Senate Passes Bipartisan Deficit Reduction Plan

December 02, 2009

Cuts nearly $3 billion in spending while preventing tax hikes and loss of aid to vital services

(Albany, NY)- The New York State Senate passed a bipartisan deficit reduction plan that protects jobs, prevents tax hikes and saves hundreds of millions of dollars in critical school funding. The legislation passed by the Senate closes nearly $3 billion of the state’s budget gap and puts New York back on sound fiscal footing.


Prior to the passage of the deficit reduction plan, the Senate, led by Finance Chairman Carl Kruger, conducted four statewide budget hearings. Throughout the hearings, the Senate heard testimony from thousands of individuals and community based organizations who expressed an overwhelming desire to participate in the budget process that ultimately determines how their tax dollars are being spent.


Following two months of bipartisan negotiations, the Senate achieved its goal of balancing the budget without any new taxes or fees of any kind. The Senate successfully fought to:

·         Cut education spending without imposing midyear school cuts that would have taken money out of classrooms and potentially raised property taxes for working families;

·         Reduce health care spending without the loss of approximately $750 million in federal funding for medical services; and

·         Prevent the loss of over 12,000 jobs from cuts to vital services.


“Across New York, families have had to tighten their belts to weather the fiscal crisis and now state government has done the same. Although the process took longer than any of us would have liked, the result was worth the wait. Through a bipartisan solution with Senate Republicans, we balanced the budget in line with our values. Thousands of jobs were saved, vital funding for schools was protected and our ability to live in safe, affordable and healthy communities was preserved,” said Majority Conference Leader John L. Sampson.


“Today, we passed a fiscally prudent deficit reduction plan that promotes sustainable spending and does not place any additional burden on taxpayers. Especially during times of economic distress, it is our duty to protect jobs and prevent unnecessary tax hikes. Throughout this budget, we held true to the principle of cutting with care. This budget achieves those goals and puts New York back on sound fiscal footing,” said Senate President Pro Tempore Malcolm A. Smith.


“We had to be responsible and deliberative with this Deficit Reduction Plan, making sure we didn’t continue to burden people already hit the hardest by this economic recession – the poor, the elderly, and working families. We were able to achieve that goal with minimal reductions in healthcare and completely averting mid-year cuts to school aid,” said Senate Majority Leader Pedro Espada, Jr. (D-Bronx). “Looking to 2010, we cannot continue to address the State budget in crisis mode but rather approach it from the bigger picture, with long-term thinking so that we can create jobs, revitalize urban areas, and develop much-needed affordable housing – all of which  will set us on the fast track to economic recovery.”


"This plan proves that it is possible to significantly cut New York State's budget deficit without sacrificing the health and welfare of our communities. Working together we developed smart and effective alternatives without costing thousands more New Yorkers their jobs, without sacrificing the education of our children and without putting any extra burden on hardworking taxpayers" said Deputy Majority Leader Jeff Klein (D-Bronx/Westchester).


“Our measure closes the budget deficit and ends the pattern of unsustainable spending,” said Senator Carl Kruger (D-Brooklyn), Chair of the Senate Finance Committee. “Negotiations were intense but essential because in this economy there is no place for new taxes on already overtaxed New Yorkers, and so-called ‘non-vital’ programs historically face the chopping block first even though they provide a lifeline to our most vulnerable residents. Though the budget is balanced, structural problems still remain that cry out for reform—and for next year the Senate will be advocating a performance-based plan that requires all state agencies to justify every dime of spending. It’s what New Yorkers expect and it’s what they will get.”


“We tried to meet the budget reduction target by doing as little harm as possible,” said Senator Liz Krueger (D-Manhattan), Vice Chair of the Finance Committee. “Because economic times are tough, our goal was to protect those who are most vulnerable and most in need of the government's help, while avoiding increasing unemployment or passing tax hikes at a time when New Yorkers cannot bear more burdens. We still have very real challenges, particularly next year’s budget. But if we approach every action in a thoughtful and responsible manner, our budget will remain balanced and our economy will continue to come back from this recession.”


Among the spending reductions passed by the Senate (other than the $485 million in agency cuts to be enacted by the Governor):

·         12.5 percent cut to remaining balances of local assistance grants;

·         5 percent cut to operating aid for SUNY, CUNY and community colleges;

·         5.4 percent cut to the Office of Mental Retardation and Developmental Disabilities; and

·         $107 million in health care actions.


Several one-time legislative actions were included in the DRP as well, including:

·         $200 million from the Battery Park City Authority;

·         $90 million from the Regional Greenhouse Gas Initiative;

·         $10 million from the Environmental Protection Fund; and

·         $26 million from the Dormitory Authority.


By working with the Governor and Assembly to find alternative cuts, the Senate successfully turned back a number of proposals that would have cost the state hundreds of millions in lost funding, established new taxes and left nursing homes without the funding they needed to continue vital services for our elderly.

·         The Senate stood firm against the imposition of any new taxes on New Yorkers or businesses by reversing the Governor’s proposal to more than double the gross receipts tax on hospitals (from .35% to .75%,).

·         The Senate ensured that outside sources of funding remain strong by finding more sensible cuts than the proposed $287 million to Medicaid programs, which would have triggered the loss of hundreds of millions in federal matching funds—the state would have lost $1.60 for every dollar saved, totaling $746 million (state and federal share).

·         The Senate eliminated the plan to delay rebasing payments to nursing homes and hospitals (costing them $60 million). The original proposal would have had a particularly negative impact on those Upstate and in suburban providers.