http://www.buffalonews.com/home/story/772073.html
Here it comes again!!!!!!!!As taxes rise, so do spending and deficit
Budget gap grows despite hikes in taxes, fees
By Tom Precious
News Albany Bureau
ALBANY -- The latest round of one of New York state's biggest tax and fee increases takes effect next month, but it still won't be enough to balance a state budget that continues to outpace inflation.
Everyone from car owners to boaters will pay more when additional fee hikes kick in Sept. 1. But thanks to a moribund economy, the largess from those increases and others is falling far short of expectations.
And that's just one of the reasons why the state's budget deficit won't go away.
The other reason is the expense side of the ledger, and a governor and legislators who continue to spend more, not less.
The result is a budget shortfall so large -- the latest estimate is $2.1 billion -- that state lawmakers will return here next month to consider Gov. David A. Paterson's still-secret plan to close it.
"It's almost entirely because revenue came in less than we had anticipated," State Budget Director Robert Megna said of the new gap.
But when they meet in September, critics say, lawmakers will be hard-pressed to turn to higher taxes and fees as a remedy.
One of the reasons is a budget that grows at two and three times the rate of inflation. That translates into an 80 percent increase in spending over the past 10 years.
A recent report by Paterson's budget office includes page after page of statistics suggesting revenues are not keeping pace with the expenses they are intended to fund.
And tax and fee increases, the Albany standby solution, are viewed more and more as a crutch that can't be used to solve yet another deficit.
The only alternative, in the eyes of leaders such as State Comptroller Thomas DiNapoli and Senate GOP Leader Dean Skelos, may be mid-year budget cuts.
"The state cannot afford to postpone these decisions," DiNapoli said in a statement. "We must readjust our priorities to meet the economic crisis."
Paterson, during a visit to Western New York last week, also expressed disdain for any more increases in taxes, especially the personal income tax.
"It's still a bad idea because you won't get the revenue you project," he said, while lamenting the potential loss of "job creators."
When the 2009 budget was passed in April, lawmakers included more than $8 billion in additional revenue-raising measures -- from hits on health insurance premiums and fishing licenses to higher fees for state park cabin rentals and security guard training -- to close a soaring deficit.
Four months later, Paterson's budget update indicates New York's march out of the recession is, at best, slower than expected.
"On the national level, the economy appears to be slowly turning around, but it will take longer for New York State to recover," said Tom Marks, chief economist and assistant state comptroller.
Consider the state's personal income tax, which celebrates its 90th birthday in New York this year.
When Paterson and lawmakers settled on a new budget in April, they figured New Yorkers would turn over $37.2 billion in income tax revenue to help balance that budget.
Now, that number is $36.1 billion -- a drop of $1.1 billion, or 3 percent, from what budget experts were projecting just four months ago.
Part of it is a timing problem.
As part of its new budget, New York raised taxes on wealthier people -- single filers making over $200,000. State officials expected those people, many of whom make quarterly income tax payments, to immediately start flooding Albany with extra money.
But that hasn't happened, and now state officials think the big flow of cash won't come until next year -- during the tax season. Or, at least, they are hoping that's the case.
One of the root causes, of course, is the lingering national recession.
The downturn, fiscal officials say, is taking a proportionately larger hit on the incomes of wealthy people. Consider the job cuts the investment banking industry experienced the past year.
In some states, that reality might not be a big deal. But, in New York, where the top 1 percent of earners generates 36 percent of the state's personal income taxes, it is huge.
That one percent translates into about 80,000 households in a state with 19 million people -- a relatively small number that can have a sizable impact on tax revenues.
"That's a small number of people who are very volatile," said E.J. McMahon of the Center for New York State Policy. "So, it's very difficult to predict, and that's one of the many problems of being so dependent on those people."
Moreover, there is the unknown number of people who sought tax shelters, such as Buffalo Sabres owner B. Thomas Golisano, who moved his residency this year to Florida to avoid paying what he says was $13,000 a day in state income taxes.
The impact can been found in the income tax receipts for April through June. The state was expecting $8.3 billion but instead got $7.7 billion.
Even more remarkable, that is $4.2 billion less than what Albany took in from those taxes during the same period last year. A large part of the drop was due to lost income.
"Many people earned significantly less last year than the prior year, and therefore owed less when they filed their tax returns," said Marks, the state's chief economist.
Megna said the state expected the personal income tax to drop from April to June by about 15 percent from a year earlier. In fact, it plummeted 35 percent.
"We expected things to be bad," he said. "They were, and much worse than expected."
But income taxes are not the only problem.
Collections of sales taxes, which are imposed on everything from cars to shirts, and which serve as a good barometer of a state's economic health, are also falling below expectations.
Albany now expects to collect $14 billion in sales tax receipts this year. That's $400 million below its 2009 budget projections, a drop of more than 4 percent.
"It really is very unusually weak," Megna said of the sales tax revenues.
He said July sales tax revenues were off as much as 10 percent from a year ago, and the slump is hitting purchases across the board.
Beyond the income tax hike on wealthier residents, it is too early to determine how much all the tax and fee hikes are generating for Albany. A clearer picture is likely by mid-September.
About the only good news is that the free-falling numbers that state officials were witnessing last year in overall tax revenues appear to have subsided so far this year.
The next big round of fee hikes -- 19 in all -- will arrive Sept. 1 and bring in an estimated $150 million a year.
The impact will fall hardest on people seeking driver's licenses and registrations for cars, trucks, trailers, taxis, buses, motorcycles, motorboats and all terrain vehicles.
On top of that, the state will soon require that all vehicles obtain new license plates, and the cost of getting those is going up 66 percent.
There is a concern that some of the added motor vehicle fee revenues -- such as the new plates -- are just being dumped into the state's general fund instead of into a pot dedicated to maintaining roads and bridges.
"We'd be willing to pay our fair share if dollars were dedicated to keeping bridges, roads and highways repaired and in good shape," said Wally Smith, a spokesman for AAA of Western & Central New York.
Even worse, said Smith, the higher fees are coming at a time when many residents, especially upstate, have no choice but to use their cars.
"It's very difficult," he said, "for people at this time to absorb those increases."
Megna would not discuss what measures are being considered to close the deficit, although Paterson has said he opposes tax hikes to erase it. Yet he made similar statements in the past, and then approved tax increases.
A spokesman for Assembly Speaker Sheldon Silver said the Assembly will "continue to work with" Paterson, but would not discuss whether additional hikes in taxes and fees are on the table.
Austin Shafran, a spokesman for Senate President Malcolm Smith, said it was expected after this spring's difficult budget process "that conditions were going to get worse before they got better."
He said the focus of the Senate Democrats in September's likely session "is going to be finding ways to reduce wasteful spending in the manner that will still protect critical areas."
Skelos, the Senate Republican leader, said GOP senators will not vote for any new taxes or fees in the special session. The Senate has a razor-thin -- 32-30 -- margin of control by Democrats.
During the budget debate, Senate Republicans warned that increasing taxes was the worst thing that Democrats could do during a recession because it would force more businesses, jobs and families to leave the state and further depress the economy and reduce state revenues.
"The Democrats' tax increases have caused even greater economic devastation, nowhere more than in Western New York," Skelos said.
News Reporter Phil Fairbanks contributed to this story.
tprecious@buffnews.com
Everyone is looking for that miracle cure.....
When will they realize THE ONLY THING that will balance this budget is to cut spending.
F NY I hope this state goes insolvent. Hey anything I can buy in Pa I will.I go to Pittsburgh every other week now. I will do my part to F this state 8% at a time. Let them cut State payrolls to many free cheesers on the books.
We are sinking faster then the Titanic and we give the Trailer trash $200.00 per kid for school supplies.Kiss my ass.
CGood......you're holding back. Tell us what you really think. Let it out!!!!Originally Posted by Cgoodsp466
Government is not the solution to our problem. Government is the problem. Ronald Reagan
Bioguy,I read the article in yesterdays news on the taxes and fees.I dont know who is dumber the ratbastards in Albany or the knuckeldraggers that elected the Nazi bastards. I am so pissed right now i could toss a midget.
I share your outrage. Not that long ago they pass a budget raising taxes, creating new fees and slapping surcharges on things like our utility bills. They don't cut any expenses and then to add insult to injury they give their staffs big raises.
It's no wonder people are leaving the state.
Government is not the solution to our problem. Government is the problem. Ronald Reagan
Here's an interesting article on Floridians getting fed up with increasing taxes and leaving Florida.
http://news.yahoo.com/s/time/2009090...08599191991600
It's laughable in that even with the increases they are still way behind NYS.
Government is not the solution to our problem. Government is the problem. Ronald Reagan
still better than NY.
It friggin amazes me how many retards love living in this state?
agreed! They enjoy the unions, special interests and politicians the best
Most of them know little else.
Amen my brother have a great Labor day,becuase your Labor feeds a Freecheeser every day.agreed! They enjoy the unions, special interests and politicians the best
Most of them know little else.
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