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August 19, 2004

Walsh urges Governor Pataki to use his veto pen

Business Council President Daniel B. Walsh urged Governor Pataki to veto spending that the Legislature added to this year's budget, and to insist on cost-saving reforms to Medicaid.

"You are absolutely right about the budget approved by the Legislature: It includes too much spending, and too little reform," Walsh wrote in an August 18 letter to the Governor.

The Council's Public Policy Institute estimates that the state will now face a budget gap of at least $4 billion next year, "and perhaps significantly more," Walsh wrote. "We urge you to limit the damage by vetoing some of the Legislature's additions to your Executive Budget, and by insisting on cost-saving reforms to Medicaid."

Governor Pataki has criticized the Legislature's budget for failing to reduce taxpayer costs for Medicaid, and said he may have to veto some of the Legislature's spending increases.

"With no reform, Medicaid costs continue to rise at unsustainable levels," Walsh wrote. As a result, businesses and homeowners in many counties will see higher property taxes in just a few months, and lawmakers will face "enormous pressure" for state-level tax increases in 2005, he said.

To ease continued increases in Medicaid costs, Walsh urged the Governor "to pursue, administratively or legislatively, reforms such as a comprehensive program of disease state management that will save tax dollars while improving quality of care."

Walsh said The Business Council is "delighted" that the Legislature enacted a new tax incentive to encourage film and television production in New York City, adding the incentive to the Governor's proposed budget.

"We're extremely disappointed, though, that the Senate and Assembly struck out your proposal to ease the tax burden on New York's manufacturing jobs -- a reform that would particularly boost the Upstate economy," Walsh wrote. "Perhaps our Senators and Assembly members are not aware, as I know you are, that we continue to lose thousands of good manufacturing jobs every year. Or perhaps they no longer believe that high taxes matter."

Governor Pataki had proposed, at The Business Council's urging, a change to "single sales factor" taxation for manufacturers, under which multistate income would be apportioned for tax purposes based on the proportion of the company's overall sales that take place in New York. Currently, manufacturers and other corporations are taxed based on their sales, payroll and capital investment in the state. The Governor's proposal would have had no fiscal impact this year.

Walsh urged the Governor to resubmit his proposal to make the state's corporate tax code more friendly to manufacturers, "and press for its immediate approval, when the Legislature returns to Albany."