1999-2000 Budget Summary

Jan

1999

Prepared by the staff of The Business Council
January 29, 1999

Overview

Governor Pataki's 1999-2000 Executive Budget includes a number of major provisions that will further improve New York's business climate. Highlights include new tax cuts totaling $1 billion; implementation this year of previously enacted tax cuts; mandate-relief and other proposals to reduce local taxes; and reform and reduction of growth in the state's debt.

New tax cuts

The bank and insurance tax rates would be reduced from 9 to 7.5 percent, matching the 1998 legislation affecting Article 9-A corporations, but implemented a year later than the Article 9-A reductions. The overall limitation on tax liability for property-and-casualty insurers would be reduced from 2.6 to 2.0 percent.
State taxes on energy utilities would be reduced and completely restructured, generally in ways long sought by utilities and business ratepayers.
The alternative minimum tax would be reduced further, from 3 to 2.5 percent, increasing incentives for manufacturers and securities firms to invest in New York State.
Middle-income workers and many small businesses would benefit from a $600 million reduction in personal income taxes in 2002-2003.
Other newly proposed tax cuts include a "capital asset exclusion" of part of the gains from the sale of assets used in a business in New York; acceleration of the elimination of assessments on hospitals and nursing homes; and a credit for businesses that create 25 or more new jobs in a city. For details, see section on Taxes, below.

Implementation of existing tax cuts

The corporate income tax rate falls from 9 to 8.5 percent for calendar year 2000, for most companies.
The state's added estate tax is repealed as of February 1, 2000.
The gross receipts tax on utility customers drops another 3/4 percent as of January 1, 2000.
The alternative minimum tax drops to 3 percent on July 1, 1999.

Mandate relief

The Wicks Law (requiring multiple contractors) would apply to projects valued at more than $2 million, in most localities, compared to the current threshold of $50,000. The level would be $5 million in municipalities with more than 500,000 residents, and $10 million in New York City.
Binding-arbitration panels for police and firefighter contracts would have to give first priority to a municipality's ability to pay without raising taxes.
Future unfunded mandates would be banned by a proposed Constitutional amendment.
Counties and New York City would save hundreds of millions of dollars through proposed reductions in Medicaid spending.

Debt reform

Currently projected levels of future-year debt would be reduced by $4.7 billion, by reducing borrowing and paying for more capital projects on a cash basis. While state-supported debt would rise to $41.9 billion by the 2003 fiscal year under the five-year capital plan enacted in 1998, this year's Executive Budget projects debt of $37.2 billion in five years. State-supported debt now totals $36.1 billion.
Service on state-supported borrowing (the amount spent to pay interest and partial principal on existing debt), which totals $3.4 billion in the current fiscal year, would rise to $3.9 billion in 1999-2000. Debt service would rise further in each of the two following years, to $4.1 billion in 2001-02, and decline in each of the next two years to $3.9 billion in 2003-04. While growing over the five-year period, debt service would decline compared to levels in the existing five-year capital plan, and as a proportion of total state spending.
Capital spending would rise by 3.4 percent, to $4.4 billion, in the 1999-2000 fiscal year. It would increase slightly the following year, and decline in each of the three following years to $3.8 billion in 2003-04.
Pay-as-you-go financing would increase, largely through use of the state's share of the national tobacco settlement, from 22 percent of projects in 1999-2000 to 37 percent in 2003-04.

Spending

State spending would increase by 1.8 percent, measured both by total expenditures and state-funded spending (the total, minus federal funds). The increase in the General Fund (the part of the budget that receives most tax revenues) is even lower, at 1.3 percent. All three measures represent below-inflation increases. Total spending would rise to $72.66 billion.
Overall spending restraint is achieved mainly by restricting the growth in the state's largest spending areas, including education and Medicaid. In both areas, taxpayer support in New York State will remain far above levels in most other states. The Business Council will strongly support the Governor's efforts to restrain spending.
The state workforce is expected to remain stable, at roughly 191,000 positions.

The economy

The budget forecasts continuing growth in employment and the state's overall economy - but more moderate growth, reflecting expected national trends.
Private-sector employment growth is projected at 1.4 percent, or roughly 100,000 jobs. Jobs in the manufacturing and financial sectors are expected to decline slightly, and other sectors to add jobs.

Taxation

Bank Tax

Reduce the 9% income tax rate as follows:

8.5% for tax years starting after 6/30/00 (calendar year 2001);
8% for tax years starting after 6/30/01 (calendar year 2002);
7.5% for tax years starting after 6/30/02 (calendar year 2003).
The Metropolitan Commuter Transportation District surcharge will still be computed as if the income tax rate were still 9%.

Corporation and Utilities Taxes(Article 9)

Effective for taxable years beginning on or after 1/1/00 create a non-refundable $1,000 credit against Section 185{Agricultural Cooperative Corporations} tax, and exempt from filing all taxpayers whose pre-credit tax liability is $1,000 or less.
Effective 1/1/99 clarify that corporations formed for or principally engaged in the transportation, transmission, or distribution of gas, electricity, or steam will be liable for franchise taxation under Article 9-A of the Tax Law, rather than Section 183 {Franchise Tax on Transportation and Transmission Corporations} and Section 184 {Additional Franchise Tax (a/k/a Gross Earnings Tax) on Transportation and Transmission Corporations}.
Effective 1/1/99 repeal Section 186 {Franchise Tax on Water-works Companies, Gas Companies, Electric, Steam Heating, Lighting, and Power Companies (a/k/a Gross Earnings Tax and Dividend Tax} and repeal Section 186-b{Temporary Metropolitan Commuter Transportation District Surcharge on Utilities} and switch these energy utilities to Article 9-A taxation.
Section 186-a {Gross Receipts Tax on the Furnishing of Utility Services} is amended to reduce the tax rate (from 3.25% currently and 2.5% as of 1/1/00) on the sale by those regulated by the Department of Public Service of the commodities of electricity and gas as follows:
- 1/1/99 through 12/31/99 - 2.6%;
- 1/1/00 through 12/31/00 - 2.4%;
- 1/1/01 through 12/31/01 - 1.75%;
- 1/1/02 through 12/31/02 - 1%; and
- 1/1/03 and thereafter - 0%.
Also, the gross operating income base is phased out according to the above schedule.
Effective on the first day of a month occurring at least thirty days after the enactment of this Budget bill, repeal Section 189 {Gas Importation Privilege Tax} and Section 189-a {Temporary Metropolitan Commuter Transportation District Surcharge on the GIPT}.
Create a credit against Section 189 and Section 189-a taxes for the appropriate amounts in respect of the difference in timing of the repeal of these sections and the reduction of Section 186-a tax that occurred on 10/1/98 and the repeal of Section 186 that will occur retroactively on 1/1/99.

Corporation Franchise Tax (Article 9-A)

Subject energy utilities to taxation on 1/1/99 and adopt a special rule for allocation in the case of receipts from the service of transporting or transmitting gas through pipes.
Provide transition adjustments for move of Article 9 qualified public utilities to income-based Article 9-A regarding depreciation, capital gain or loss, expensing of regulatory assets, automatic extension of time to file, payment of estimated tax, overpayments, carryforward credits, Investment Tax Credit, and Economic Development Zone Investment Tax Credit.
Create a credit/refund for non-regulated sellers of gas and electricity equal to the Sales and Use Tax on the transportation, transmission, and distribution of gas and electricity between 4/1/99 and 3/31/00.
Reduce the Minimum Income Tax rate from 3% to 2.5% for tax years beginning after 6/30/00.
Effective for tax years commencing on or after 1/1/01 increase the Qualified Emerging Technology Credit for jobs created from $1000 to $1500, for investments held five years from ten percent to 25%, for investments held ten years from 25% to 50%, the aggregate credit for investments held five years from $150,000 to $500,000, and the aggregate credit for investments held ten years from $300,000 to $1,000,000.
Effective for tax years commencing on or after 1/1/00 create a Job Growth Credit (for the first year of employment) and a Job Maintenance Credit (for the second year of employment) for jobs created/maintained in excess of a 25 job increase over the prior year in economic development zones in New York City and anywhere in other New York cities; the amount of the credit is $500 ($250 if the pay is $8/hour) times the number of jobs created/maintained in excess of 25. [These credits are also applicable against Articles 9, 22, 32, and 33.]
Establish a partial income exclusion for gain on the sales of New York capital assets used in this State as follows:
- for assets held 1 year, but < 3 years - 5%;
- for assets held 3 years, but < 5 years - 10%;
- for assets held 5 years, but < 10 years - 15%; and
- for assets held 10 years - 20%.
[This partial income exclusion is also available in Article 22.]
Clarify that land set aside or retired under a Federal supply management or soil conservation program is eligible for the school property tax credit for agricultural land and expand the base acreage eligible for a full tax credit for agricultural land after 1998 to include land enrolled or participating in a Federal environmental conservation acreage reserve program as established in the 1996 Farm Bill.

Estate and Gift Tax

Conform State law to the Federal Reform and Restructuring Act of 1998 regarding closely-held business deductions thereby providing some $1 million tax relief in Fiscal Year 2000.

Insurance Tax

Reduce the 9% income tax rate as follows:

8.5% for tax years starting after 6/30/00 (calendar year 2001);
8% for tax years starting after 6/30/01 (calendar year 2002);
7.5% for tax years starting after 6/30/02 (calendar year 2003).
Reduce the 2.6% of premiums cap on property and casualty companies to:
- 2.4% for tax years starting after 6/30/00 (calendar year 2001);
- 2.2% for tax years starting after 6/30/01 (calendar year 2002); and
- 2% for tax years starting after 6/30/02 (calendar year 2003).
The Metropolitan Commuter Transportation District surcharge will still be computed as if the income tax rate were still 9% and the cap were still 2.6%.
Effective for tax years starting on or after 1/1/01, repeals the requirement that the State Insurance Fund compute its tax only on the basis of the cap.

Personal Income Tax

Increase the $1000 dependent exemption to $1500 on 1/1/02 and to $2000 on 1/1/03.
Raise the start of the 6.85% tax bracket from $40,000 (married), $20,000 (single), and $30,000 (head of household) to $50,000, $25,000, and $37,500, respectively, on 1/1/02 and to $60,000, $30,000, and $45,000, respectively, on 1/1/03.
Clarify that land set aside or retired under a Federal supply management or soil conservation program is eligible for the school property tax credit for agricultural land and expand the base acreage eligible for a full tax credit for agricultural land after 1998 to include land enrolled or participating in a Federal environmental conservation acreage reserve program as established in the 1996 Farm Bill.

Petroleum Business Tax

Effective 12/1/99 repeal the $25/month minimum tax on petroleum businesses.
Effective 12/1/99 repeal the $2/month minimum tax on aviation fuel businesses.

Real Property Tax

Notwithstanding Section 102, subdivision 12, paragraph (f), retain as taxable movable machinery and equipment which is used in the generation of electrical power for sale directly or indirectly to the public, which was subject to taxation on a final assessment roll completed in 1998, and which would otherwise become wholly exempt from taxation due to either a change in ownership or the repeal of Section 186 of the Tax Law as follows:

on a final assessment roll completed in 1999 - 100% taxable;
in 2000 - 90% taxable;
in 2001 - 80% taxable;
in 2002 - 70% taxable;
in 2003 - 60% taxable;
in 2004 - 50% taxable;
in 2005 - 40% taxable;
in 2006 - 30% taxable;
in 2007 - 20% taxable;
in 2008 - 10% taxable.

Sales and Use Tax

Effective immediately and applicable to the 9/1/99 price adjustment:

Round to the nearest whole cent the amount of prepaid Sales and Use Tax per package of cigarettes; and
Provide for a replacement inflation index used to adjust the base retail price of cigarettes for purposes of calculating the amount of prepaid Sales and Use Tax. The numerator would be the sum of the manufacturer's list price for a carton of standard brand cigarettes and the applicable New York cigarette tax on the first day of each month for the immediately preceding twelve months ending in June of that year; the denominator would be the sum of such prices and taxes on the first day of each month for the twelve months ending in June of the preceding year.
Extend for five years through 11/30/04 the special provisions requiring Manhattan parking service vendors to keep and file additional records detailing each parking service transaction and authorizing the Department of Taxation & Finance to conduct unannounced "walkabouts" of parking garages for observational purposes.
Effective 4/1/99 clarify that "gas service" and "electric service", respectively, include gas or electricity itself, as a commodity or as a part of an integrated service where the commodity is bundled with delivery and other components of a gas or electric service, the transportation, transmission, or distribution of the gas or electric service, either itself or similarly bundled with the commodity, metering service, meter reading, billing or collection services, and capacity and demand charges, even if unbundled and furnished by a separate service provider, as well as ancillary services currently in the rate base but which may be separately charged for the future.
Effective 4/1/99 clarify that "use" includes the right or power over gas, electric, and other services subject to use tax.
Effective 6/1/99 impose a use tax on gas service or electric service.
Effective 4/1/99 clarify that school districts' use tax on utility services includes telephone answering services.

Economic Development

Empire State Development Corporation

$117 million for economic development projects to be allocated to the following programs in the following amounts:

Economic Development Fund
$40 million
Jobs Now Program
$45 million
Minority & Women's' Business Enterprise Program
$3.5 million
Urban & Community Development Program
$3.5 million
New York Stock Exchange
$10 million
Griffiss Air Force Base redevelopment
$2.5 million
Plattsburgh Air Force Base redevelopment
$2.5 million
Empowerment Zones
$10 million

Department of Economic Development

Economic Development Zone administration
$2.9 million
Clean Air Program
$.5 million
Business Marketing
$4.5 million
I Love NY
$11 million
Tourism Matching Grants
$4.27 million
Science & Technology Program
$5.6 million
Manufacturing Extension Partnership Program
$5 million

Transportation

Industrial Access Program
$25 million

Education and Job Training

Provides an increase of $154 million in general support for public schools on a school year basis. Note: this amount does not include ALL programs and it is less than the amount schools would receive if current statutory provisions were not modified. However, the Executive Budget would raise overall state support for schools to $11.9 billion.
The Governor also recommends the creation of a $200 million block grant program (out of the consolidation of various categorical programs), that would promote flexibility at the school district level. This Educational Improvement Block Grant would be created to provide flexible, needs-based aid to all school districts. Also, during the 30-day amendment period the Governor will propose a new program to ensure children in the "Big Five" city schools can meet the challenges of the new fourth-grade reading and writing tests.

Other recommend reforms and enhancements:

Charter Schools Stimulus Fund/Federal Grants: $1 million in General Fund support for the Charter School Stimulus Fund would be used for study grants, start-up costs and facility expenses and $10 million in new appropriation authority for receipt and expenditure of potential Federal grants awards;
Charter Schools Implementation Support: Provides $750,000 in operational support for activities of the State University of New York's new Charter Schools Institute, as well as $275,000 for the State Education Department's Charter School activities. In addition to serving as a sponsor for new Charter Schools, the Institute will monitor results under the new legislation.
School Violence: Lieutenant Governor Mary Donohue will chair a Task Force on School Violence to develop aggressive ways to rid our schools of violence. The Governor will also reintroduce legislation to allow teachers and principals to remove disruptive students from the classroom. The legislation would require that school districts, in conjunction with community leaders, develop a "code of conduct" that defines standards of acceptable behavior, penalties for violations and methods of enforcement. It would also require the inclusion of school violence data in the recently established school report cards.
Literacy First for 4^th Graders: Provides for the creation of a Literacy First summer school initiative that will provide intensive remediation to ensure our young learners have a solid foundation in the reading and writing skills required for academic success. Beginning with the summer of 2000, the State would provide 80 percent funding for school districts that choose to provide six-week summer remediation programs for fourth graders who fail to meet the proficiency requirements of the Regents new English Language Arts test. In the 2000-01 school year, $30 million in State funding would be provided for this initiative.
English Immersion: Provides for Literacy First summer programs for children in grades K-2 who have limited English skills. The 2000-01 school year cost is $10 million.
Advantage Schools: Recommends $10 million for this after-school program which would bring together schools, parents, and community organizations to provide a secure and enriching environment for children after school ends, but before many parents are home from work, during the hours of 3 to 7 p.m.
Accountability: Will recommend legislation to curtail the State Board of Regents' powers to unilaterally impose costly regulatory mandates on school districts. In addition, the Governor proposes to eliminate tenure for school principals and assistant principals to ensure that high standards of performance extend beyond the classroom and into the principal's office.
Technology Investment: Recommends increasing funding for educational technology by 17.5 percent to $36.6 million in hardware and software aid in this budget.
Textbook Aid: Recommends a 14 percent increase to $151.3 million. By 2001-02, aid will more than double from $36 per pupil in 1996-97 to more than $78 per pupil.
Special Education: Recommends changes to the special education system to ensure that children are taught in regular classrooms whenever possible through a new flexible State special education funding formula for school-age children to become effective in the 2000-01 school year, and to ensure compliance with new Federal requirements. Under the recommended new formula, school districts could use State funds for services -- such as speech therapy and counseling -- to support special needs students in a regular classroom setting.
Preschool Special Education: Recommends reforms that would address the conflict of interest that can result when private providers perform evaluations which then serve as the basis for referral to special education.
BOCES Reform: Recommends that school districts be given greater flexibility to take advantage of cost savings opportunities through shared service arrangements outside the existing BOCES system. The existing BOCES funding formula currently supports nearly 65 percent of local costs -- an amount far greater amount than other needs-based school aid formulas, such as operating aid. This results in an incentive for school districts to use BOCES as a way of leveraging State aid -- regardless of the actual cost-effectiveness of these BOCES services. Under the Governor's proposal, BOCES aid would be phased out beginning in 1999-2000, and funding for shared services would be provided through operating aid beginning in 2000-01.
Building Aid: For the 1999-2000 school year, building aid would increase by $120 million, or 14 percent, to a total of $970 million. The budget recommendation includes the creation of a new School Facilities Development Unit in the State Dormitory Authority to help school districts reduce their construction and borrowing costs. School districts that use this new Unit would also benefit from an exemption to Wicks Law requirements.

School Property Tax Reform

To ensure that STAR savings to homeowners are not eroded the Governor is proposing to limit future school tax increases in school districts with a demonstrated history of overspending. Despite record State school aid increases in the past two years, local school property taxes continue to increase faster than both inflation and enrollment levels.
The Governor's tax cap plan will only apply to school districts with two-year average spending increases that exceed the lesser of: four percent or 140 percent of the increase in the CPI (Consumer Price Index) after certain exclusions for enrollment growth, voter approved capital projects, court orders, emergencies and other unique fiscal events.
After two years of such spending in a school district, the property tax levy increase in the next budget would be limited to the lesser of four percent or 120 percent of the increase in the CPI for the prior year. Spending and levy increases attributable to the excludable items mentioned above would not be included in the levy increase limit.
Subsequent passage of a tax levy increase in excess of the amount allowed under the tax cap would require a two-thirds majority, unless more than 50 percent of eligible voters voted, in which case only a simple majority would be required. "Big Five" cities already have constitutional tax limits and would not be included in this measure.

Truth in Taxation

A Property Tax Report Card: Schools would be required to report details of proposed budgets and tax levy increases to the State Education Department. The Department would then publish a "Property Tax Report Card" prior to the budget voting day, enabling taxpayers to see how the proposed budget and tax levy changes in their school district compare to other districts around the region and across the State.
Full Disclosure: School districts would be required to inform voters, prior to the statewide school budget voting day in May, on how a proposed budget compares with the maximum contingency budget allowed, should the budget proposal be defeated twice. Also, school districts proposing budget increases of more than 140 percent of the increase in consumer prices (CPI) for the prior year, or more than four percent, would be required to notify affected taxpayers of the proposed increase in a separate mailing one week prior to school voting day.

Higher Education

The Governor's budget recommends the transfer of a number of programs from the State Education Department to the Higher Education Services Corporation. They include the following programs:
- Bundy Aid ($44.25 million)
- HEOP ($16.4 million)
- Liberty Partnerships ($11.0 million)
- STEP ($7.5 million)
The Governor's budget recommends nearly $6.7 billion in total funding for services and programs at public and private institutions of higher education. Of that $2.6 billion is recommended for SUNY and CUNY operations. Also recommends $59 million in cash savings in SUNY and CUNY through continued efforts to improve cost-efficiency and productivity.
Recommended funding levels anticipate no increase in undergraduate resident tuition rates of $3,400 at SUNY and $3,200 at CUNY.
For 1999-2000, State operating aid for SUNY and CUNY community colleges will be continued at the same level as in 1998-99 -- providing State support of $2,050 per full-time equivalent student.
The budget also recommends continued implementation of the $3 billion SUNY/CUNY Capital Investment Plan that was initiated in 1998-99.

Tuition Assistance Program

$501.1 million is recommended for the Tuition Assistance Program (TAP). Pursuant to this recommendation 1999-2000, TAP expenditures will decrease by $133 million with nearly $19 million attributable to declining participation due to income increases generated by an improved economy, and approximately $114 million attributable to a proposed TAP restructuring.
A restructured TAP is recommended to provide a vehicle for promoting timely completion of degree programs. Currently, fewer than two of every five college students in New York complete their baccalaureate degree in four years -- often because they enrolled in less than 15 credits each semester. In fact, fewer than half of SUNY students and fewer than one-third of CUNY students currently take 15 credits per semester.
Students participating in TAP would be expected to enroll in and complete 15 credits each semester. Students enrolling in and earning 15 credit hours would receive a full TAP award, while students enrolling in 15 credits but earning fewer than 15 credits would receive 80 percent of a full TAP award.
Additionally, students would be expected to contribute a minimum of 25 percent -- rather than the current 10 percent -- towards the cost of tuition. However, as a reward for successfully completing their degrees in four years (or two years for an associate degree), students would receive a TAP "dividend" which, when added to regular TAP awards, provides more aid than available under the current TAP program. This restructuring, together with limiting the availability of TAP to two years for associate degree programs and use of the Federal Adjusted Gross Income (AGI) as the basis of determining TAP awards, would achieve $114 million in TAP savings for 1999-2000.

Other Higher Education Services Corporations Programs

Scholarships for Academic Excellence program: includes $10.5 million, an increase of $3.5 million for 1999-2000 which would support 8,000 new annual awards and continue aid for existing scholarship recipients attending public or private colleges in New York State.
Funding of $564,000 is recommended for the second year implementation of the College Choice Tuition Savings program. Families participating in this program will also be able to take advantage of Federal tax deferrals on the interest earned on the college savings accounts.

Job Training

General Fund appropriations of approximately $8.96 million would support the current level of Youth Education, Employment and Training program contracts that serve economically disadvantaged youth.
There are no new job training programs recommended.

Environment

Proposed Fee Increases

Air permit emission fees for "major facilities" (covered by Title V permits) will increase to $48 per ton for calendar 1999; in subsequent year, this fee amount will be indexed to the consumer price index. These fees are currently "capped" at just under $33 per ton. There is no proposed change to the contaminants or tonnage of emissions subject to this fee. This fee income is dedicated to financing one hundred percent of the state's Title V permit program.
Fees on registered petroleum bulk storage facilities will be increased to $100 for facilities with storage capacity between 1,100 and 2,000 gallons; $300 for those with capacity between 2,000 and 5,000 gallons; and $500 for larger facilities. These fees are payable once every five years. They are currently set in regulation at $50, $150 and $250, respectively. There are about 15,000 oil storage facilities in the state. This fee income is used to finance the state's oil spill cleanup program.
The existing "licence fee" on major oil storage facilities and vessels (over 400,000 gallons capacity) will increase from $.04 per barrel to $.08 per barrel of petroleum transferred through such facilities. This would raise about $12 million per year. This fee income is also used to finance the state's oil spill cleanup program.

Spending Proposals

The general operations budget for the Department of Environmental Conservation will increase slightly to $352 million (about 1 percent.) Annual funding for the state oil spill cleanup program will increase to $34.2 million.
The Title V air permit program will be "fully funded" at about $16 million.
The proposed budget stated that the Governor will be proposing a "superfund" refinancing proposal once it receives final recommedations from the "Superfund Working Group" appointed last fall.
The budget includes funding to initiate the state's new heavy duty vehicle emission "inspection and maintenance" program.
Spending from the "Environmental Protection Fund," which is financed primarily by revenues from the real property transfer tax, will increase from $100 million to $125 million. The EPF finances land acquisition and open space programs; parks projects; municipal landfill closure and recycling efforts; the state's "pesticide use database;" and other types of projects. The Hudson River Park and Hudson River Estuary program will receive major funding increases under this proposal (about $34 million in total).
A total of $283 million in addition spending is authorized from the 1996 "Clean Water/Clean Air" bond act. These funds are used to implement water resource management plans, land acquisition, water quality and safety projects, state and municipal parks projects, state facility environmental compliance projects, small business compliance assistance efforts, and other project categories.

Construction

Provides funding of $1.4 million to implement legislation, included in the Executive Budget, authorizing the adoption of model fire prevention, building and energy codes.
Creates a new School Facilities Development Unit within the State Dormitory Authority to provide school districts with lower borrowing and construction costs as well as relief from Wick's law requirements.
Increases the building aid for schools by $120 million, or 14%, to a total of $970 million.
Provides for the continuation of the Governor's Capital Investment Program. Capital recommendations for state-operated colleges total $330 million including $287 million in bonded projects for academic and other facilities and $43 million in hard dollar capital funding.
Exempts certain construction projects within municipalities from the Wick's Law. Provides for a $2 million exemption for most municipalities, a $5 million exemption for large municipalities and a $10 million exemption for New York City.
Provides for a new program for Revitalization Projects and Infrastructure Renewal (RePAIR). The program will be administered through the Department of State and will provide $5 million of assistance to urban governments for demolishing and clearing abandoned buildings and vacated industrial and commercial structures.

Health

The Governor's goal for 1999-2000 is to bring Medicaid costs in line with the rest of the nation. Accordingly, the budget proposes measures to reduce the cost of the state's Medicaid program by $511 million.
The Governor proposes eliminating the assessments on hospitals, nursing homes and home care providers effective April 1, 1999 - one full year early. This action will reduce provider taxes by $223 million next year.
The budget proposes reductions to hospital reimbursement rates, achieving $89 million in State Medicaid savings in 1999-2000. The Governor proposes reducing support for graduate medical education in order to reduce the number of residents trained.
The budget provides over $450 million in State and Federal funds for Child Health Plus.
$100.9 million to provide prescription insurance to more than 105,000 senior citizens.
$1 million for breast and ovarian cancer detection and education services, from the Commissioner's Health Care Reform Act priority pool.
$1 million to continue funding for the cancer mapping project from the Commissioner's Health Care Reform Act priority pool.
$5 million to continue the operations of poison control centers - including $2 million from the Commissioner's Health Care Reform Act priority pool.
$550,000 for the Governor's diabetes initiative to support efforts to prevent diabetes and to help children with diabetes control their disease.
$5 million to create a new biotechnology research center at SUNY Buffalo
$3 million to support the University of Rochester's new Institute for Biomedical Sciences.
$200,000 in new funding to support pilot projects to provide asthmatic children with care and to conduct a statewide education campaign to increase awareness of the dangers of asthma.

Labor & Welfare Reform

As part of the changes enacted in last year's Unemployment Insurance Reform bill, the Department of Labor will operate a re-employment services program.
Employment, transportation, and education to help welfare recipients get jobs: $200 million.
Recipient assessments to address barriers to self-sufficiency and incentives for children to attend school: $68 million.
Support for the Child Care Block Grant: $188 million for 1999-2000 and an additional $200 million for services through March 31, 2002.
Investment in the New York Works Compliance Fund to develop computer tracking systems necessary for welfare reform: $50 million.
$192 million in fiscal relief to counties and New York City through child welfare services and related State savings of $165 million.

Energy & Telecommunications

The Executive Budget recommends a wide-sweeping overhaul of energy taxation in recognition of the current transition to competitive electric markets, and includes the following proposals:

A repeal of the natural gas importation privilege tax (GIPT), §189 of the New York State Tax Law.
A repeal of the current franchise tax on gross receipts (.75%) and excess dividends (4.5%) §186.
All energy utility companies would be required to file under Art. 9-A, net income, from Art. 9, gross earnings. Article 9 receipts are expected to decrease by $309 million. A conversion from Art. 9 to Art. 9-A allows energy utility holding companies in the state the opportunity to file combined returns, therefore eliminating the subsidiary capital tax.
A repeal of the .75% gross receipts tax (GRT) on sales of electricity for resale.
A phase out of the GRT on the commodity portion of electric charges, from the current rate of 3.25%, beginning in 1999 and ending in 2003 (§186-A).
A new compensating use tax is proposed on the importation of energy from outside of New York State. This tax will be imposed at the state and local level and at the same tax rate as the current sales tax rate.
Energy service companies participating in retail access programs will be allowed a one-year "transitional tax credit" equal to the state sales tax paid by retail access customers on their transmission and distribution bills.
The Department of Public Service has been recommended for an appropriation of $61,566,700 for fiscal year 1999-2000, a decrease of $3,944,200 from total funds available in 1998-99. A reduction in 68 staff positions is also recommended. The Department is the staff arm of the Public Service Commission (PSC), which regulates the rates and regulates rates and services of the state's public utilities, including electric, gas, steam, water and telecommunications.
The Governor also recommends a $30,523,000 appropriation for the New York State Energy Research & Development Authority (NYSERDA), unchanged from the operating budget proposed for 1998-99. State operations account for $17,906,000 and Capital Projects total $12,617,000. Reappropriations from the 1998-99 fiscal year are $3,722,000. NYSERDA will also continue to administer the $235 million Systems Benefits Charge Fund which provides financing for projects in energy research & development, market transformation and low income assistance programs.

Technology

The Governor's Chip Fab-New York Program will pre-permit up to ten sites around the State for new chip manufacturing plants and give New York a significient advantage in the global competition for siting these plants.
Utilizing the same pre-permitting concept as above, Build Now-New York will pre-qualify 30 New York sites to attract expansion or relocation of a wide variety of emerging and growth industries.

Transportation

The Executive Budget implements the final year of the current five-year transportation capital plan, maintaining total investments in highway and bridge construction at $13 billion. According to the Governor's proposal, construction contract awards will total $1.5 billion in 1999-2000, down from a record setting $1.7 billion during 1998-1999. The budget preserves annual base level funds for the next five year capital plan at $1.5 billion and recommends substituting "pay-as-you-go" financing for bond-financed projects.
The budget includes $192.3 million for the Consolidated Local Highway Improvement Program (CHIPS), down from the Governor's $218 million appropriation last year. The CHIPS program provides state and federal monies to assist localities in funding the repair and construction of roads and bridges.
The Governor recommends $35 million for the 1999-2000 Marchiselli program, a decrease of $5 million from last year. This program assists localities in leveraging financing for the repair and construction of roads and bridge infrastructure projects.
The budget includes $85 million for a new Department of Transportation Rail Freight program intended to improve and stimulate the use of freight systems that serve municipalities, businesses and ports across the state.
Overall engineering resources will decrease to $540 million from $605 million. The Department of Transportation budget formula also calls for 167 staff reductions to reflect lower construction levels, including 136 positions under design and construction.

Worker's Compensation

The 1999-00 Executive Budget continues to fulfill the commitment to revamp the operations of the Board by providing:

$9.5 million to complete the conversion from a paper-based, manual claims processing operation to a paperless "electronic case folder".
$3.5 million to complete the restructuring of the Board's administrative and district offices.

Prepared by the staff of The Business Council January 29, 1999