The state Legislature's budget plan would impose the largest tax increase in state history, $3.3 billion, and that increase would kill more than 100,000 jobs statewide during the next two years, a new report from the state Division of the Budget says.
The legislative plan would cause massive fiscal problems, harm the state's economy, and hurt taxpayers statewide, the report says. The report provides the first real comprehensive analysis of the impact of the Legislature's budget actions on the state's finances, taxpayers, and programs and services, DOB's release said.
According to the report, the Legislature's plan would:
- Add
nearly $4 billion in state spending in all funds.
-
Create a $1.5 billion current-year shortfall.
- Increase
the state's out-year budget gaps over the next two years
to $13 billion.
- Enact
the largest tax increase in state history which would kill
more than 100,000 jobs.
- Cause a wide range of programmatic disruptions.
"At a time when New York is facing a $12 billion deficit, it is unfathomable that the Legislature's response is to simply add billions of dollars in new, unaffordable spending," Governor Pataki said. "Even worse, at a time when New Yorkers are working to support their families, pay their taxes, put their children through college and cope with the effects of the national recession, the Legislature is saddling them with new and higher taxes to pay for their actions."
DOB said its analysis shows that the Legislature's plan would:
- Add
$3.9 billion in All-Funds spending, including more than
$2.75 billion in new General Fund spending, while using
$400 million worth of fiscal gimmicks -- such as rolling
out spending to future years and underfunding important
programs -- to artificially reduce the General Fund spending
number to $2.3 billion. As a result of these gimmicks, new
General Fund spending grows to nearly $4 billion in 2004-05.
- Increase
General Fund spending in fiscal year 2003-04 by $1.3 billion
or 3.3 percent over last year. All Funds spending grows
by $3.9 billion or 4.3 percentboth well above the
2.3 percent inflation estimates for 2003-04.
- Create
a $1.5 billion current year (2003-04) shortfall that will
require mid-year spending cuts or even higher mid-year tax
increases.
- Increase
the 2004-05 and 2005-06 budget gaps by a total of $6 billion.
- Leave
the state with a total budget shortfall of $5.3 billion
in 2004-05 and another $7.7 billion in the following year
for a two-year shortfall totaling nearly $13 billion.
- Add
$6.5 billion in new spending in the current fiscal year
and next, but only identifies $3.7 billion in new resources
to support it.
- Cause
t he state to run out of cash in the first part of 2004-05,
necessitating up to $1 billion in payment delays to schools,
health-care facilities, and other entities and/or a return
to the practice of "spring borrowing."
- Increase
by 12 percent increase the top personal income tax rate
and by more than 6 percent the state sales tax. This would
give New York the highest income tax rate and highest sales
tax rate among our four major neighboring states.
- Leave
New York, despite these tax increases,more than $3 billion
short of what it would need to fully fund its spending.
The legislative plan would actually require nearly $7 billion
to fund the new spending this year and next year to keep
next year's budget in balance.
- Add
$200 million in non-itemized legislative pork barrel spending.
Because this spending is budgeted as a lump sum, the public
cannot know how this money would be spent.
- Take none of the need actions proposed by the Governor to provide relief, including Wicks Law reform, municipal tort reform supported by Mayor Bloomberg, and other critical mandate-relief measures that would substantially reduce costs for local governments.