Legislature's budget has big tax cuts

[steven]

ALBANY - Property owners, families with school-age children and clothing purchasers would be the major recipients of $2.1 billion in tax cuts this year under an agreement hammered out Tuesday night by an election-bound State Legislature.


The $112.4 billion budget proposal crafted by the Senate and Assembly, up nearly $2 billion from the fiscal plan by Gov. George E. Pataki, will permanently eliminate the state sales tax on certain clothing purchases and provide a record $1.1 billion increase in aid to public schools.
The tax cut package came together only hours before the midnight deadline. It includes a rebate - with checks going out just before the November elections - worth 30 percent of a property owner's STAR property tax break, ranging from $300 to $800 per household.
A bid by religious and private schools for a tax credit for educational expenses, including non-public school tuition, was rejected, and replaced with a tax credit, up to $330, for every child between ages 4 and 17 in a family earning less than $170,000 a year.

Lawmakers also turned back an effort by Pataki to delay the scheduled end of the state's 4 percent sales tax on clothing purchases under $110. The end of the tax is set to begin this weekend.
The cut is worth $600 million this year.

Other tax cuts include elimination of the state's so-called income tax marriage penalty; tax breaks for companies in Empire Zones, film companies and volunteer firefighters; a cost-of-living adjustment for seniors in the STAR program; and the elimination of sales tax on amusement park admissions.

"We have a $4 billion-plus surplus. We believe the overburdened taxpayers of our state need to get that back," said Senate Majority Leader Joseph Bruno.

With lawmakers needing to introduce bills by midnight to have them ready for passage by Friday's deadline for an ontime 2006 budget, the Legislature also agreed Tuesday to cast aside a series of reforms Pataki wanted to help control school and Medicaid costs.

Lawmakers also denied the governor's attempt to delay collection of taxes on sales of cigarettes sold by Indian retailers, though it remains uncertain how the Legislature will force the reluctant governor to go after what legislators say is hundreds of millions of dollars in lost tax revenues. A $1 per pack cigarette tax hike by Pataki was also rejected.
The agreement includes extra money for school construction projects, especially districts like Buffalo, and millions more for programs pushed by a powerful teachers union.

http://www.buffalonews.com/editorial...29/1070923.asp

[colossus27]

The tax cut package came together only hours before the midnight deadline. It includes a rebate - with checks going out just before the November elections - worth 30 percent of a property owner's STAR property tax break, ranging from $300 to $800 per household.

If they really want to make a statement, they should move election day to April 16th.

30% of a STAR break, which ranges from $300 to $800 per household, is bad math.

Something is wrong here. There is 100% assessed market value in Lancaster, taxed at ~$21/thousand. It is mathematically impossible for a person taxed at $21/thousand to get a $1000 'break' on the STAR's $30,000 decrease of assessed value. It requires a rate of $30/thousand. Like you see in towns that don't tax at 100% of assessed value. Somebody here is gonna get screwed....

[colossus27]

If they really want to make a statement, they should move election day to April 16th.

30% of a STAR break, which ranges from $300 to $800 per household, is bad math.

Something is wrong here. There is 100% assessed market value in Lancaster, taxed at ~$21/thousand. It is mathematically impossible for a person taxed at $21/thousand to get a $1000 'break' on the STAR's $30,000 decrease of assessed value. It requires a rate of $30/thousand. Like you see in towns that don't tax at 100% of assessed value. Somebody here is gonna get screwed....

Sorry...got ahead of myself...It requires a minimum rate of $30/thousand. Like you see in towns that don't tax at 100% of assessed value.

On the other hand, if you went by Lancaster's old assessment rules, 80% of market value, then figure the $30,000 STAR decrease, your rate would be ~$35/thousand. Meaning you'd get a rebate of $313 on the exact same house, just because the assessed value isn't determined by the same percentage of market value.

To get the $800 maximum, you would need a tax rate of almost ~$89/thousand. That would mean $4444 per year, in school tax alone, on a house assessed at $80,000!

[buffy]

AND THEN...

Massive new debt to follow tax cuts

State's borrowing to rise by $11.7 billion

By TOM PRECIOUS
News Albany Bureau
3/31/2006
ALBANY - Huge new cuts in state taxes that lawmakers are quick to take credit for will be accompanied by a massive, multibillion-dollar borrowing package.

When the legislators today approve a new state budget, they also will add $11.7 billion to the state's debt level - already the nation's second-highest.

"We are approaching a level of debt that exceeds the affordability for state taxpayers," said Assemblyman William L. Parment, D-Jamestown. "It's ruinous for the state's fiscal picture."

The debt has grown from $14.4 billion in 1990 to an estimated $50 billion this year before the latest borrowing is added, according to the state comptroller's office. Taxpayers already are paying more than $4 billion annually to pay off previously issued debt.

"It seems to me to be adding insult to injury to taxpayers," Assemblyman James P. Hayes, R-Amherst, told colleagues of the borrowing during a floor debate Thursday.

Though lawmakers will wrap up their budget bills today, the process is far from over. The governor Thursday warned he would use his budget veto power unless the Legislature agrees to make "significant" changes.

He did not specify those changes, but Pataki's budget office said the new legislative plan will spend up to $115 billion in the coming year - far above their claim of $112.4 billion.

"We're going to have to make changes, significant changes, to have a budget that's acceptable to me," Pataki said after an appearance across the Hudson River from the Capitol. "Most of it takes effect unless vetoed by the governor. I certainly don't see vetoing the budget en masse. There will be, if we don't reach agreement, certain elements that are vetoed."

The sides are expected to negotiate changes over the next week and a half before Pataki will have to act on the bills. If deals are not struck, Pataki will likely focus his vetoes on items most close to the hearts of legislators, setting the stage for an override battle against the lame-duck governor.

The new borrowing will pay for everything from new school facilities in Buffalo to housing and environmental programs. Lawmakers say the borrowing is for sound capital programs such as $40 million to Buffalo State College for a new technology building and $3 million for a new science facility at Canisius College.

Critics acknowledge that such long-term building projects are good debt, but they also say the budget is sprinkled with inappropriate borrowing for items such as car purchases, repairing potholes and hundreds of millions of dollars worth of pork-barrel projects - items that should be funded on a pay-as-you-go basis.

The governor proposed about $8 billion in new debt when he offered his budget plan in January.

The Legislature, in its new budget package that is being voted on here this week, added about $3.7 billion more in borrowing, said Senate Majority Leader Joseph L. Bruno, R-Brunswick.

The legislative borrowing includes an extra $2.6 billion for public school construction projects, including $400 million for "high needs" districts such as Buffalo. The state already provides billions of dollars each year in reimbursements to schools for construction projects, said John F. Cape, the governor's budget director. What's new in the Legislature's plan, he said, is that the state will directly do the borrowing for districts for $2.6 billion.

"It's a disturbing precedent," Cape said. "What's next? State-supported debt for a new city hall? How about that monument in the park?"

Elizabeth Lynam of the Citizens Budget Commission, a business-funded fiscal watchdog group, said the school construction borrowing "is the poster child for the need for constitutional debt reform in the state."

She noted that voters in 1997 rejected a big school bond.

"Now they are attempting to do a backdoor school bonding engineered in a way that doesn't have to go before voters," she said.

Legislators, though, say a court order requiring more state money for New York City schools drove the new borrowing plan. Besides the public school borrowing, $760 million is being borrowed for State University of New York and City University of New York construction projects, including $25 million for a new University at Buffalo engineering building.

Besides the borrowing concerns, Cape said, the legislative budget violates the constitution because the Legislature rewrote language in Pataki's budget in ways that go against a court order upholding the governor's control over the budget process. The governor criticized the Legislature for not adopting changes he said would control the costs of school spending and Medicaid.

In the budget talks, Pataki said, he will push for those changes, cuts in spending and more tax cuts to help the upstate economy. The governor singled out concerns over the Legislature's child tax credit - giving families a $330 credit for every child between ages 4 and 17. Pataki had proposed a $500 tax credit that could be used for educational expenses - for both public and private schools - in about 80 of the state's poorest-performing districts, including Buffalo.

"I think the education tax credit is very important," Pataki said. "I don't think the way it's been structured meets the needs of the children or the people of this state."

[LHardy]

Don't forget the Supreme Court order to increase down state public school funding by 4.7 billion each year from here on out.
This state goes from bad to worse everyday. Constantly moving the bar.