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January 24, 2008

Council expresses concerns about increases in taxes, spending in Governor's proposed $124.3 billion budget

The Business Council has expressed concerns about increases in spending and in revenues from taxes and fees in Governor Spitzer's proposed $124.3 billion budget for 2008-09.

The Governor unveiled his budget on Tuesday, saying it would close a projected $4.4 billion budget gap, increase spending on health care, education, and economic development, and take a number of steps that would increase the costs of fees and taxes for employers and individual New Yorkers.

"We're glad the Governor has identified some cuts in state spending," said Business Council President Kenneth Adams. "But his proposal to raise nearly $2 billion in new revenues from taxes and fees suggests that they haven't cut enough.

"With the national economy in turmoil and Wall Street tanking, our leaders in state government need to take bold actions to reduce spending, ease the tax burden, and give the private sector a boost."

Adams added that The Business Council is ready to discuss a range of spending cuts with the Spitzer administration and legislative leaders. To avoid imposing new taxes and fees on vital sectors of the economy, such as financial services, energy, and insurance, Albany should consider reductions in the cost of government. Examples include: a property-tax cap coupled with mandate relief for local governments; reform to the state's STAR program; reductions in Medicaid spending; and education spending reform.

Adams also expressed concern about taxes and spending in the Executive Budget at a Wednesday press conference conducted by the Senate Majority on its Upstate Now economic plan.

On Tuesday, the Governor said his proposal would close the projected budget gap without raising taxes. But the Governor's proposal also outlines several "targeted actions" that he said would increase recurring revenues by $1.1 billion. In particular, the Governor said his budget would increase the tax burden by closing "tax loopholes" (with an estimated cost to taxpayers of $434 million) and increasing some fees ($305 million).

The Governor's spending plan would increase state-funds spending by 5 percent, just below long-term growth in personal income but well ahead of the projected rate of inflation. The Spitzer administration has said it wants to use the higher number as a goal for restraining growth instead of the rate of inflation.

The Governor's budget proposal would:

The Governor said he could cut spending with a variety of measures, including:

The Governor said his budget would maintain $2.2 billion in reserves and would increase New York's debt by $3.3 billion $53.3 billion, a 6.6 percent increase. As of the 2004-05 fiscal year, New York's debt per capita was the nation's third-highest, 73 percent above the national average.