State Legislature passes budget

April 9, 2008 4:30:36 PM PDT
The state Legislature passed a $121.7 billion budget Wednesday that will include $1.5 billion in new taxes, $205 million in new fees and $200 million in member items - or pork barrel spending - that politicians can direct back to their own districts.Legislators expect the state to raise $66.4 million for an optional new driver's license or ID card that would add $30 to the current $50 license fee and give the user the ability to cross some borders, including Canada's.

Another $28 million is expected to come in from a new surcharge on traffic tickets and another $70 million will come from a new assessment on health insurers.

For New Yorkers, this means they'll have to spend more on identification if they want to go to bordering countries, and if they drive too fast along the way it could cost them $20 more for a ticket and $170 more if they drive under the influence.

State officials don't think the extra fee they've applied to insurance companies will be passed on to customers, but it remains a possibility.

The budget doesn't include new personal income taxes and it cuts local assistance programs - except for school aid and most entitlement programs - by 2 percent to save $270 million.

"In the economy, we're in the worst of times," Gov. David Paterson said Wednesday of the difficulty in getting out the budget - which was nine days past the state's constitutional deadline. He described the economy and the unique circumstances that made him governor less than a month ago as "twin storms" complicating the budget.

Paterson took over March 17 because former Gov. Eliot Spitzer resigned after being linked to a prostitution ring.

New York state Comptroller Thomas DiNapoli questioned Wednesday if the revenues lawmakers are counting on to cover the state budget will turn up.

"Albany should keep an eraser handy," DiNapoli said of the 2008-09 budget proposal. Budget planners come up with a spending plan in part by anticipating revenue from the previous year, and 2007-08 was "a volatile year," he said.

"Spending and revenue projections were a moving target all year and significantly deviated from what was estimated," DiNapoli said. "The economy is in rough shape and the worst may still be around the corner."

DiNapoli's preliminary revenue and spending results for the last fiscal year pointed to lower than expected business taxes, and general fund tax receipts $120 million below estimates.

With that trend, the Legislature may have to reevaluate their spending plans throughout the year. In past years when revenues plummeted, the Legislature had to return to Albany to cut the budget, including school district funds.

"It's a concern of mine, like it is of everybody in New York state," Senate Majority Leader Joseph Bruno said Wednesday. "I don't think it will happen. I'd rather be optimistic and expect that pretty much the worst of what we have to do budget-wise and the challenges that we've overcome here in getting the budget done are behind us. What the future brings, no one can tell."

The budget, which was due April 1, increased spending 4.9 percent and included $1.6 billion in capital projects statewide. An upstate revitalization initiative will pump $700 million into the struggling region.

Education advocates said kids are the real winners in the budget and that the historic $1.75 billion increase in aid will help more students perform better in the neediest schools.

"We were able to keep a promise to the children of our state," Assembly Speaker Sheldon Silver said.

But the bloated budget and reliance on questionable revenue sources at a time when the economy is on a downturn could mean higher taxes and even bigger budget gaps in the future.

Elizabeth Lynam, deputy research director for the Citizen's Budget Commission, said the spending in Albany is out of control, and in the long run New Yorkers will be paying for it.

"Eight months from now they're going to be wrestling with a $5 billion-plus budget gap, in a situation where it's likely to be worse because the revenues won't be there," she said. "The tax burden New Yorkers face is already the second highest in the country, and unless their elected officials take stock of the situation and get the pocketbook under control, the taxes will be even higher."

The state will get additional revenue through a number of new business taxes, including $429 million from closing what lawmakers called tax "loopholes." Lawmakers expect to raise $250 million in taxes to put video slot machines into the Aqueduct Racetrack and other developments that could include hotels. Another $268 million will come in from increases in taxes on cigarettes and small cigars, both of which are going up $1.25.

State officials couldn't provide the exact budget deficit they had to fill for fiscal year 2008-2009, but it's projected at $4.6 billion.


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