Now the budget takes the spotlight. With flaps and confrontation behind us, the state legislature turns its attention to the governor’s proposed budget for 2007-2008. With just over five weeks to go until the start of the new fiscal year, the senate and the assembly are engaged in public hearings and subcommittee reviews of the various components of the massive spending document called the state budget. Here is some background. The governor has presented the state legislature with a spending and revenue plan equalling $120.6 billion – with a “b.” That includes state and federal dollars, because New York has to account for any federal aid it receives. With all funds together, the increase is just over $7 billion, or 6 percent. The state is anticipated to close its current fiscal year with a surplus of $1.5 billion, providing an accumulated surplus of just less than $4 billion. The healthy balance sheet inherited by the new governor is the product of modest prior year spending, tax reductions of $126 billion over 13 years and a strong economy. The prior years’ tax cuts have improved the business climate (although I would be the first to say there’s more to do) and boosted the state’s overall economic growth. Clearly, more must be done so that the entire upstate economy can enjoy the same economic growth experienced by other parts of the state and nation. Here is a brief look at some of the highlights of the budget proposals by the governor. • Taxes and fees: The governor’s budget raises fees by $828 million and taxes by $1.27 billion. Tax increases include elimination of the current STAR rebate check program and the personal income tax credit backup as well as a variety of business tax increases. My particular disappointment in the budget is the lack of tax breaks and assistance for small businesses, which are the foundation of our upstate economy. Small businesses in our state create most of the new jobs and they need help desperately. That’s why the state senate passed, with my sponsorship, a major small business/manufacturing assistance plan. We want to create new jobs and provide careers here in New York for our young people. • Education: The governor proposes an increase in aid to public schools of $1.4 billion, or 8 percent, raising state spending on education to $19.2 billion. He has proposed a new education formula that helps many of our rural, upstate schools. The budget also recommends new accountability measures for school districts. • Property tax relief: The governor’s budget offers a property tax relief plan that would expand the STAR program, but it is partially financed by cutting the rebates taxpayers received last year. For the current fiscal year, the governor proposes just $825 million in new property tax relief, and puts income limits on the additional, new relief, beginning at $60,000. So in our area, a couple with a household income of $60,001 would see their new tax relief limited to 80 percent of those earning less than $60,000. • Health care: The governor’s budget proposes various Medicaid, health care, and mental hygiene reductions totalling $1.4 billion in state funds savings. The cuts will affect hospitals and nursing homes, particularly those that are county owned. Many hospitals and nursing homes are coping with the uncertainty of the Berger Commission’s recommendations. In addition to the $1.4 billion in cuts, the governor’s proposal reallocates critical health care dollars away from many upstate and suburban hospitals to those serving larger Medicaid populations. Many have focused on the budget process to the exclusion of the budget’s substance. Both are important. We need the right budget that’s done right. We will have a significantly changed process this year, with additional conference committees and more open budget negotiations so that we have the right budget for New Yorkers.
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