff complement will be 191 employees.
The Office of Advocate for Persons with Disabilities will see a $120,000 reduction in federal grants but will maintain all core services. The All Funds appropriation will fall to $1,577,000 from $1, 712,000. Staff levels will also fall by one to 20 employees.

HEALTH
Staff Contact: Mark Amodeo

Existing Medicaid cost-containment provisions will be maintained in the 2000-2001 fiscal year and new statutory caps on spending growth negotiated as a part of HCRA 2000 will be implemented.
State and local shares of Medicaid will increase by 3.4 percent during fiscal year 2000-2001. The General Fund increase in hospitals and long-term care — will rise by 1.2 percent during the next fiscal year.

In addition, the 2000-01 Executive Budget provides:

$550 million in Federal and State funding to support the Child Health Plus program. This State-subsidized health insurance program serves 400,000 children. Beginning in July 2000, Child Health Plus income eligibility would increase to 250 percent of the Federal Poverty Level, making thousands of additional children eligible for health insurance benefits.
$42.5 million from HCRA 2000 funds in 2000-01 for a new Statewide Anti-Smoking initiative.
$6.5 million in new revenues from a public and private water system fee to support and expand State and local drinking water testing and monitoring.
$5 million in new funding to expand the State's screening program for newborn babies.
$5 million to continue the operations of poison control centers, financed with HCRA 2000 funds.
$3.3 million in funds to continue key Governor's initiatives — $550,000 to support efforts to prevent diabetes and help children with diabetes control their disease, and $200,000 to supplement projects to provide asthmatic children with care.
$3 million to continue the cancer mapping project financed from HCRA 2000 funds.
$2.5 million in new funds to prevent the potential spread of the West Nile virus.

January14, 2000