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Zack Hutchins
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January 18, 2005

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:

The Governor also said he is advancing a budget-reform plan that would:

The Governor's Executive Budget also: