Governor George Pataki, Senate Majority Leader Joseph Bruno, and Assembly Speaker Sheldon Silver Tuesday announced agreement on a $77.5 billion state budget that includes $1.2 billion in new tax cuts and a new debt-reform statute.
The leaders said that legislators would begin passing bills Wednesday, and Senator Bruno predicted that the budget would be completed by Thursday or Friday.
The agreement calls for increasing reserves to more than $3 billion while increasing General-Funds spending to just under 5 percent and all-funds spending to just under 6 percent.
"This budget will include the most fundamental debt reform in the history of New York State, while ensuring that we continue the largest and most sustained tax-cutting campaign of any state in American history," Governor Pataki said.
The Governor added that already enacted tax cuts scheduled to be phased in over the next few years should take effect as scheduled, and he emphasized that he would continue to advocate further tax reductions in future years.
"We are pleased that our lawmakers are enacting significant new tax cuts for the seventh consecutive year, with a cumulative total effect, when fully phased in, of some $13 billion," said Business Council President Daniel B. Walsh. "The past tax cuts have created new jobs, and these new cuts will create still more new jobs. And that will help all New Yorkers."
GRT repeal: The new tax cuts will include the repeal of the state's gross receipts tax (GRT) on energy for businesses. That repeal would be retroactive to the beginning of this year for manufacturers; for other businesses, it would be phased in over four years. In addition, the agreement includes a 40 percent reduction in the GRT on residential ratepayers.
The total reported value of the GRT package is $330 million.
"Our plan to slash the punishing Gross Receipts Tax on energy will benefit businesses, consumers, and homeowners, and, coupled with utility deregulation that this Governor and Legislature have championed for years, help make New York more competitive with our surrounding states to attract jobs and new commercial investment," Senator Bruno said.
Repeal of the GRT is the top priority of The Business Council.
Other tax cuts: The tax-cut package in the budget also includes: a $250 million expansion in the state's Power for Jobs program, under which employers may receive reduced-rate power if they pledge to create or retain jobs in the state; a tax deduction for college tuition at any college in the country for up to $10,000 per student per year (valued at $200 million); elimination of the marriage-penalty tax ($200 million); and an expansion of the Earned Income Tax Credit ($125 million).
Miscellaneous tax changes reported to be part of the package include several priorities of the business community, including: a favorable change in how the securities industry allocates its receipts for tax purposes, from the address of the firm to the address of the customer; an updating of a sales tax exemption for capital purchases by the telecommunications industry; a reduction in the ton-mileage tax; a rate reduction for small businesses; and creation of an investment tax credit for the securities arms of insurance companies.
Debt reform: The debt-reform law would be "the most fundamental debt reform in the history of New York State," the Governor said. The statute will limit new debt to 4 percent of net personal income in the state, and it will also limit debt-service costs, he said. The limitation on new debt would be phased in over 10 years, the Governor noted.
The Governor said he still would like to see debt reform enacted through a constitutional amendment, and that he would continue to advocate that. He said that the statutory debt-reform agreement came after a rating agency said it would view such an action favorably.
Other budget provisions: The budget agreement also includes: an expansion of the state's Tuition Assistance Program for college students and their families; a 12 percent increase in aid to cities and local governments; a $3.8 billion transportation bond act; an increase of $1.1 billion in aid to schools; and an expansion of the EPIC program, which gives seniors access to reduced-rate prescription drugs.
Assembly Speaker Sheldon Silver praised the agreement, which he called "the product of a successful conference-committee process that conitnues to make investments in education, job creation, and infrastructure improvements critical to building better lives for working families and a stronger, more competitive New York State."