01/24/05
Pataki Releases Budget Proposal
Governor Pataki has proposed a 2005-06 budget that includes
funding for his new Upstate economic-development plan, Medicaid
cost-containment measures designed to contain growth in local
taxes, a faster phase-out of the 2003 personal income-tax
surcharge, and a variety of new increases in taxes and fees.
The proposed budget would increase state-funded spending by 5.4 percent, which is about twice the projected rate of inflation for 2005. Without proposed changes in Medicaid and other programs, spending would rise by billions more, the Governor’s Budget Division said.
The budget would spend a total of $105.5 billion, including federal funds. The Governor said his proposal closes a budget gap of $4.2 billion and increases the state’s “rainy day” fund to $864 million, the maximum allowed by law.
The Governor’s release noted that the state Division of the Budget (DOB) is projecting annual growth of state tax receipts of 10.2 percent in 2004-2005 and 6.5 percent in 2005-06. DOB is also projecting 5 percent annual growth in New Yorkers’ personal income, and an improvement in job growth from 0.4 percent in 2004 to 1.1 percent in 2005. The national job-growth rate for the 12-month period ending in November 2004 was 1.6 percent.
The budget would also put all programs and funding for the Health Care Reform Act (HCRA) on budget, a reform that The Business Council and other advocates of fiscal restraint have long advocated.
The Governor’s executive budget would also cap local Medicaid costs; accelerate the state takeover of Family Health Plus; create a bi-partisan Commission on Health Care Facilities in the 21st Century to consider options for eliminating excess capacity in New York’s health-care system; extend HCRA payments and programs through June 30, 2007; close Medicaid loopholes that allow individuals to refuse to contribute financial assets towards health-care services and create a preferred drug program for Medicaid.
The Governor's Executive Budget would also increase state spending on schools by $526 million, the largest increase ever proposed by any governor. The Governor also proposed capping the growth in local school budgets.
The proposed budget also includes a single-sales factor tax reform for manufacturers. This reform would base corporate taxes for manufacturers on just one factor, in-state sales. Corporate taxes are now based on three factors: in-state jobs, payroll, and property. Because state taxes now increase as in-state jobs and sites increase, companies are effectively encouraged to put jobs and plants elsewhere.
The Governor's Executive budget also: renews his call for constitutional debt reform, including a ban on “back-door” borrowing; urges unspecified reforms to the state’s Empire Zone program; enacts public-employee pension reforms that would save local governments an estimated $621 million in 2005-06; implements sweeping mandate relief for localities, including full repeal of the Wicks Law; allocates $36.6 billion to a five-year transportation capital program and financing plan; allocates $2 million to create a new Office of Educational Accountability and Efficiency and creates a competitive matching capital program for private colleges.