ALBANY, N.Y. — Hard times are about to get harder in New York. The recession, a meltdown on Wall Street and Albany’s overspending on special interests over decades are leading to a budget deal that will include some higher taxes and losses of parts or all of tax breaks to close a budget nearly three months late. It comes a...
ALBANY, N.Y. — Hard times are about to get harder in New York.
The recession, a meltdown on Wall Street and Albany’s overspending on special interests over decades are leading to a budget deal that will include some higher taxes and losses of parts or all of tax breaks to close a budget nearly three months late. It comes a year after a record increase in taxes, including taxes on higher incomes, that was used to raise billions to confront the 2009-10 budget shortfall.
“Just like last year, the taxpayer’s burden is only growing larger,” said Senate Republican leader Dean Skelos of Nassau County. He said his conference in the chamber with a narrow Democratic majority won’t vote for higher taxes, fees or borrowing. “Taxpayers have had enough.”
The Tax Foundation, a national nonpartisan research group, ranks New York as having the highest state and local tax burden among all states. New York’s newest proposals include a broad range of options in closed-door talks. They include:
• Reducing the state tax break enjoyed by residents making at least $10 million a year when they donate to charity.
• A tax on coal-fired and nuclear power plants.
• Extending the hours for the Quick Draw lottery game often at bars.
• Expanding the hours of video slot machine operations at several harness racing tracks.
• Paterson is sticking to his tax on sugary drinks, which many lawmakers say is dead, and the once-dismissed proposal to allow wine to be sold in grocery stores.
The biggest revenue producer remains the proposal to temporarily end the state’s 4 percent sales tax exemption on clothes and shoes sold for less than $110. A state official briefed on the revenue options say the exemption would end after back-to-school shopping this year and continue until the March 31 end of the fiscal year. Then, the exemption would resume, but only for clothes and shoes costing less than $55. In the 2012-13 fiscal year, the full exemption would return, said the official who spoke on the condition of anonymity because of the sensitivity of the talks.
This year the measure is projected to provide the state $340 million. That amount, added to the projected $440 million from raising the cigarette tax by $1.60 per pack along with a plan to finally collect sales tax on cigarettes sold by Indian-owned businesses, bring Paterson and legislative leaders close to agreement on revenue.
Lawmakers say a budget deal could be struck by Monday. That’s Paterson’s deadline to have agreement before he will impose a budget through an emergency appropriation, forcing the Legislature to approve it or shut down government.
“Taxes are regrettable, certainly we don’t want to do them at this particular time,” Paterson said on WGY Radio on Thursday. “But a combination of a few taxes and some rather severe cuts to services is, I think, the best solution.”
Frank Mauro of the labor-backed Fiscal Policy Institute said Albany’s plan to mix tax increases and services cuts, although each weaken the economy, is likely the most effective way to “do the least harm” to a recovery.
The fiscal outlook became more bleak this week with news that about $1 billion in Medicaid reimbursement that already has been budgeted won’t be released, at least not all of it. Assembly Speaker Sheldon Silver, however, said there is a very good chance of getting the funds, saying leaders could deal with any shortfall after the budget.
That leaves the toughest spending element: Education.
Paterson is pushing his plan to empower the State University of New York and City University of New York to be more autonomous from state government in operations and in setting its own tuition with annual “modest” increases instead of spiking years apart in bad times. Paterson said that will give SUNY the flexibility it needs to compete with other public, statewide systems and to become a national academic power.
“You can’t lock in future legislatures,” said Blair Horner of the New York Public Interest Research Group. “It’s a promise that can’t be kept.”
Silver has led the effort to restore part of Paterson’s proposed $1.1 billion cut to school aid, about a 5-percent reduction. Silver would restore $600 million, with a big chunk going to New York City schools. The Senate’s Democratic majority has sought to have restorations that are made to schools outside New York City to be used to reduce property taxes.
But that compromise is far from certain. “Diverting school aid to property tax relief undermines the purpose of school aid and would provide such minuscule property tax relief that homeowners won’t even notice it,” said Billy Easton of the Alliance for Quality Education, an advocate for school funding.