Senate's Budget Cuts Property Taxes, Helps Schools

James L. Seward

March 12, 2007

The state senate today will begin acting on a $120.6 billion 2007-08 state budget that redirects one billion dollars in spending proposed by the governor to achieve the senate's commitment to reject new taxes and provide tax relief, prevent devastating health care cuts, provide a fair aid distribution to all school districts, invest in job creation and make college more affordable.

"This is a good step forward toward my goal of an on-time budget," Senator James L. Seward said. "We're getting results where it matters to people -- property tax relief; supporting our local schools; helping nursing homes and hospitals; and initiatives to help counties devastated by the floods and to assist our dairy farmers."

"Education, health care, tax relief, jobs these have been the Senate’s priorities all along because they are our constituents’ priorities," Senate Majority Leader Joseph L. Bruno said. "We have heard a clear and consistent message from the people that they don’t want money cut from their local hospitals, they don’t want their school district shortchanged on State aid, they want greater property tax relief and they want a stronger economy. The Senate budget delivers on all these issues and more."

The Senate will begin acting on budget measures today and will complete action Tuesday before submitting the plan to joint budget conference committees for public negotiations.

"We are moving forward with a public process to resolve the differences between the budgets proposed by the Senate and Assembly and as long as everyone involved is open and willing to negotiate and compromise, there is no reason we can’t have a budget in place before April 1," Senator Bruno said.

"Rather than taking more money from taxpayers for the government to spend, the Senate budget provides greater tax relief and rejects new taxes," Senator Bruno said. "It’s not the government’s money to spend, that’s why we are giving taxpayers more of their money back so they can decide how to spend it on their families or invest in our economy."

"The Senate’s proposed budget will restore critical funding to ensure that our health care system can continue to function well and deliver quality services to Long Islanders and all New Yorkers," said Senator Owen H. Johnson (4th Senate District, Babylon), Chairman of the Finance Committee. "I’m also pleased that our budget provides meaningful property tax relief and business tax relief to help struggling homeowners and businesses and ensures that Long Island schoolchildren aren’t shortchanged. I look forward to working with my colleagues to deliver New Yorkers another on-time budget that meets their most pressing needs."

Highlights of the Senate’s proposed 2007-08 budget

Rejects new taxes and fees

> Rejects more than $800 million in new and increased taxes and fees this year, growing to over $2 billion next year, including tax increases on hospitals, nursing homes and financial services.
Provides greater tax relief for property taxpayers
> Provides $2.6 billion in property tax relief that would triple the size of direct tax rebate checks to all homeowners, growing to $3.4 billion next year.
Provides tax relief to business to create jobs
> Provides more than $723 million in business tax relief this year to create new jobs, growing to more than $1.8 billion next year.
> Business tax cuts include:
- eliminating income and corporate franchise taxes on manufacturing, saving $550 million;
- $350 million in tax credits to help small businesses afford rising energy costs
- $150 million in direct property tax rebate checks for small businesses and
- providing tax incentives for emerging technology companies to manufacture in New York so they can grow here and create new jobs.

Increases School Aid and ensures a fair distribution
The Senate budget adds $358 million, which generates over $514 million on a school year basis, to the Governor’s school aid package to ensure a fair distribution of school aid to districts throughout the State. This represents the largest school aid increase in the history of New York. This substantial infusion of education dollars will both meet the mandate of the Court of Appeals decision in CFE v The State of New York, and will provide school districts with a fair, transparent and predictable aid program that properly reflects the needs of students and taxpayers across the entire State.

The Senate adds $192 million to significantly improve the distribution of the Governor’s Foundation Aid by enacting the Foundation Plus aid formula. The school aid formula proposed in the Executive Budget would have placed 304 school districts (45 percent of the schools in the State) on a permanent save harmless. The Senate Foundation Plus plan significantly improves on the Executive plan and places only 83 school districts on save harmless in 2007-08; this number will decline to 70 by 2010-2011.

Specifically, the Senate budget --
> Adds $90 million to fully fund the Public Excess Cost aid formula, ensuring that all schools will receive the reimbursement promised for the 2007-08 school year;
> Provides for current year state aid payments for High Cost special education children beginning in the 2008-09 school year;
> Adds $25 million for a new version of the traditional growth aid formula to recognize those school districts that are experiencing pupil growth. The Governor proposed to collapse this aid category into his Foundation Aid proposal;
> The Senate reestablishes the Tax Limitation Aid formula which was proposed to be consolidated by the Governor and provides $45 million for those school districts with strong per pupil spending efforts relative to the State and those school districts with substantial tax effort compared to their districts' income;
> The Senate accepts the Executive's proposal on transportation aid, BOCES, private excess cost aid, and special services aid;
> The Senate concurs with the Executive's proposal to provide per pupil increases for Textbook Aid (95 cents per student) and Library Materials Aid (25 cents per student) as well as provide an additional tier worth $6.2 million in hardware technology aid for nonpublic schools.
> The Senate rejects the Executive’s Contract for Excellence proposal and substitutes the Senate’s Leading Educational Achievement for Results Now (LEARN). The LEARN program creates the Office of Educational Accountability (OEA) to promote educational achievement across the State.
> Specifically the LEARN plan includes the following: each school or district deemed to be "poorly performing" by the OEA would be assigned a "Master Administrator" to help develop a three-year School Improvement Plan. If after three years the school or district continues to perform poorly, the school or district can be closed by the OEA and reopened under new leadership. If after six years it continues to perform poorly, an "Executive Administrator" would be assigned by the OEA to provide direct management to the school;
> The Senate concurs with the Executive's proposal to increase the cap on charter schools from 100 to 250 with the Chancellor, SUNY and the State Board of Regents each given the authorization to approve 50 new charter schools. The Senate also provides $7 million in additional funds to expand the school districts which are eligible for charter school transition aid.
> The Senate rejects the Executive's the Middle Class STAR proposal. Instead, the Senate proposes to restore and triple the Rebate checks provided in 2006-07; and
> The Senate adds $5 million for libraries bringing the total amount for library aid to $102.2 million.

Making College More Affordable
> The Senate budget includes $129 million to expand eligibility for the State Tuition Assistance Program (TAP) and increase awards, including doubling the minimum TAP award, enhancing the tuition tax credit for families, establishing a student loan debt relief program, providing assistance to help veterans afford college tuition and creating a math, science and engineering technology retention initiative for New York students.
> The Senate provides an additional $3.78 million for independent colleges and universities (BUNDY) aid.

Protects Access to Health Care
> The Senate Budget includes a net restoration of $544 million for Medicaid and health programs. The Senate Budget includes $121 million in General Fund savings as a result of a re-estimation of

Medicaid spending for SFY 2007-08.
> Restorations include $241.1 million for hospitals and $230.4 million for nursing homes.
>The Senate rejects the imposition of new Early Intervention program fees.
> The Senate accepts the Executive’s proposal to provide improved prescription coverage for seniors by requiring all seniors to enroll into a Medicare Part D Drug plan.
> The Senate budget provides $91.3 million (State share) for the 2.5 percent trend factor to assist hospitals with inflationary pressures, such as increased costs for energy, and every day supplies. >

The Senate Budget provides $40.9 million to restore hospital worker recruitment, retention and retraining funding, and rejects the Executive's proposal to redistribute funding among hospitals.
> Because the Senate is opposed to any new taxes or fees, the Senate Budget rejects the 0.35 percent tax on hospitals gross receipts and restores $136.9 million in State Funds.
> To ensure that hospitals have highly trained and qualified physicians in New York State, the Senate Budget restores $36.2 million for Graduate Medical Education (GME).

Stem Cell Research
The Senate rejects the Governor’s proposal to establish the Stem Cell and Innovation Fund Corporation and provides $1 billion in funding ($100 million per year over the next ten years) beginning in SFY 2007-08 for the New York State Stem Cell Innovation Program to support biomedical research and emerging biotechnology. Grants will be awarded after review by a Biomedicine Advisory Board and a Bioethics Advisory Board. Applicants will be required to provide a 3:1 match.

Local Government Assistance
> Restores $2 million in State aid through the AIM program to 81 towns and villages that had aid eliminated in the Executive Budget.
> Restores $40 million of the $328 million in AIM funds eliminated for New York City in the Executive Budget and fully restores the funding for SFY 2008-09.
> Restores $13 million in CHIPS highway funds.

Upstate Flood Relief
> The Senate budget proposal includes $10 million in financial assistance to help counties impacted by the devastating floods in June and November of 2006.

Help For Struggling Dairy Farms
> The Senate budget provides $60 million in financial assistance to strengthen dairy farms that are struggling as a result of low commodity prices and high energy and livestock feed prices.
Budget Transparency
> The Senate budget lines out spending and does not include any lump sum appropriations.

Crime and Corrections
> The Senate budget rejects the Executive's proposal to create a temporary prison closure commission and also lines out unallocated discretionary lump sums.

Water and Juice Bottle Tax
> The Senate budget rejects the proposal to expand the State Returnable Container Act to include non carbonated beverage containers.