SUMMARY OF THE GOVERNOR'S PROPOSED
by the staff of The Business Council
January 31, 2003
Governor's 2003-04 budget preserves enacted tax cuts, keeps spending flat; some other taxes would rise
Governor Pataki proposed a 2003-04 budget that would go forward with $177 million in already enacted tax cuts, raise taxes on life, property and casualty insurers and health insurance, and leave overall spending essentially the same as this year's.
Overall spending, including federal aid to support recovery in downtown Manhattan, would drop by 0.1 percent to $90.8 billion, according to the Budget Division. The state-funds portion of the budget-including state taxes, fees, tuition and other non-federal revenue-would be reduced by a similar proportion. Including expenditures moved off-budget, overall spending would rise modestly.
Governor Pataki said the slowdown in the state's economy caused by the September 2001 terrorist attacks and the national recession created a budget shortfall of $11.5 billion for the current fiscal year and the 2003-04 year, which starts April 1. This fiscal year will end with state-funded spending having risen by an estimated 3.5 percent over the previous year.
Half of the projected shortfall for the coming fiscal year would result from a $4.6 billion increase in "baseline" spending largely caused by existing formulas for Medicaid, school aid, and other programs. The remainder stems from revenue losses due to the slow economy, and the absence of reserves used to balance the current budget.
The Governor proposed to balance the budget with a combination of spending reductions in selected programs, reduced levels of increases for others, targeted tax and fee increases, movement of some expenditures off-budget, and one-time revenues.
State aid to K-12 education would be reduced by $567 million, or 4 percent. The Budget Division said school spending in New York was the highest in the nation in fiscal 2002 at $11,400 per student, 44 percent above the national average. Spending on state agencies' operations would be reduced by $176 million, including a reduction of the state workforce by 5,000 positions.
The budget proposes to reduce projected spending increases on Medicaid and other health-care programs by $1 billion. Total expenditures on those programs would still rise, though-by $515 million, or 2 percent, for Medicaid and $225 million, or 28 percent, for Child Health Plus.
The budget proposes to securitize the state's share of the tobacco settlement raising $2.3 billion.
Following are the specific budget summaries by issue area.
- Economic Development
- Labor and Human Resources
- Research & Development
- Small Business
- Workers' Comp
Scheduled Tax Cuts
- The proposed Executive Budget implements tax cuts enacted in previous years and scheduled to take effect in 2003-04. The Budget Division estimates the value of those tax reductions at $177 million. They include continued reduction in energy taxes for commercial, residential and nonprofit utility customers; a reduction in the small-business tax rate; expansion of the earned income tax credit for working, low-income New Yorkers; and increase in the deduction/credit for college tuition; and reduction of the "marriage penalty."
New Tax/Fee Increases/Changes/Continued Tax Reductions
Governor Pataki's Executive Budget proposes to:
- Remove the expiration date (taxable years beginning on or after 1/1/3) on Article 32 -- Bank Tax.
- Extend for one additional year for taxable years beginning before 1/1/4 the taxable status existing before the Federal Gramm-Leach-Bliley Act.
- Abolish the net income portion of Article 33 -- Insurance Tax and raise the premiums tax rate to 2% from 0.7% (life, accident, and health), 1% (accident and health), and 1.3% (property and casualty). The Budget Division said the change would raise insurance companies New York tax by more than $160 million or 23 percent a year.
- Repeal both the State and the Metropolitan Commuter Transportation District (MCTD) retaliatory tax credit for tybooa 1/1/3.
- Reimpose the State Sales and Use Tax on clothing costing under $110.
- Institute four one-week sales tax holidays (January/April/July/August-September) from the State's 4% sales tax on clothing costing under $500. Note: this and the preceding change are expected to raise Sales tax collections by $363.4 million in FY 2004 and by $418.9 million in FY 2005.
- Revoke the exemptions adopted by counties of clothing costing under $110 from local sales tax.
- Authorize counties to adopt four one-week sales tax holidays (matching the State's) on clothing costing under $500.
- Double the filing fees for limited liability companies and limited liability partnerships to $100 per member of the company or partnership and increase the minimum fee by 54% to $500 and the maximum fee by 150% to $25,000. Note: this change is expected to raise Personal Income taxes by $25 million in FY 2004.
- Impose an excise tax on new tires of $2.25 per tire. Note: this tax is expected to raise taxes by $22.5 million in FY 2004 and by $45 million annually thereafter.
- Split in half the cost of the Empire Zone Real Property Tax Credit between the State and municipalities housing the Empire Zone for new investments made on or after 1/1/4.
- Create an Unemployment Compensation Tax surcharge on employers averaging some $1.80 per employee effective 4/1/3. Note: this new tax is expected to raise UC taxes by $22 million in FY 2004 and by greater amounts in future fiscal years.
- Decouple (except for farmers) Personal Income Tax from Federal law for the Internal Revenue Code section 179 expensing option for motor vehicles over three tons. Note: this change is expected to raise $1 million in FY 2005 and by $2 million annually thereafter.
- Require payments of estimated tax by partnerships, limited liability companies, and S corporations on behalf on non-resident individual partners, members, or shareholders and on behalf of all partners, members, or shareholders that are C corporations. Note: this change is expected to raise $15 million in FY 2004 and by $25 million annually thereafter.
- Establish a fourth certified capital company (CAPCO) program to encourage investments in high technology companies through research centers that are State-supported through a) the Center of Excellence Program, b) the Gen*NY*sis program, c) the Centers for Advanced Technology Program, d) the Capital Facilities Program, or e) the Rebuilding the Empire State Through Opportunities in Regional Economies (RESTORE).
- Qualify any subsidiary of the New York Urban Development Corporation as a certified capital company.
- Double the annual lobbyist registration fee to $100. Note: this change is expected to raise fee collections by $200 thousand in FY 2004.
- Increase the annual nuclear generating facility operator fee from $550 thousand per reactor to $950 thousand per reactor. Note: this change is expected to raise collections by $2.4 million in FY 2004.
- Double the Real Property Transfer Fee to $50. Note: this change is expected to raise fee collections by $9.6 million in FY 2004.
- Reduce the dormancy period of uncashed checks from three years to one year to escheat these funds to the State two years earlier. Note: this change is expected to raise funds by $38 million in FY 2004.
- Caps STAR benefits for non-senior homeowners at their 2002-2003 levels.
Governor Pataki also chose to continue implementation of the following tax reductions that were previously enacted:
- Reduce the Alcoholic Beverage Tax rate on 0.5% + beer from 12.5 cents per gallon to 11 cents per gallon effective 9/1/3.
- Reduce the Gross Receipts Tax rate on the commodity portion of gas, electricity, and steam from 0.85% to 0.4% effective 1/1/4.
- Reduce the Gross Receipts Tax rate on the transmission and distribution portion of gas, electricity, and steam for non-residential customers from 1.125% to 0.53125% effective 1/1/4.
- Reduce the Gross Receipts Tax rate on the transmission and distribution portion of gas, electricity, and steam for residential customers from 2.25% to 2.125% effective 1/1/4.
- Reduce the Gas Importation Privilege Tax rate on out-of-State purchases of gas and electricity from 0.85% to 0.4% effective 1/1/4.
- Reduce the Corporation Franchise Tax differential tax rate imposed on S corporations by 45 percent effective 7/1/3.
- Reduce the Corporation Franchise Tax rate on firms with net income under $200 thousand to 6.85% effective 7/1/3.
- Reduction of the Sales and Use Tax rate on the transmission and distribution of gas and electricity from 1% to 0% effective 9/1/3.
- Proposes an overall reduction in school aid of $1.24 billion consisting in part of:
- $407 million in operating aid (4%)
- $l44 million reduction in building aid
- $15 million enrollment based decline in Growth Aid
- Eliminates separate grants for Universal Pre-Kindergarten and Class size reduction and discretionary grant programs
- Also proposes to consolidate nine aid programs into the new consolidated operating aid:
- Comprehensive Operating Aid
- Extraordinary Needs Aid
- Operating Standards Aid
- Gifted and Talented Aid
- Educationally Related Support Services Aid
- Limited English Proficiency Aid
- Summer School Aid
- Academic Support Aid
- Public Excess Cost Aid (special education program aid)
- Proposes to eliminate BOCES aid for routine administrative services.
- Proposes to consolidate BOCES aid into operating aid.
- Proposes to replace the current building aid program with a priority based system. Projects approved by the State Education Department after February 1, 2003 would be selected for funding based on certain priorities such as alleviating health and safety problems or relieving severe overcrowding. Also proposes to simplify the manner in which state aid is calculated for projects approved by voters after July 1, 2003.
- Proposes to restructure the State Education department by transferring Cultural Education Programs to a new New York Institute for Cultural Education, moving Vocational Rehabilitation to the Department of Labor and moving the Office of the Professions to the Department of State.
- Also proposes to increase the number of Regents from 16 to 18 with 12 being appointed by the Governor 6 by the legislative leaders.
- Proposes that SUNY be allowed to increase tuition by $1200 from $3,400 to S4,600, and to have more flexibility over tuition increases in subsequent years.
- Proposes $183.5 million in cuts to SUNY campuses and $81.7 million to CUNY senior colleges.
- Proposes to reduce community college funding for SUNY and CUNY by 15 % or by $345 per student. Proposes deferment of one-third of tuition assistance grants until a student graduates. Students would lose the funding if they take longer than four years to graduate.
- A $58 million transfer from NYPA to the General Fund to provide continued funding for the "Power for Jobs" program.
- A requirement that municipalities provide 50 percent of the Empire Zone program's real property tax refund to eligible taxpayers that are certified after January 1, 2004.
- $125 million in additional "certified capital company," or CAPCO, tax credits, which would leverage up to $250 million in new venture capital for small and emerging businesses related to state-supported research facilities.
- $75.4 million for ESD's economic development programs, including $32 million for the "Jobs Now" program and $32 million for the Empire State Development Fund.
- Permanent extension of the general loan powers of the New York State Urban Development Corporation. Its current authority expires on July 1, 2003.
- Additional appropriations from the "Empire Opportunity Fund" for R&D facilities, transportation improvements and other infrastructure projects.
- Creation of new "Centers of Excellence," to be located in Westchester County and New York City, focusing on biotechnology.
- $5 million for the "Security through Advanced Research and Technology" program to assist universities to leverage Federal and private high tech research funding.
- $5 million for the SUNY Albany/RPI semiconductor research program.
- Increase in a number of fees including those for real estate and security broker fees in the Department of law.
- Increases fees for Limited Liability Company.
- Superfund/brownfield "reform" provisions that closely resembles the Executive/Senate compromise bill from last session (see S.7686-A from the 2002 session). Key components include: a $138 million annual budget, including superfund, oil spill and brownfield cleanups; $18 million in hazardous waste surcharges; increases in petroleum tank registration fees; post-cleanup liability reform; and use-based cleanups and economic incentives for brownfield sites.
- A 25 percent increase in wastewater permit (SPDES) program fees. Fees for industrial facilities, currently between $375 to $37,500, will increase to between $475 and $47,000 based on a total daily average of gallons discharged. The flat fee for power plants will increase from $40,000 to $50,000. These fees were first enacted in 1983 and last increased in 1989. The aggregate impact is just $1.5 million.
- A decrease in the DEC's general fund operations budget from $106 million to $100 million, largely due to a reduction in staff (through attrition or a shift in funding sources, e.g., to the Environmental Protection Fund). The DEC's capital budget, largely supported by bonds, revolving loan funds and federal dollars, would increase by $116 million, to $653 million.
- Expand the purposes for which the Environmental Protection Fund (EPF) may be used to include, among other things, assessment of natural resource damages in the Hudson River and for beneficial end-use projects at closed municipal landfills and for municipal landfill gas management projects at active landfills. The EPF, which receives most of its funds from the Real Estate Transfer Tax, would receive $125 million in new funding.
- $22 million in new fees on vehicle tires, to fund waste tire and tire dump management programs.
- $750,000 in increased fees for underground and surface mining permits. Current fees range from $1,200 to $2,000; increased fees would run from $1,500 to $4,000.
- A doubling of "depth fees," on oil and gas wells, with a statewide impact of $200,000.
Increase fees paid by operators of the six nuclear power reactors
- The Governor is proposing adjusting the fees paid by nuclear electric generating facility operators to support local and State Radiological Emergency Preparedness activities. Paragraph (b) of subdivision 2 of section 29-c of the Executive Law is amended to change the annual fee per nuclear reactor from $550,000 to $950,000. The new revenue will be divided among the State and certain localities pursuant to an existing statutory formula. In 1981, a fee of $250,000 per reactor was set. It was increased to $550,000 in 1994. The fee increase provides a total of $2.4 million in new revenue. Per statutory formula, half of this revenue, or $1.2 million, is provided to the State Emergency Management Office (SEMO) for training and radiological emergency preparedness activities, offsetting costs that would otherwise be supported by the General Fund. The other half of the revenue is divided among specified counties in accordance with the statutory formula (seven counties within a 10-mile radius of a nuclear facility Westchester, Rockland, Oswego, Wayne, Monroe, Orange and Putnam) to support radiological emergency preparedness activities
Re-authorize the New York Power Authority to make voluntary contributions to the General Fund to fully support the Power for Jobs program in calendar year 2003
- The Governor is proposing changing the funding formula for the "Power for Jobs" program. The proposed changes will not effect the operation of the program at all (i.e recipients, allocation levels, etc). Under the proposal NYPA is to make a payment to the General Fund equal to 100 percent of the gross receipts tax (GRT) credit provided to businesses relating to the Power for Jobs program for SFY 2003-04. It also adds phase five of the program under which an additional 183 megawatts of power, added by Chapter 226 of the Laws of 2002, becomes eligible for inclusion in the voluntary contribution by NYPA.
- NYPA currently is authorized to make a voluntary contribution to the General Fund equal to 50 percent of the GRT credit available each year to all local electric distribution companies relating to phase four of the program up to a cap of $125 million. Chapter 85 of the Laws of 2002 increased NYPA's voluntary contribution limit from 50 percent to 100 percent for SFY 2002-03 only.
- A similar bill was enacted in 2002 that provided for a 100 percent contribution to the General Fund in SFY 2002-03.
- Without this bill, NYPA will only be authorized to make a contribution of 50 percent of the GRT credit relating to Power for Jobs in 2003-04, estimated at $35 million. NYPA intends to make a $58 million contribution to the General Fund, well in excess of the 50 percent limit. This bill provides the authorization to make this contribution while maintaining the $125 million statutory limit.
Authorize certain State agencies to finance their activities with revenues from assessments on public utilities and cable companies
- Provides authorization to certain State agencies to finance their
activities with revenues generated from assessments on public utilities
and cable television companies. Authorizes certain expenditures of
the Department of Health as eligible expenses for cable television
assessment revenue and authorizes certain expenditures for the departments
of Agriculture and Markets, Economic Development, and Environmental
Conservation, the Office of Parks, Recreation and Historical Preservation,
the Consumer Protection Board and the Office of Public Security as
eligible expenses for utility assessment revenue.
Authorize New York State Energy Research and Development Authority to make payments to the General Fund from various sources.
- Authorizes the New York State Energy Research and Development Authority (NYSERDA) to make payments to the General Fund and the environmental conservation special revenue fund.
- Authorizes NYSERDA to make a payment to the General Fund of $1.8 million from interest earnings from the low-level radioactive waste account; payments of $330,000 to the Department of Environmental Conservation's environmental conservation special revenue fund, low-level radioactive waste account from funds rebated to New York from the Federal government and; $913,000 payment to the General Fund from unrestricted corporate funds.
Authorize assessments on utilities to be used for New York State Energy Research and Development Authority research costs
- Provides annual authorization for the New York State Energy Research and Development Authority (NYSERDA) to obtain revenue for certain programs through assessments on gas corporations and electric corporations, pursuant to section 18-a of the Public Service Law.
Increase oil and gas depth fees
- Increases by over 50 percent oil, gas and solution mining depth permit fees established in the Environmental Conservation Law (ECL) Article 23, Title 19. These fees have not been changed in over 20 years, since they were established in 1981. By increasing permit fees, the regulated oil and gas industry will pay a greater portion of the cost of regulation.
Extend the authorization for the State to recover from the industry the cost of appraising oil and natural gas wells for local property taxation purposes
- Authorizes State recovery of costs associated with the appraising of oil and natural gas wells for local property taxation by continuing charge backs on their owners. Local governments have benefited from these services requiring specialized data and methods. Worth $40,000 annually.
Additional License Plate fees for Motor Vehicles
- The cost of license plates will increase in 2003 from $5.50 to $15.00 a pair for standard Empire license plates and from $2.75 to $7.50 a pair for motorcycle plates. Fiscal impact is approximately $21.7 million.
Divisible Load Permits Included in Budget
- The Governor has included in his budget a proposal to add more divisible load permits. This has been a top priority for The Business Council's Transportation Committee and is a key issue for the trucking, shipping, dairy/farming, forest product, petroleum and construction industries. The shipping, trucking and construction industries have created greater demand for overweight truck permits than the current statutory limit of 17,000 permits. This bill increases the annual divisible load permit authorization to 21,000 effective immediately, with graduated increases up to 25,000 beginning January 1, 2005 through January 1, 2008. Also, the bill amends subdivision 15 of section 385 of the Vehicle and Traffic Law to add a new permit fee for seven axle vehicles; increases the number of annual divisible load permits authorized by the Department of Transportation; requires new safety equipment and axle configurations; and modifies restrictions on crossing weight-posted bridges. Enactment of this legislation equates to $2.25 million of revenues associated with increased permit issuances and fine levels.
Require Hazardous Material license holders to undergo a criminal history background check
- This bill requires all applicants for a hazardous materials driver's license to submit their fingerprints for a criminal history records check. The applicant would submit fingerprints and the required State and Federal fees to the Department of Motor Vehicles (DMV), which would then transmit the fingerprints and fees to the Division of Criminal Justice Services (DCJS). DCJS and the Federal Bureau of Investigation (FBI) would return any criminal history record to DMV. DMV would review the criminal history record for a conviction of any felony or terrorism related offense and determine whether the applicant should be granted the hazardous materials endorsement. Section 501 of the Vehicle and Traffic Law requires an additional endorsement for a driver to transport hazardous materials. The Department of Motor Vehicles sets forth regulations regarding the requirements for obtaining this endorsement. Fiscal impact is annual revenue of $2 million.
Increase various mandatory surcharges on Penal Law and Vehicle and Traffic Law offenses
- Amends sections of the Penal and Vehicle and Traffic laws to increase fees and surcharges levied on offenders. Specifically, the bill increases the existing crime victim assistance fee on felonies, misdemeanors, and Penal Law violations from $10 to $20. The bill enacts a crime victim assistance fee of five dollars on all Vehicle and Traffic Law violations and infractions. Additionally, the mandatory surcharge, ranging from $20 to $200 and assessed based on conviction type, is increased by approximately 35 percent. The surcharge and fee cap provided for offenders convicted of one or more traffic violations or infractions arising from the same offense is increased from $50 to $100. Projected revenue increase of $8 million in 2003-04 and $16 million annually thereafter.
Provide the annual authorization for CHIPs and Marchiselli local transportation programs
- Authorizes the 2003-04 CHIPS and Marchiselli local capital highway assistance programs. The authorization continues capital funding for $23.9 million of CHIPS aid that was shifted from operating aid to capital aid in 2002-03. This bill authorizes funding for the CHIPS and Marchiselli capital aid programs to counties, cities, towns and villages for State Fiscal Year 2003-04. The current five-year authorization levels for CHIPS and Marchiselli were first set by schedule in the 2000-01 Enacted Budget as part of the State's then-new transportation plan. The schedule was amended in 2002-03 to reflect the shift of $23.9 million of operating aid to capital aid. This bill provides capital program funding authorization for State Fiscal Year 2003-04 and amends the five-year schedule to continue the operating-to-capital shift for 2003-04. Annual authorizations for CHIPS and Marchiselli spending are made each year since the State Highway Law requires annual authorization of both the CHIPS and Marchiselli funding levels.
State vehicular blood alcohol standards to meet Federal requirements
- Accelerates the effective date of the State's new standard for driving while intoxicated (DWI), from November 1, 2003 to July 1, 2003. This effective date change is necessary for the State to avoid Federal highway aid penalties in Federal Fiscal Year (FFY) 2004 and to qualify for a Federal aid incentive award in FFY 2003. Chapter 3 of the Laws of 2002 reduced the State's standard for driving while intoxicated (DWI) from a 0.10 blood alcohol content (BAC) limit to a tougher 0.08 BAC limit.
Extend and conform the State motor vehicle drug penalty standards to Federal requirements
- Permanently extends provisions to suspend drivers' licenses for certain drug-related convictions and repeals the accompanying Division of Criminal Justice reporting requirement. These provisions will conform State law to Federal standards, thereby averting sanctions which would reduce the State's Federal highway aid.
- This bill permanently extends provisions in Chapter 533 of the Laws of 1993, which requires the denial or loss of driving privileges for a period of six months upon an individual's conviction or adjudication for any drug-related criminal offense defined in Articles 220 or 221 of the Penal Law; any violation of Section 1192(4) of the Vehicle and Traffic Law; any violation of the Federal Controlled Substances Act; or any out-of-state or Federal drug-related criminal offense. In addition, the bill repeals Section 28 of Part E of Chapter 58 of the Laws of 1998, requiring the Division of Criminal Justice Services to prepare a report on implementation procedures.
- The license suspension provisions enacted in Chapter 533 have annually been extended since 1994 and a 1-year extension of these provisions will expire October 1, 2003.
Increase various Motor Vehicle fees and authorize that these fees and a percentage of the transportation and transmission tax be deposited in the Dedicated Highway and Bridge Trust Fund
- This bill increases several motor vehicle fees (data search fee, emissions inspection fee, certificate of sale fee, and title application fee) to increase General Fund and Clean Air Mobile Source account revenues. The bill also transfers a portion of Department of Motor Vehicles' (DMV) generated revenues beginning in 2003-04, and part of the transportation and transmission tax beginning in 2004-05, to the Dedicated Highway and Bridge Trust Fund. This redirection of revenues is necessary to maintain an adequate revenue-to-debt-service coverage ratio necessary to sell bonds for the Department of Transportation's (DOT) highway program.
- These fee increases will generate an additional $18.8 million in General Fund revenues and $8 million for the Clean Air Mobile Source Account SRO in 2003-04, and in 2004-05 will generate $37.7 million for the Dedicated Highway Fund and $16 million to Clean Air Mobile Source thereafter on a recurring basis.
Establish the Waste Tire Management Recycling Act
- The bill amends section 27-0703 of the Environmental Conservation Law (ECL) to require the owner or operator of a facility that stores 1,000 or more tires to provide financial assurance to cover the cost of closure of the facility at its maximum capacity in a form and amount acceptable to the Department of Environmental Conservation, before the Department may issue a permit to operate the facility. Among other requirements this would provide that tire retailers collect a tire management and recycling fee of $2.50 for each new tire purchased by a consumer. The retailer would be allowed to retain 25 cents per tire, with the remaining $2.25 to be forwarded to the Department of Taxation and Finance along with a quarterly report.
- Waste Tire Management and Recycling fee would generate approximately $22.5 million in General Fund revenues, $2.5 million of which would be transferred to the Environmental Conservation Special Revenue Fund, waste tire management and recycling account.
Wicks law repeal and mandate relief initiatives for localities in Budget
Within the budget the Governor is proposing local government flexibility and removing long-standing, State-imposed impediments to efficient government operation. According to budget memos the Governor is proposing a myriad of changes to existing law including:
- Repealing multiple bidding requirements for the State, municipalities, school districts and public authorities (Wicks Law) to allow for more flexible and cost-effective public construction contracting methods.
- Arbitration panels to consider, above all other factors, the financial ability of a local government to pay an award without increased taxation, or in the case of the State, without increased taxation or contributing to a budget deficit in the current or a future fiscal year.
- Amending the prevailing wage requirements of the State Labor Law to allow construction wages paid on State and municipal projects to more closely reflect the true cost of labor in a locality.
- Fostering cost-effective local governmental cooperation and consolidation by: authorizing inter-municipal agreements for the joint provision of services and the sharing of real property taxes; establishing a statutory process to guide officials when consolidating local governments; and maintaining unrestricted local aid at 2002-03 levels and permitting localities that merge to keep 100 percent of their combined aid.
- Bringing greater parity to the process under which legal claims against a public entity are resolved by: allowing judgment awards against local governments and the State to be offset by both past and future compensation from all collateral sources, i.e. insurance, social security and workers' compensation, as they are in the private sector; establishing a reasonable market-based method of calculating interest in court judgments similar to the method used in judgments involving the Federal government; and conferring exclusive jurisdiction to the Court of Claims for certain local government matters.
- Authorizing local governments to take advantage of electronic bidding and purchasing tools, and provide New York City schools with greater procurement flexibility.
- Setting effective dates including the implementation of changes to binding arbitration and the expanded investment options.
- A $98 million Internal Service Fund appropriation for operation of the consolidated State Data Center. This fund will support positions previously transferred from State agencies, the cost of operating the Center's computers and providing the computing services authorized by agencies.
- A $111.8 million Internal Service Fund appropriation for the New York Intranet (NYeNet) - a high-speed communications network system supported by fees charged to State and local users - and for the operation of the State's telephone system.
- A $1.6 million Internal Service Fund appropriation to coordinate the development of computer systems that will be used by various agencies and statewide enterprise agreements.
- The Executive Budget also transfers the Cyber Security and Critical Infrastructure Coordination Division from OFT to the Office of Public Security in order to centralize oversight of the State's security functions.
- The Labor Department, with almost 90% of its workforce financed by federal grants, will grow due to vocational rehabilitation services for disabled persons being transferred to the responsibility of DOL. Specifically, components of the Commission for the Blind and Visually Handicapped (CBVH) will be transferred from the Office of Children and Family Services to better coordinate CBVH programs with existing DOL employment services. Also, the Vocational and Educational Services for Individuals with Disabilities (VESID), now part of the state Education Department, and its network of 15 district offices across the state, will also be transferred. Employment levels will rise from 4,219 full time equivalent positions in 2002-03 to 5,103 in 2003-04.
- 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 no change in their $18,224,000 all funds appropriation for 2003-04. They will, however, reduce their full time equivalent positions by 4, from 209 to 205.
- The Office for Advocate for Persons with Disabilities will maintain its full time equivalent positions at 16 but will see a small increase in its all funds appropriation from $1,585,000 to $1,593,000. The Office for Advocate promotes the inclusion of persons with disabilities in all aspects of community life.
Care Reform Act
The Governor proposes extending the Health Care Reform Act two years from July 1, 2003 through June 30, 2005. Included are the following proposals:
- increasing the bad debt / charity care assessment from 8.18% to 8.85%, raising $80 more on an annual basis.
- increasing the level of graduate medical education "covered lives assessment" by $35 million, bringing it from $690 million to $725 million. This increase would be effective January 1, 2004.
- the Governor states he wants to restructure graduate medical education payments to reduce reimbursement for indirect costs. He goes on to state in his Budget Message: "New Yorkers can no longer afford this generous program that trains 15 percent of the nation's doctors – half of whom leave New York to practice elsewhere."
- requires payors of GME (see above bullet) to submit their reports to the state electronically.
- establishes a HCRA amnesty plan to encourage payors to remit overdue HCRA surcharges, assessments and other payments without interest charges and penalties.
- Increasing the assessment on Medicaid from 5.98% to 6.47% – some of the money going to bad debt/charity care and graduate medical education.
- extends the Child Health Insurance Program and shifts children who are between 100%-133% of the federal poverty level off the Medicaid program onto the Child Health Insurance Program.
- rolls-back eligibility for Family Health Plus from 150% to 133% of the federal poverty level.
- sets up a framework for the use of money generated by any conversions of not-for-profit health insurers to for-profit status, beyond the conversion of Empire Blue Cross.
- establishes a Preferred Drug Program for the Medicaid program. The selection of preferred drugs will be guided by the Department of Health's Pharmacy and Therapeutics Committee. The Department will hire a contractor to administer the new program. Certain drugs for AIDS, mental health treatments and organ transplants will continue to remain available.
- reduces pharmacy reimbursement rates for both Medicaid and the state's Elderly Pharmaceutical Insurance Coverage (EPIC) program.
- recommends increases in prescription drug co-payments by Medicaid and EPIC recipients.
- Recommends the state assume the entire local government share of prescription drug costs. Local governments would be required, in turn, to pay a 37% share of fee-for-service hospital, outpatient and clinic expenses. The Governor estimates this to be a net gain for local counties.
- re-establishes a 0.7% non-reimbursable assessment on total hospital revenues for inpatient and outpatient services. The tax is to be phased-out by March 31, 2007.
- implements a new regional average reimbursement system for nursing homes.
- eliminates the return on equity incentive to for-profit nursing homes.
- changes the early intervention system to require a contribution from health insurers and parents. Health insurers would be required to cover the first $5,000 in early intervention costs where a child has health insurance. Early intervention providers would bill Medicaid and health insurers directly.
- funds the physician profiling system by using revenue generated by physician fees as part of the Office of Professional Medical Conduct.
- Establishes a "forge-proof" prescription program to reduce the illegal marketing of prescription drugs.
- finances immunization, newborn genetic screening and selected community health programs from insurance industry assessments. These programs are now paid out of general state revenues.
- Recommends converting SUNY hospitals to private, not-for-profit corporations.
- Replace the current $110 sales tax exemption on clothing and footwear with four one-week exemptions at $500.
- Funding continued for the five designated Centers of Excellence. Additional Centers to be established in Westchester County and New York City focusing on biotech research.
- Funding for the Empire Opportunity Fund (EOF) which finances major infrastructure projects included those related to high technology research and development.
- $25 million in funding for Centers of Advanced Technologies (CATS)
- $7.5 million in funding for attracting and retaining research faculty.
- Targeted expansion of the Certified Capital Company (CAPCO) program to provide up to $250 million in private capital to companies which collaborate with state-supported research facilities.
- Continued funding for the Security Through Advanced Research and Technology (START) program.
- Specific funding for various university specific research programs including $ 5 million for the SUNY Albany/RPI Focus Center-NY semiconductor research program; $500,000 for the Cornell Nanoscale Information Technology Center; $500,000 for the Columbia University Molecular Nanostructures Transport Center; $500,000 for the RPI Nanostructures Directed Assembly Center; $500,000 for the RPI Center for Advanced Interconnect Systems Technologies; $400,000 for the Cornell Materials Research Science and Engineering Center; and $300,000 for the Cornell Nanobiotechnology Center.
- The Executive Budget for 2003-04 recommends $163.7 million in support for the Workers' Compensation Board which is a reduction of $3,933,000 over last years funding levels.
- Authorizes the Workers' Compensation Board to make certain payments on behalf of insolvent self-insured private employers, outside of State appropriated funds.