Tough Budget Choices Still Loom, More Voices for Fair Share Tax Reform by WFP

Albany took a $1.6 billion bite out of the budget gap yesterday, balancing the current year's budget with a "grab bag" of one-time revenue raisers and cuts. As the New York Times reports, however, the big question of whether to raise income taxes on those who can most afford to pay or balance the budget through devastating cuts still looms.

(Note: lawmakers rejected the use of the $1 billion in the state's rainy day (i.e.,tax stablization) fund that is designed to be used if a budget incurs an unexpected deficit as happened this year.)

One Albany leader who's taking the side of working families is Assembly Speaker Sheldon Silver, who the New York Post reports, asked rhetorically yesterday: "Is it fair to ask the people who make more to pay a little bit more in this time of crisis?" He added: "We've done it before. There hasn't been a catastrophe. It is certainly a viable option that has to be considered as we go forward for the next budget."

He isn't the only one who thinks so. Rex McKenzie, an economist at SUNY, Purchase, argues in an op-ed in today's Journal News that dramatically cutting state spending as the Governor proposes would have the effect of worsening the recession:

The reasoning is straightforward: in a recession, you want to raise (or not decrease) the level of total spending by households, businesses and government in the economy…To cut spending as Albany proposes is living on the edge in that the governor risks prolonging and deepening the recession… The economists advising the governor must have told him the obvious - raising taxes on high-income households will reduce spending, but by much less than the amount of the tax increase, since those with plenty of income typically spend only a fraction of their income.

…
[W]hy then has Paterson and Albany opted for a path that could easily swell the unemployment numbers and why exactly is Albany asking for the most sacrifice from those who can least afford to give it?



The Post-Standard joins the call as well, writing in an editorial today that hard-hitting or not, TV ads launched this week by SEIU 1199 make a good point: "the idea of temporarily raising the income taxes of the state's highest earners -- a strategy Gov. George Pataki used in 2003 and 2004 -- is worth a careful look."

Those voices join the vast majority of New Yorkers who have consistently told opinion polls they'd like to see Albany ask the wealthy to pay their fair share in taxes before enacting devastating budget cuts. That's no surprise, given the myriad painful cuts the Governor has proposed, as today's stories illustrate:

-The Times Union's Fred LeBrun looks at Gov. Paterson's plan to limit the amount of property taxes the state pays to local communities on public land, potentially devastating rural communities in the Catskills and Adirondacks. Savings? $9 million.

-Speaking of 1199's ads, the New York Post reports Juan Petri, who appears in the ad and is blind, insisted he wasn't delivering a cheap shot: "Nothing could be further from the truth. While I am a New Yorker who needs home health services who happens to be visually impaired, I am no different from the millions of other New Yorkers who want to see health care protected from budget cuts."

-Newsday's editorial board says the Governor's plan to transfer funding from the Environmental Protection Fund and replace it with an expanded bottle bill is risky and could end up gutting environmental protection.

-In Albany, the Times Union reports that state workers rallied against the proposed merger of the Department of Economic Development and the New York State Foundation for Science, Technology and Innovation into the Empire State Development Corporation. Assemblyman Richard Brodsky called the merger "anti-reform in the guise of consolidation," adding, "If you like the MTA and the Thruway Authority, you're going to love the new ESDC."

-The Governor's budget cuts will curtail county fairs in Central New York, the Post-Standard reports.

-Finally, in a show of solidarity, the Albany Times Union reports Troy schools superintendent Fadhilika Atiba-Weza will forgo his annual pay raise as the district tries to cope with the Governor's cuts.

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A summary of the cuts

Higher education: $53 million

Increase SUNY tuition: $62 million
Increase TAP Award spending: Cost $9 million
Local Government: $94 million

Change timing of NYC STAR Payment: $93 million
Scale back local government efficiency grant programs: $1 million
Human services: $4 million

Delay implementation of bridges to health program: $1 million
Reduce OASAS Prevention Funding: $3 million
Workforce: $5 million

Rescind 2008-09 Vacation Exchange program: $5 million
Miscellaneous reductions: $253 million

Reduce new legislative programs: $26 million
Eliminate Member items transfer: $30 million
Reduce funding for Certain Economic Development programs: $6 million
Reduce Arts Grants funding: $7 million
EPF Reduction: $50 million
Statewide Spending controls: $135 million
Health Care: $359 million

Delay nursing home rebasing: $22 million
Eliminate retroactive trend adjustments: $0
Increase Covered Lives Assessment: $120 million
Reduce Grant funding: $9 million
Eliminate non-public hospital grants: $11 million
Change HMO Direct Pay Financing: $40 million
Eliminate grant funding: $4.6 million
Reduce grant funding: $4.2 million
Change Healthy NY Financing: $137 million
Recoup overpayments: $11.1 million
Other Actions: $823 million

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Federal Stimulus On the Way! Groups Urge Legislature to Reconsider Cuts
Deficit Reduction Plan Will Needlessly Hurt the Economy, Cut Jobs and Put Vulnerable Populations at Further Risk in our Fragile Economy

(Albany, NY) The Better Choice Budget Coalition, the One New York: Fighting for Fairness Coalition, Citizen Action of New York and many others groups joined forces today to tell the Governor and the Legislature to reject the current Deficit Reduction Plan and wait for federal relief which could be agreed upon as early as this week.

The plan being considered by the governor and legislative leaders to close that gap is drawing passionate opposition from non-profit service providers, environmental and education groups, religious leaders, and labor leaders, who gathered today to call attention to the so-called dark side of the plan.

While the details of the plan may be subject to change, the legislation (A.163/S.250) identifies programs that will be cut by nearly half, including child care programs, HIV/AIDS programs, services for older adults, services for runaway and homeless youth, chronic homelessness, after school programs, newborn home visiting, and funds for community colleges. The cuts would be immediate and affect many existing contracts the state already has in place.

The groups say that the harm these cuts would wreak has not been seriously considered, and that there are gap-closing strategies that would avoid the harshest impacts. They also point to the Federal Stimulus Package—now being debated in Congress—which is expressly intended to help states reduce current as well as future deficits.
“Justice Louis Brandeis reminds us that, ‘Most of the things worth doing in the world had been declared impossible before they were done,’” said Susan Hager, President, United Way of New York State. “So in response to the outcry for change in our state and country, and the formidable challenges we face, we call upon the governor and the legislature to abandon this attempt to save money by reneging on 2008 funding promises to community service providers. Instead, we urge them to join us in a new dialogue to find ways to balance the state budget, while continuing to provide assistance to those who need it most.”
Karen Schimke, president of the Schuyler Center for Analysis and Advocacy, said, “We believe strongly that New York’s priorities should be to protect the vulnerable, protect our future “seed corn” investments and to support programs that have proven outcomes. There is no reason to violate these priorities in view of the fact that a stimulus package is coming. Human Services organizations across the state have already laid off staff in anticipation of the Governor’s budget. That should not be acceptable.

“Currently not-for-profits are suffering from a loss of private and public dollars while trying to serve an increasing number of people in need of their services. Now is not the time to remove critical dollars, and the Deficit Reduction Plan will have severe repercussions not only for vital programs, but for New Yorkers in desperate need of help, said Allison Sesso, Human Services Council, Deputy Executive Director.

“In the midst of this economic crisis, civil legal services providers outside New York City are turning away at least 55 low income New Yorkers in need of legal assistance every hour our doors are open because we do not have enough funding to meet the need. Those numbers will only increase as the recession deepens. We urge the Governor and the Legislature to reconsider this short sighted cut and to focus instead on ensuring greater access to justice in New York,” said Anne Erickson, of the Empire Justice Center speaking on behalf of the Legal Services Funding Alliance, a coalition of the 20 civil legal services providers outside New York City.
“These cuts will not only be harmful, but they're unnecessary,” said Alan Lubin, New York State United Teacher’s executive Vice-President. “The federal stimulus funding we’re anticipating will be retroactive, so it makes no sense to cut when help is on the way.”

Bob Cohen, policy director of Citizen Action of New York, agreed: “Given that Congress is set to pass an economic stimulus plan in February, it doesn’t make sense for the Legislature at this point to make mid-year cuts to vital programs that New Yorkers depend on. Instead we should wait to find out how much in aid New York State will receive as part of the federal economic stimulus plan before the Congress, and then determine a state response. And when we receive the federal dollars, this shouldn’t let Governor Paterson and the Legislature off the hook for passing Fair Share Tax Reform, which would raise taxes on high income individuals. Governor Paterson should be working in tandem with President Obama for change – not undermining the President’s efforts to stimulate the economy.”

According to Ron Deutsch, executive director of New Yorkers for Fiscal Fairness, “There has been no serious analysis about how these cuts will hurt already fragile community services. What we find the hardest to accept is that our leaders seem to be willfully passing over some of the tools available to them—tools meant for this very purpose,” “What can you call it but irresponsible?” In addition to the anticipated federal stimulus, he pointed to funds the state could find on its own.

“Citizen Action of New York and the Alliance for Quality Education were two of the main organizations that fought and won the fight for equitable funding of schools in New York State,” said Ivette Alfonso, Citizen Action of New York board member and AQE committee chair. “The Governor is backing away from that victory by proposing to cut school funding in his executive budget. The new federal money should target the school districts where the need is greatest. There’s no reason to do mid-year cuts until we know how much New York is getting in the stimulus bill.”

The state’s so-called Tax Stabilization Reserve Fund is a rainy day fund designed for unanticipated mid-year deficits; that fund alone has a balance of over $1 billion. Other reserves identified in the executive budget include: a $306 million reserve from NY Power Authority, $166 million in Department of Law and Manhattan District Attorney legal settlements; $25 million from transferring the bottle bill deposits to the state; and $106million in general fund transfers.

Mark Dunlea, executive director of the Hunger Action Network of New York State, said, “The last thing any government wants to do in an economic recession is to cut spending for low-income families, since such funds are the most effective way to stimulate the economy. Instead of trying to push through draconian cuts in essential services, it would be far more fiscally prudent to utilize the 'rainy day' funding to close the immediate gap, especially in light of the significant fiscal relief the state expects from the federal stimulus package. Lawmakers should also recognize however that the state's fiscal problems stems from decades of excessive tax cuts for the wealthy rather than excessive spending on the poor and working families. They should support tax reform that begins with making the rich pay their fair share.”

“Our leaders should ‘just say no’ to cutting programs that serve the homeless, low-income families and people with disabilities who are already struggling,” said Shelly Nortz, deputy executive director for policy at the Coalition for the Homeless. “The fact is that Governor Paterson, the Senate and the Assembly can plug this year’s budget deficit without devastating critical services for the most vulnerable groups.”