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Spitzer budget raises spending, state taxes, fees
Proposal totals $124.3 billion
ALBANY — Faced with a huge deficit, Gov. Eliot L. Spitzer proposed a state budget Tuesday that grows at more than the rate of inflation, raises taxes and fees on everything from insurance companies to car owners, and calls for cuts in the growth of spending on health care and funding for high-needs schools.
Against the backdrop of a troubled national economy, Spitzer also is backing away from a promise last year to provide $500 million in additional property-tax rebates and shaving state payments to hospitals and nursing homes caring for Medicaid patients.
He, furthermore, relies on several unusual ways to raise money, including tax stamps on illegal drugs, higher assessments on malt liquor drinks and small cigars, an additional $20 charge for the enhanced driver’s license for crossing the border from Canada and a major expansion of the lottery’s Quick Draw game that critics call video crack.
After a year of battles with the Legislature, Spitzer sounded a new theme — conciliation.
“We are open to all ideas,” he told lawmakers in a briefing about his budget, which he said focuses “limited resources on the critical investments we need for economic growth.”
But in the Legislature, many of his ideas already were being called dead.
The Spitzer budget would raise spending in several areas, including expanded health insurance availability for low- to moderate-income families and a big borrowing campaign to fix up state parks. While a funding formula intended to drive more money to low-income, underperforming schools would get $350 million less than expected, education spending, overall, would rise $1.46 billion from last year, to $21 billion.
The overall budget totals $124.3 billion, up 5.1 percent from last year. And the state’s debt — costing New Yorkers nearly $5 billion in payments annually — will go to $53.3 billion from $50 billion, largely as a result of new borrowing programs.
The governor, a Democrat, repeatedly insisted his budget does not raise taxes; budget documents refers to “targeted actions to increase recurring revenues.”
The budget actually calls for raising about $1.9 billion from new revenue schemes, including tax and fee increases, more money from lottery proceeds and assessments on insurance companies.
The plan calls for $434 million in a variety of tax increases on businesses and individuals, which Spitzer calls closing loopholes. It also seeks another $305 million in fee increases, such as a tripling of a state fee imposed on auto insurance premiums and higher costs for everyone from nuclear plant operators to internet companies.
It also proposes an additional $20 to obtain a special driver’s license to qualify for travel to and from Canada. That would raise an estimated $52 million for the state.
State Senate Majority Leader Joseph L. Bruno, the governor’s chief protagonist, criticized the budget for overspending and poor choices.
“I believe the governor has missed addressing the real priorities of the people of New York State,” said Bruno, who questioned Spitzer’s upstate commitment, noting a sizable portion of the $1 billion fund targeted for upstate will go for things the state needs to pay for anyway, such as road and parks improvements.
While the governor has talked of an extra focus on upstate, his downstate program is more generous, at $1.2 billion.
The proposed budget is perilously balanced, the governor’s own fiscal documents show. It assumes no national recession and notes the heavy reliance on Wall Street and other economy- sensitive sectors to bring in tax revenue. The financial services industries alone count for 20 percent of the state’s revenues — a worrisome reliance given Wall Street’s recent downturn.
“The bad news is, when it sneezes the rest of us get pneumonia,” Spitzer told lawmakers of the budget’s reliance on Wall Street profits. Still, fiscal conservatives said Spitzer is ignoring economic warning signs. He, for instance, proposes no hiring freeze and calls for increasing the state payroll by 1,850 positions, for a total work force of 210,270.
The budget also envisions collecting taxes on sales of cigarettes by retailers on Indian reservations to non-Indians; however, the governor has not said how he will accomplish that.
Buffalo Mayor Byron W. Brown praised a proposed $13.9 million — 9 percent — increase, to $169 million, in state funding for the city. Most suburban towns would get increases averaging 3 percent, while other cities, including Rochester, would receive a 13.5 percent increase.
The Spitzer budget also calls for $15 million in improvements for Buffalo’s inner and outer harbor areas. He wants to give localities more flexibility in raising taxes and fees, such as those on cell phones and mortgage recording taxes.
Fiscal conservatives said they were disappointed by a budget that ignores the worsening national economy.
E.J. McMahon, director of the Empire Center for New York State Policy, pointed to the proposed budget’s big spending increases in the future — 22 percent between 2010 and 2012.
“We’re flying pretty high in stormy skies,” he said.
Borrowing is peppered throughout the budget, adding billions to the state’s already much-criticized debt levels. The state university system alone would begin a $9.3 billion borrowing program for new construction.
The governor noted that although the budget includes $125 million extra for counties, it also requires counties to pay more for public assistance and youth detention facilities.
Property taxpayers were promised last year they would receive $1.8 billion in rebate checks. Instead, the Spitzer plan calls for $1.3 billion — the same level as approved last year. That is worth, on average, about $65 less in average rebate checks than promised.
One cost not rising under the Spitzer budget is state university tuition. The budget calls for reducing aid to the state university system by 2.5 percent — the same level other state agencies are being asked to trim their spending. It also cuts state aid to community colleges.
