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:
- Increase the state's spending on schools by a record
$1.46 billion. New York's per-pupil spending on schools
is already the nation's highest, and as of the 2004-05
fiscal year, its per-pupil revenues from state sources
were the nation's sixth highest.
- Fully fund an expansion of the Child Health Plus program
to provide universal health care for all children in New
- Create a property tax cap commission as outlined by
the Governor in his State of the State address to develop
and propose a property-tax cap and reforms to address
the "root causes" of New York's high property taxes.
- Continue rebates offered under the STAR program to some
residential taxpayers as part of $5 billion of total immediate
property tax relief. The STAR program does not offer any
tax relief to business taxpayers. However, the Governor
also said his budget plan would delay a planned increase
in the STAR rebates offered to middle-class taxpayers.
- Create a $1 billion Upstate Revitalization Fund.
- Begin the process of creating a $4 billion endowment
for New York's colleges and universities.
- Increase the number of full-time-equivalent (FTE) state employees by about one percent to more than 200,000. In 2004-2005, New York's state and local governments employed 62 FTEs per 1,000 residents. The national average that year was 54.
The Governor said he could cut spending with a variety of measures, including:
- A five percent cut in non-personnel services, the closing
underutilized state facilities, and the lowering of the
state's energy costs.
- Rationalizing outdated health-care reimbursement methods
as part of a plan to save $980 million on health-care
- Slowing projected growth in school aid by $93 million-a
step the Governor said would be offset by increases in
other types of aid.
- Property Tax Relief. Delaying the projected increase of the Middle Class STAR property tax relief program and other alterations to that program will save $354 million.
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.