Budget Equity XII

Analysis of the Governor’s Executive budget

The People’s Budget

by The New York State Black, Puerto Rican and Hispanic Legislative Caucus

Assemblyman Roger L. Green

Assemblyman Carl Heastie
Caucus Budget Chairman

February 15, 2003

I. Message From Chairman Roger L. Green
II. Message From Budget Chairman Carl E. Heastie
III. Acknowledgements
IV. Explanation of Terms and Overview Charts
V. Preliminary Analysis of the 2003-2004 Executive Budget Proposal
VI. Balancing Revenues, Expenditures and Human Needs in the 21st Century
VII. Economic Development
VIII. Census, Redistricting and Electoral Reform
IX. Education
X. Higher Education, Arts & Culture
XI. Health & Elders
XII. Housing Energy, & Community Development
XIII. Immigration
XIV. Justice & Human Rights
XV. Labor & Workforce Development
XVI. Transportation & the Environment
XVII. Women's Issues
XVIII. Families & Human Services
XIX. Restoring a Fair and Adequate Tax System


The New York State Black, Puerto Rican and Hispanic Legislative Caucus has put forth this analysis of the Governor's Executive Budget, entitled Budget Equity XII, in order to inform our constituents of the magnitude of the hardship and pain our communities will face if it is enacted. This document provides an overview of the devastating impact this proposed budget could inflict, especially in those areas of particular concern to the poor and minority communities of our state. The Caucus is determined to protect New York State's most vulnerable populations, the elderly, our children, the poor and people of color.

This budget is a clear and present danger not only to the poor in our communities, but also to most of our middle class constituents. The cuts in education, coupled with various fee increases, saddle the middle class and poorer citizens with a disproportionate level of burden. For example:

* A two billion-dollar cut to Medicaid and other health care spending would jeopardize our health care system. This proposal would certainly diminish the quality of life for most New Yorkers.

* If the Governor cuts $1.24 billion for elementary and secondary schools, our children will be forced to endure yet another year of antiquated school buildings and insufficient resources to succeed in the twenty-first century. Adopting this measure would be the largest reduction in school aid, in state history

We will continue to fight to ensure that the state's final budget protects the future of our constituents. We cannot allow this government to solve its problems on the backs of our people. Please use this document to inform and empower yourself for the struggle that lies ahead.

Message from Budget Chair Assemblyman Carl E. Heastie SFY 2003-2004

In presenting his Executive Budget for the 2003-2004 state fiscal year, Governor Pataki's message was about making choices between job killing taxes and job creation. Further, he states, to do this we must make tough choices. Unfortunately, the Governor's budget is about making wrong choices not tough choices. Everyone recognizes that sacrifices need to be made to balance the budget. However, the sacrifices need to be just and shared by all.

The state is facing roughly an $11.5 billion dollar deficit, $2.2 billion through the close of SFY 2002-2003 and $9.3 billion for SFY 2003-2004. Closing this deficit will be difficult based on the economic climate in New York as a result of the national recession and the events of September 11, 2001. With this in mind, we must do all that we can to educate our people, offer affordable quality health care, create jobs and ensure that working families are able to make ends meet. The Governor's budget falls short in these aspects.

Education in New York State, particularly in communities of color will be crippled under the Governor's proposal. This budget has virtually eliminated all early childhood programs, including pre-kindergarten, K-3 class size reduction and full day kindergarten. School aid cuts totaling $1.24 billion will mean cutbacks to essential and worthwhile programs, teacher lay-offs and ultimately lower academic standards… not to mention local property tax increases in some areas of the state in order to offset this proposed reduction.

The Executive Budget proposal calls for sharp increases in tuition for State University and City University students this fiscal year; this is in addition to mandatory fee increases in previous years. This budget has also proposed to cut opportunity programs, which have paved the way for many children of color the opportunity to go to college. During uncertain economic times we should be encouraging our youth to go to college and obtain skills that will ensure that they will be ready and able to participate in an ever increasingly competitive job market.

Included in Governor Pataki's proposal are massive cuts to Medicaid. The total of these cuts could reach upwards of $2 billion, which would further hamper an industry already plagued by staff shortages, emergency room closures and the denial of home care services to many seniors. Furthermore, the Governor proposes to raise fees for the Elderly Pharmaceutical Insurance Coverage program, cut reimbursements to pharmacies and reduce eligibility levels for the Family Health Plus program.

As New Yorkers are faced with public university tuition increases and Metropolitan Transportation Authority fare hikes, the Governor's proposal contains billions in numerous hidden taxes, fees and surcharges. Despite his promise not to raise job killing taxes, the Governor has chosen to impose increases on working families. Some of these fees are freezing the School Tax Relief program, calling for state and local sales tax on clothing and shoes costing less than $110, reinstating a higher tax rate on hospitals and imposing tax increases on other certified home health agencies, home care agencies and personal care agencies.

As we move forward in the budget negotiation process, it is paramount that the Governor and the Legislature make the right and fair choices to benefit all New Yorkers.


We would like to express a special appreciation to all of the Legislators, staffs and community groups who have contributed to this publication. Without their talents, dedication and commitment Budget Equity XII would not have been possible.

The Fiscal Policy Institute
The Conference of Big Five School Districts
Environmental Advocates of NY
District Council 37
Medgar Evers College
Alliance for Quality Education
Citizen Action of New York
John Wellspeak
Dean John Flateau
DuBois Bunche Center For Public Policy
Assemblywoman Barbara M. Clark
Assemblyman Paul D. Tonko
Assemblywoman Helene Weinstein
Senator John Sampson
Legislative Women's Caucus, Inc.
The Assembly Ways & Means Committee
Assembly Program & Counsel Office
Assembly Commission Staff
The Assembly Print Shop

We would also like to thank our staffs for the editing, processing and production of this document:

Shaniqua Saxon
Sabrina Bonne Annee
Lakisha Spence
Ashley Coulanges
Ime Nelson

Chief Content Editors:

Tyrone Benton
Margie Owens

Coordinator: Paul Upton


New York State's Annual Budget contains the financial resources that allow many programs throughout the State to operate in an efficient and effective manner. The appropriations contained in the state budget are presented in specific fund types and categories or purposes. The presentation is simply distinguishing where the money comes from and where it goes or for what purpose is it spent. The following definitions are meant to be a non-technical description of funding structure of the state budget.

Fund Types: How does NYS derive its money for the programs;

General Fund (GF): Represents funds derived from the Income Taxes of New York State Residents. These "TAX DOLLARS" can generally be spent for any purpose within the budget as designated by the Legislature and Governor.

Special Revenue Fund: Represents funds derived from a "SPECIAL SOURCE" and generally fall in two categories, State and Federal. These funds may be restricted in their usage and could prohibit appropriation for general purposes in the Budget.

The Special Revenue Fund (SRO) -State: dollars come from special agency sources like user fees, fines, penalties, student tuition, etc. charged to New York State Residents.

The Special Revenue-Federal (SRF): dollars come from the federal government usually in the form of a Grant and are for program-specific purposes in most cases. An example of these funds would be Federal Pell Grant funding for students at the State University of New York.

Capital Projects Revenue: Represents funds derived Tax Revenue or the sale of New York State Revenue Bonds. These funds are specifically targeted for major infrastructure and capital improvements like roads, bridges, buildings, and computer upgrades.

Debt Service Funds (DSF): Represents Tax Dollars and special revenue sources set aside to pay for the various revenue bonds issued by the State of New York.

Categories and Purposes

State Operations: funds in this category are used to support the primary operations of an agency such as administration and core programmatic activities.

Aid to Localities: Funds in this category are used to support the operations of local municipalities, community organizations, or direct grants to New York State residents (e.g. Tuition Assistance Grants for eligible college students).

General State Charges: Funds in this category are used to pay for the employee benefits of the state work force (e.g. medical insurance, retirement etc.).

Capital Projects Revenue: These funds are specifically target for major infrastructure or capital improvements like roads, bridges, buildings, and computer upgrades.

Debt Service Funds (DSF): set aside to pay for the various revenue bonds issued by the State of New York.

Percent of Governor's Proposed Cuts

Funding Level for General Fund Spending

NYC Population



Governors Budget Spending Percentage by Category

Balancing Revenues, Expenditures and Human Needs in a Troubled Time
Let a new earth rise. Let another world be born.

-Margaret Walker

Balancing Revenues, Expenditures and Human Needs in a Troubled Time

In discussing New York State's fiscal situation, Governor George E. Pataki has described New York's current budget problems as "the most difficult our generation has ever faced." The magnitude of these problems was first hinted at last summer when Senate Majority Leader Joseph Bruno said that the state government was likely to face an $8 to $10 budget gap for its 2003-04 fiscal year. While there were those who questioned this estimate during the summer and fall, it has turned out to be very much "in the ballpark". While this number is likely to fluctuate up and down with developments on both the revenue and expenditure sides of the ledger, Governor Pataki's recent Executive Budget set the state's budget gap at $11.5 billion - $2.2 billion for the fiscal year that will end on March 31, 2003, and $9.3 billion for the fiscal year that begins on April 1, 2003.

In thinking about the magnitude of this gap, it is important to remember that this is a gap in the state's General Fund budget, which currently accounts for approximately $40 billion of state spending. A recent report from the National Conference of State Legislatures, analyzing the 2003-04 budget gaps facing the various states, estimated that only four states faced larger general fund gaps than New York in percentage terms: Alaska, Arizona and California.

Because of the magnitude of the budget gap facing New York State, Governor Pataki is proposing a multi-year approach to getting the state's finances back into some form of on-going balance. To reconcile this approach with the Constitutional requirement that he submit a budget which is balanced on a cash basis, Governor Pataki is proposing to reduce that $11.5 billion gap to more manageable proportions through the use of one-shots (the largest of which is his proposal to generate $4 billion in cash through the sale of a portion of the payments that the state is scheduled to receive pursuant to the Master Settlement Agreement that settled the lawsuit between the states and the major tobacco companies), federal aid, efficiencies and other actions that will not create an additional drag on the state economy during the current recession. Through such steps, the Governor is proposing to reduce to approximately $6.5 billion the amount of the gap that needs to be closed through service cuts and spending increases.

In addressing this portion of the budget gap, Governor Pataki leans much more heavily toward service cuts than to revenue increases, and in recommending particular revenue increases, he relies almost entirely on increases in regressive consumption taxes and fees. The result is a budget that will have a more negative effect than necessary on both the state's economy and on our ability to meet essential human needs.

How Did We Get Into This Mess?

Thirteen months ago, in presenting his Executive Budget for the 2002-2003 state fiscal year, Governor George E. Pataki said that, "no challenge has ever been so great as the one before us now." At that time, Governor Pataki was referring to the incredible impact that the destruction of the World Trade Center on September 11th was having on New York's economy and on the finances of the New York State and New York City governments.

Several months earlier in a report to the federal government on the impact of the World Trade Center disaster on New York State, the Governor said, "The destruction in lower Manhattan disrupted or eliminated revenue sources that support the day-to-day functions of the City and the State. The financial services industry, which was most directly and profoundly impacted by the attacks, is by far the most important industry to the State and the City in terms of generating taxable incomes for both individuals and corporations, and is one of the primary engines for the national economy."

We now know, however, that the financial problems facing New York State and New York City were and are even greater than we realized a year ago. In addition to the revenue losses that we are experiencing as a result of the September 11th disaster, New York, like all the other states with personal income taxes, is experiencing unprecedented declines in revenues as a result of the bursting of the Wall Street bubble.

Throughout the 1990s, with some occasional minor declines, the Dow Jones Index grew phenomenally - - from just under 2,600 in January 1990 to 11,900 in January 2000. During this period, Net Capital Gains taxable by New York State grew from $8.7 billion in 1991 to $63.3 billion in 2000, an increase of 625%. During this same period Wall Street wages and bonuses grew 287% from $12.3 billion to $47.6 billion. Taken together, these two categories of income directly accounted for 37% of all of the growth in New York State's income tax base. And this is without even taking into consideration the multiplier effect of this growth on the rest of the New York City metropolitan area economy.

The stock market then flattened out, and for the next 16 months, the Dow Jones Index bounced up and down between its 11,900 January 2000 high and 9,500. In May 2001, the Dow began its bumpy but precipitous ride down from 11,300 in May 2001 to 7,500 in September 2002. This brought with an unprecedented decline in taxable capital gains in New York and in all of the other states with income taxes. In New York taxable capital gains declined from the 2000 peak of $63.3 billion to $28.4 billion in 2001 and an estimated $17.1 billion in 2002. California has experienced a similar but even more extreme roller-coaster ride with taxable capital gains in that state shooting up from $20 billion in 1995 to $118 billion in 2000, and then plummeting to $48 billion in 2001 and $40 billion in 2002.

The large multi-year tax cuts enacted in 1994 through 2000 have created significant, long-term budget problems for New York State.

Taken together, the tax cuts enacted in Governor Cuomo's last year in office and in Governor Pataki's first six years are reducing state revenues by about $13 billion during the current fiscal year alone. As the Governor proudly points out, the total value of these tax cuts through the end of the current fiscal year will be $64.6 billion - growing from about a half billion in 1994-95 to $4.2 billion in 1996-97 to this year's $12.8 billion. But, he never mentions the services that were cut, the human needs that were not met, and the investments that were not made in order to accommodate that $64.6 billion in foregone revenues. Imagine, if the state had cut taxes by half that amount - $32.3 billion - it would have still been the biggest tax cut in the history of this or any other state, but it would have meant less deferred maintenance of the state's physical and human infrastructure. And New York would have been much better prepared to deal with the "triple whammy" that it is now confronting - the bursting of the Wall Street bubble, the national recession and the aftermath of the September 11th attacks.

What the Governor also says, which unfortunately is not correct, is that "on a cumulative basis, when all enacted tax cuts are fully phased in, New Yorkers will have realized a savings of more than $100 billion." While, according to the Governor's estimate, state revenues will have been reduced by over $107.2 billion by the end of 2005-2006, a much smaller amount will have gone into the pockets of New Yorkers or into the state's economy. Approximately one third of this $107.2 billion will have gone to the federal treasury (since state personal and corporate income taxes are deductible on taxpayers' federal tax returns), while large portions will have gone to nonresident individuals and out-of-state and foreign corporations. Thus, the tax cuts are actually taking more money out of the state's economy than they are pumping back in. This helps to explain the stagnancy of those parts of the state that did not benefit during the 1990s from external forces like the boom on Wall Street or the growth of entertainment and "new media" businesses.

Governor Pataki's tax cuts are not stimulating the economy, as promised or as claimed.

The Governor argues that the additional tax cuts scheduled to take effect this year and in the future "must go forward, because we know that tax cuts create jobs." But no independent review of these additional tax cuts would conclude that they will contribute in any material way to New York state's economic revitalization. The $65 billion in tax cuts that have already been implemented have produced few if any tangible benefits for the state, particularly in comparison with the growth-supporting investments that could have been made with all or a portion of those resources.

Almost all of the state's job growth, before the declines that began in 2001, occurred in the New York City metropolitan area and this growth was overwhelmingly related to the phenomenal good times enjoyed, during the mid and late 1990s, by the financial services sector, professional business services, and entertainment and media. The real test of the Pataki tax cuts is that they do virtually nothing to stimulate growth in the parts of the state that did not benefit from the strength of these industries.

While the boom on Wall Street allowed New York State to implement these massive tax cuts without even deeper service cuts and without even less investment in the state's human and physical infrastructure, New York State tax policy, quite simply, had nothing to do with what happened or is happening in national and international financial markets. If New York State tax policy had anything to do with what goes on in the financial markets, the financial press would pay a lot more attention to what goes on in Albany and a lot less to the thoughts of Federal Reserve Bank chairman Alan Greenspan.

Wall Street is located in New York State and, as a result, the New York State treasury benefited mightily from the incredible bonuses and capital gains that were generated by the unprecedented Bull Market of the 1990s. The bonuses paid to Wall Street executives, and the quintupling (from $12 billion in 1994 to $63 billion in 2000) of the amount of capital gains declared on New York State tax revenues, resulted in three consecutive years of unprecedented increases in personal income tax revenues. But those revenues went to cover the revenue losses from the overly ambitious multi-year tax cuts, rather than to investments in the state's human and physical infrastructure in ways that address the huge disparities in socioeconomic well-being that plague our state and help build a strong and large middle class for the future. And now the bloom is off the rose. With capital gains income dropping from $63 billion in 2000 to $28 billion in 2001 and an estimated $17 billion in 2002, New York is now having to face the true implications of its tax cutting mania of recent years.

The Governor's centerpiece, a classic "supply-side" cut in the top rates on the state's personal income tax that is now reducing state revenues by over $5 billion per year, did not come close to generating the number of additional jobs that the Governor and his advisors promised. If those tax cuts had delivered the promised job growth, New York State would now have 200,000 more jobs than it actually has. Moreover, if employment had grown as fast in the first six and a half years of the Pataki administration as it had grown in the first six and a half years of the Cuomo administration, New York in August of 2001 would have had 185,000 more jobs than it actually had.

Tax Credits Run Amok

Many of the tax cuts enacted in recent years were sold as efforts to encourage the creation of jobs in areas of New York State where job creation is needed and where it would otherwise not occur. While this goal is obviously laudable, it ignores the experiences of this and other states with such efforts to use the tax code for "social engineering." Even more shocking has been the Pataki Administration's use of the rulemaking process to allow Empire Zone boundaries to be amended to include noncontiguous parcels in prosperous suburban areas. A program designed to steer development into socio-economically distressed urban and rural areas is now being used to reward favored firms in areas that would never on their own meet zone criteria.

Service cuts kill more jobs per dollar than progressive tax increases.

The Executive Budget proposes a $1 billion dollar cut in state Medicaid spending. According to a January 2003 study by Families USA on the economic impact of Medicaid spending in each of the 50 states, a $1 billion dollar reduction in New York State Medicaid funding would result in a $2 billion decline in business activity; the loss of 17,410 jobs and $720 million in wages and salaries.

The Executive Budget recommends a $1.2 billion dollar decrease in school aid for the coming fiscal years. Just to maintain current services, school districts will have to spend approximately $1.3 billion more than they did last year. If the state were to increase state aid by $650 million, local property taxpayers would only have to cover half of those costs. But if the state moves in the other direction and cuts state aid by $1.2 billion, local districts will be faced with a funding gap of $2.5 billion which they will have to close through either tax increases, service cuts or a combination of the two. If all of this budget balancing was done on the revenue side, it would require school districts across the state to increase local property taxes by 15% with that figure being much higher in the needier districts that are heavily dependent on state aid. If all of this budget balancing was done on the expenditure side it would not only have a substantial negative effect on the quality of the schools' educational programs but it would result in a substantial hit to the state's economy - in terms of both direct and indirect job losses.

The Executive Budget estimates savings of $587 million through "use of federal funds and other efforts to support welfare spending." These "savings" come in part from reducing support for local social services districts by $162 million and reducing services and benefits to recipients by another $242 million, including a proposal to not pass through the January 2004 federal cost of living increase for SSI recipients.

While the Governor assumes/asserts that tax increases generally have a more negative effect on the economy than service cuts. This is not true, and is particularly mistaken during a recession. Neither tax increases nor service cuts are desirable during a recession, but New York (like most other states) is required to balance its budget in both good times and bad. As Joseph Stiglitz, winner of the 2001 Nobel Prize in Economics, and Peter Orszag of the Brookings Institution have explained in Budget Cuts vs. Tax Increases at the State Level: Is One More Counter- Productive than the Other During a Recession?, a temporary increase in the tax on the portions of income over some relatively high level is the least damaging mechanism for balancing state budgets during recessions. Reductions in government spending on goods and services produced or provided locally and reductions in transfer payments to lower-income families are most damaging to the economy since they take dollar for dollar out of the local economy. Increases in consumption taxes and fees will take more demand out of the economy than tax increases on the tax on the portion of income over some relatively high level.

Both tax increases and service cuts can be "job killers." The Governor should want to avoid job killing service cuts as much as he wants to avoid job killing tax increases. Rather than engaging in a war of words, the Governor and the Legislature should get down to business and choose that mix of revenue increases and service cuts that will have the least negative effect on the economy.

As part of a general clean up of the state's tax laws, it is essential that certain basic "common sense" safeguards be added to the state's growing list of economic development tax incentives:

* Tax credits created in the name of job creation should include accountability mechanisms to ensure that the promised job creation actually materializes.

* Tax credits designed to help areas with poorly performing economies should have logical criteria and should not write into permanent law criteria that make permanent some notion of what those under-performing areas may be at a particular point in time.

* Tax credits or other government largesse should not be used to encourage or to reward the creation of jobs at or below the poverty level. Doing this only drives more money out of the federal, state and county treasuries in the form of the income supports that our society appropriately provides to the working poor.

* Subsidies should not go to firms that violate environmental, worker safety, or other laws.

* In the new information-based economy, investing in K-12 education; ESL, GED, and adult literacy programs; and, training for incumbent workers has greater pay-off than subsidies for low-wage jobs. Education must be protected from corporate welfare.

* Retail and service businesses that serve local markets should not be subsidized except in extreme cases.

* No subsidies should be given for intrastate relocations.

New York and the Other States Need and Deserve Federal Help

Third, New York's public and private sector leaders should work with New York's congressional delegation, the Bush Administration and public and private sector leaders from other states to ensure that the federal government provide "state fiscal relief" as part of its efforts to deal with the effects of the current recession. In late July, the U.S. Senate adopted an 18-month "state fiscal relief" measure which would have provided the states with $7 billion of fiscal relief over 18 months by temporarily increasing the federal Medicaid match rate and increasing Title XX Social Service Block Grant payments. New York would have received about $1.1 billion of that assistance. This proposal by Jay Rockefeller (R- WV) and Susan Collins (R-ME) was added as an amendment to the Schumer-McCain prescription drug bill (S. 812) by an overwhelming bi-partisan majority (75-24). While the Schumer-McCain bill passed the Senate, it was never considered by the House of Representatives. Representatives Peter King (R-NY) and Sherrod Brown (D-OH) have obtained broad bi-partisan co-sponsorship for a 12-month State Fiscal Relief Act that they will be reintroducing in the near future. This bill would provide a 2% increase, retroactive to October 1, 2002, in the federal Medicaid match rate for all states that maintain their current Medicaid eligibility levels. Under this bill, states that have high unemployment (defined as having a state unemployment rate higher than the national average for three consecutive months) would be eligible for an additional 2.5 percentage point increase in their FMAP provided that they maintain current eligibility levels."

Fourth, New York's public and private sector leaders should work with New York's congressional delegation, the Bush Administration and public and private sector leaders from other states to secure amendments to the Stafford Act (the Federal Emergency Management Act) that would allow New York State and New York City to receive federal aid for tax revenue losses directly attributable to the WTC attacks and which would allow other states and cities to receive such aid in the event of future attacks. Governor Pataki initially raised this issue in his October 2001 request for federal help, but since then the state's emphasis has shifted to federal money for other purposes. HR 5523/S 3055, as introduced in the last Congress by Congresswoman Carolyn Maloney et al. and Senators Schumer and Clinton, would allow states and localities to receive federal reimbursement for a substantial portion of revenue losses directly attributable to terrorist attacks.

The Stafford Act - the law that establishes the Federal Emergency Management Agency and governs the provision of federal disaster assistance - has been refined over the years to deal with floods, earthquakes and hurricanes. This law, as currently written, does not provide an appropriate framework for federal assistance in the case of war-like attacks such as those of September 11th. As Governor Pataki and other state leaders have emphasized, the attack on the World Trade Center was an attack on the entire country and not just on New York.

There is also an important constitutional distinction between the federal government's responsibilities in the case of emergencies of the kind that are covered by the Stafford Act and its responsibilities in regard to war-like events such as the World Trade Center attacks. In drafting and agreeing to the U. S. Constitution, the founding states ceded significant powers to the new national government. One of the important considerations that the states received in return was that the new national government would "provide for the common defense." More specifically, in regard to instances such as those of September 11th, Article IV Section 4 of the Constitutions guarantees that the United States shall protect every state in the union against invasion. It is clearly a good thing that the federal government provides assistance to state and local governments in the case of fires, floods, explosions and natural catastrophes that are determined by the President to be major disasters. But the obligation of the federal government to the states in the case of a foreign attack is of a higher constitutional order.

The loss of lives, the closing of businesses - some temporarily and some permanently, the loss of customers and revenue, and the relocation of some businesses to New Jersey and Connecticut in order to keep operating in the face of the loss of over 25 million square feet of prime office space, and related reductions in important parts of the state's tax base, such as Wall Street bonuses, have combined to cause major reductions in the state's main revenue source - the personal income tax. Corporate and sales taxes have also been hit hard. To accommodate the losses involved without federal assistance would mean that New York would have to enact spending reductions and/or tax increases taxes by that amount thus causing additional damage to the state's economy. It is neither logical nor consistent with the federal government's responsibilities under the U. S. Constitution for a single state to have to run its economy into the ground in order to deal with the fallout from a national defense disaster.

This does not mean that New York should be given special treatment. While we have never before had to deal with such terrorist attacks on American soil, we now know that such attacks are possible. And, we should put into place laws that will treat New York, and any other areas that might bear the brunt of such attacks in the future, in a fair and equitable manner.

Rather than thinking about this as if it is a matter of dealing with a single state with a special problem, Congress and the President should agree on a general law that specifies the kinds of costs that the federal government will pick up in the case of a war-like invasion of this type. Such a general law should then guide what the federal government does in the current New York case and what it would do in case any other part of the country is ever the target of such a foreign attack.

Economic Development
He who is not courageous enough to take risks will accomplish nothing in life - Muhammad Al

Economic Development

In this challenging economic and fiscal climate, the Governor's Budget includes support for the following economic development initiatives:

- The Empire Opportunity Fund (EOF) to generate jobs via infrastructure projects for high tech research and development facilities, transportation improvements, downtown commercial revitalization, and for parks, recreation and tourism.
- $75.4 million for programs to assist businesses in job growth and retention.
- $ 7.5 million to aid universities in attracting and retaining high quality research faculty.
- $ 11.2 million for tourism marketing programs.
- $ 1.7 billion in federal, state and local funding for job training and work-related education programs.
- $ 100 million in new capital funding for affordable housing.
- The Centers of Excellence program to underwrite research universities and private industry working together in product development and manufacturing in the fields of biotechnology, electronics, photonics and other sectors.
- $ 5 million for the START (Security Through Advanced Research and Technology) Program to assist academic institutions in leveraging federal and private funding for high tech research.
- Continued major funding for high tech research at SUNY Albany, RPI, Cornell and Columbia Universities.

Caucus modified and additional economic development initiatives should be included in the state budget:

- Target high tech initiatives beyond majority institutions, to include CUNY senior colleges with science and technology initiatives at heavily minority serving campuses at Lehman, York and Medgar Evers College;
- Targeting new state funded affordable housing to include inner city communities throughout the state;
- Targeting job training and education initiatives to inner city neighborhoods whose unemployment rates are still 2-3 times the national and state average;
- Targeting tourism, marketing and commercial revitalization funding for major tourism and retail shopping destinations in communities of color such as Harlem, East Harlem, Washington Heights, the "Fulton First" initiative in Brooklyn, the South Bronx and Southeast Queens;
- Additional funding for entrepreneurial assistance, working capital and equity financing for small, minority and women businesses, who are the backbone and job generators of our state and local economies; increased funding for the Entrepreneurial Assistance Program (EAP) and Small Business Development Centers (SBDCs) targeting MWBEs and minority neighborhoods should be the primary vehicles;
- More resources and vigorous implementation of Article 15A, the state agency statutory program to provide MWBE contracting and procurement opportunities, which has yielded less than 5 percent MWBE participation in recent years;
- $ 1.5 million for a legally mandated MWBE Disparity Study to extend Article 15A legislation which is due to sunset in December 2003;
- Vigorous implementation of an MWBE program for lower Manhattan redevelopment which thus far has produced less than 1 percent of MWBE contractual opportunities on $ 2.5 billion in spending to date;
- Increasing MWBE participation, and construction training and jobs on state and local funded projects such as the $ 200 million statutory set-aside for Medgar Evers College Capital Construction program; the Republican National Convention, the 2012 Olympics, and the West Side Convention Center project in New York City;
- Research funding support for Census Information Centers to conduct demographic and economic research on communities of color;

Census, Redistricting & Electoral Reform
Destroy the culture and you destroy the people.

- Frantz Fanon


The state and many local jurisdictions have completed their initial redistricting processes for congressional, state and local legislative districts, though some redistricting plans are currently in litigation, such as the State Senate districting plan. New York City is still redrawing it's City Council districting plan which should be submitted to the Justice Department for review in Spring 2003. The Caucus should vigorously monitor various legal challenges by local minority groups and voting rights advocates, with a view towards joining or otherwise supporting these voting rights lawsuits which are designed to achieve equitable political representation for communities of color throughout the state.


The Caucus should support research funding for local entities which analyze demographic, business and economic census data in order to clearly define and understand the dynamics of communities of color in terms of race, ethnicity, age, income, education, poverty, immigration and other factors which are crucial to understanding these communities and their social, economic and governmental needs. Three federally designated Census Information Centers in New York State are specifically mandated to conducted such research and information dissemination on communities of color and require funding assistance to carry out this research: the DuBois Bunche Center For Public Policy at Medgar Evers College, CUNY, the Puerto Rican Legal Defense and Education Fund, and the Asian American Federation.

As a key policy and administrative initiative for the US Census Bureau and Census 2010, advocates must begin now advocating for prisoners to be counted from their permanent residence in inner city communities, instead of where they are now being counted from their prison cells in rural upstate communities. Similarly, minority college students should be counted from their permanent New York ( in state) residence and not from their out of state temporary college residences. These current Census Bureau policies and practices are artificially reducing the minority population count in local communities which are already being hit with traditional census undercount problems.

A Caucus Census Task Force must make active input on these and other issues such as: liaison to local and national census policy groups, implementation of the American Community Survey which will eventually replace the traditional census, new census definitions of race and ethnicity, and census geography which will impact the counting of communities of color, and other key issues.

Electoral Reform

Several key policy, legislative and administrative issues regarding electoral reform include:

- Modernization of equipment and personnel training for improved conduct of the electoral process. There should be federal, state and local funding for this initiative and there is pending federal legislation on electoral reform.

- More equitable ballot access for political candidates.

- A state level Campaign Finance program similar to New York City;

- More rigorous State Lobbying and Ethics rules, regulations and penalties.

- More electoral opportunities for New York's large immigrant communities to exercise voting rights. Forty percent of New York City's adult population is immigrant, many do not yet have the right to vote, and school board elections where they could previously vote are slated to be abolished. Immigrants had voting rights at an earlier time in New York's history. This right could be restored for certain elections in specified jurisdictions. Voting is the hallmark of democracy and civic participation. New York's immigrant communities must have more opportunities to participate in the political process if we are all truly to be connected as one New York, - "e pluribus unum" (from many, one).

- Restoration of voting rights for former felony offenders (elimination of felony disenfranchisement laws). Tens of thousands of Black, Latino and White adults who have served their time in the criminal justice system still do not have their voting rights restored because of current laws and regulations. Their ultimate rehabilitation is to be reincorporated into society's highest form of democratic participation - voting.

- Ongoing, targeted civic, legislative and political internships and training programs for today's youth to become our next generation of leaders.

The function of education is to teach one to think intensively and to think critically. Intelligence plus character that is the goal of true education. - Martin Luther King, Jr


It has longed been realized that education is the foundation for success. It is the primary component in creating accomplished citizens. New Yorkers are counting on the state leaders to commit to creating a strong foundation for our children.

The Governors budget proposal has called for a $1.24 billion cut in aid to education. The budget eliminates all early childhood programs, aid to after school programs consolidates resources to students with limited English proficiency as well as reduces aid to professional development programs. This proposal proves to be a threat to vulnerable communities, specifically communities of color. The Governor has chosen to neglect the need for improvement and opportunities for achievement in these communities. The Governor has neglected the fact that education is a primary resource and fails to invest in communities of color.

The 2003-2004 Executive Budget provides for a $1.243 billion cut in school aid including a formula aid reduction of $1.23 billion and the elimination or reduction of a number of grant programs. The Governor's plan targets over 43 percent of the cut in formula aid, more than $533 million, to the Big 5 School districts (NYC, Buffalo, Syracuse, Rochester, and Yonkers). Each of these cities has significant communities of color. These children are the least capable of shouldering the burdens of budget cuts.

The Governor's budget cuts $1.24 billion for elementary and secondary schools - the largest reduction in school aid in state history. To put these cuts in context you have to understand that just to maintain the same level of services from one year to the next requires an increase in funding. Before the Executive Budget was released the Fiscal Policy Institute did an analysis for the Educational Conference Board, and concluded that approximately $656 million dollars are needed just to meet the expected increases in cost of education across the state. That will have a disastrous affect on schools all across the state.

This increase would allow for inflation, increased cost of health benefits as well as other contractual obligation, and increased enrollment. This would not allow for additional funds to help schools district meet the higher standards.

This year the Governor has proposed the complete elimination of LADDER, which reduces class sizes, funds universal Pre-K and pays for maintaining our school buildings.


The Learning, Achieving, Developing by Directing Education Resources (LADDER) was created in 1997. This program was adopted in effort to reduce class sizes among young students in early grade levels. The policy called for providing resources to start a pre-kindergarten program in all school districts. This program has proven to be very successful at improving students' achievements. Funding for the LADDER initiatives, including Universal Pre-K, Early Grade Class Size Reduction, Minor Maintenance, and Full Day Kindergarten, is eliminated. Support for Private Excess Cost Aid, Teacher Support Aid, Teacher Resource and Computer Training Centers, the Mentor Teacher Internship Program, and a host of other programs is also reduced.

The Governor's latest budget plan completely eliminates the Assembly's LADDER program. Without this crucial program, school classrooms will become even more overcrowded - further burdening teachers and threatening student's ability to learn in a nurturing environment

LADDER: Eliminated as follows:

Universal Pre-Kindergarten cut by $200.9 million

As part of the LADDER plan the state adopted the Universal Pre-Kindergarten program. This program has an indisputable educational advantage for participating children, which must be maintained. It is clear that investing in high quality pre-kindergarten experiences for children defrays costs of more expensive interventions in the future, such as special education, and remediation. The Pre-K program was designed to help children excel in the later grades.

The Governor has reneged on last years promise to fully fund Universal Pre-Kindergarten. This is a clear example of how the Governor is reluctant to honor its commitment to the Universal Pre-Kindergarten program and the families of New York State. In realizing that this program is successful in helping children develop the basic skills needed to make achievements in the upper grades levels, it is important to apply the funds necessary to maintain this source for the future success of our children.

In the 2002-2003 school year, this program provided for 60,000 children. Pre-K has been provided to 208,000 children since 1998. Governor Pataki's new budget proposal calls for an addition $7.5 million cut targeted at experimental pre-kindergarten. In order to ensure achievement and scholastic success among these students, it is important to provide the necessary resources that were initially promised by the LADDER program.

Early Grade Class Size Reduction Aid eliminated, a cut of $134.6 million.

As part of the LADDER plan, the Assembly majority found it necessary to initiate a plan to reduce the class sizes in grade levels K-3. Districts were provided with funds for teacher salaries and startup costs for each new classroom. The Assembly majority believed that this investment in smaller classes would provide children with a more personal, individualized environment in which to set the foundation of their education. The Governor's cuts will hurt almost 50,000 children across the state who benefit from class size reductions.

After realizing there was much support for smaller classes, more funding was provided to create avenues to achieve this objective. Studies continue to prove that smaller classes assist in student learning and education. This year budget proposal suggests that we eliminate the class size reduction program. The Governor has rejected the importance and the need for this program in the inner city districts.

Full-Day K Conversion Aid is eliminated, a cut of $17.4 million. This program provides full-day kindergarten programs for 27,000 children.

Minor Maintenance and Repair Aid is eliminated, a cut of $50 million.

Formula Based Aids- cut $406.8 million

Consolidated Operating Aid - NEW: Funded at $9.8 billion down from $10.2 billion, replacing the following categories of aid: Comprehensive Operating; Extraordinary Needs; Operating Standards; Gifted and Talented; Educationally Related Support Services; Limited English Proficiency; Summer School; Academic Support; and, Public Excess Cost. District reductions in Consolidated Operating Aid across the State range from 2 percent to 8.75 percent with all districts prevented from receiving reductions of more than 5 percent of their estimated 2002-2003 total General Fund expense. Nearly every aid category specifically targeted to high need children, or designed to help students increase their achievement has been wiped out.

While the impact of the $1.2 billion aid cut varies somewhat from school district to school district, the general pattern is the same: radical cuts. This is true in the largest 6 cities in the state, as well as suburban and rural communities:

Largest 6 Cities in the State
- New York City will receive a 8.8% state aid cut ($462.3 million);
- Buffalo will receive a 6.3% cut ($21.5 million);
- Rochester will receive a 9.5% cut ($27.2 million);
- Syracuse will receive a 6.7% cut ($10.2 million);
- Yonkers will receive a 11.9% cut ($11.9 million);
- Albany will receive a 10.2% cut ($4.2 million);

-Private Excess Cost Aid: Funded at $90.8 million, a cut of $70.7 million. The average State aid ratio used in calculating aid for placements is reduced from 85 percent to 49 percent.
-BOCES Aid: Funded at $387.8 million, a cut of $109.3 million.
-Special Services Aid (Big 5 funds for Career Education and Computer Services): Funded at $122.1 million. Includes a present law reduction of $4.81 million.
-Transportation Aid: Funded at $991.25 million, a cut of $6.15 million. For 2003-2004 districts receive the amount provided in the base year or the amount generated by formula, whichever is less.
-Growth Aid: Funded at $15.8 million. Includes a present law reduction of $14.9 million.
-$30.2 million cut to Extended Day After School programs

Building Aid

The adopted budget provides a total of $1.1 billion, a cut of $144 million resulting from recently enacted Building Aid changes and additional recommended modifications. Changes proposed include: a priority based funding system for all projects approved after February 1, 2003; limiting the use of the 10 percent Building Aid incentive to instructional space; and, requiring districts to use current Building Aid ratios for projects approved on or after July 1, 2003.

Teacher Support Aid

The Governor reduced Teacher Support Aid by two-thirds - a move that undermines efforts to recruit and retain teachers so they can provide educational excellence to our children. Teacher Support Aid: Funded at $22.5 million, a cut of $45 million, with distribution as follows:

Buffalo $ .58 million, representing a cut of $1.16 million
New York City $ 20.9 million, representing a cut of $41.8 million
Rochester $ .36 million, representing a cut of $.72 million
Syracuse $ .27 million, representing a cut of $.54 million
Yonkers $ .38 million, representing a cut of $.77 million
Other Grant Programs and Aid Categories:

-Employment Preparation Education (EPE) Aid: Funded at $76.7 million, a cut of $19.5 million.
-Experimental Pre-K Grants: Funded at $42.7 million, a cut of $7.5 million.
-Teachers of Tomorrow program cut by 20 percent Funded at $20 million.
-Extended Day and School Violence Prevention Programs: $30.2 million program eliminated.
-Teacher Resource and Computer Training Centers: Funded at $10 million, a cut of $20 million. An additional $1 million provided in the adopted 2002-2003 budget is also eliminated.
-Mentor Teacher Internship Program: Funded at $1.67 million, a cut of $3.33 million. An additional $1 million provided in the adopted 2002-2003 budget is also eliminated.
-Schools-as-Community Sites: $6 million program eliminated.
-Missing Children Prevention: $900,000 program eliminated.
-Parenting Education: $506,400 program eliminated.
-Primary Mental Health Project: $570,000 program eliminated.
-Comprehensive School Health Demonstration Program: $525,000 program eliminated.
-Transferring Success: $629,800 program eliminated.
-School Health Demonstration Project: $150,000 program eliminated.
-AIDS Education: $990,000 program eliminated.
-Children of Migrant Workers: $90,000 program eliminated.
-Work Force Education: Funded at $8 million, a cut of $2 million.
-Advantage Schools: Funded at $20.2 million, a cut of $4.8 million.
-SURR Schools: $2 million program eliminated.

School Evaluation Services-NEW: Funded at $600,000 to enable schools to evaluate the cost effectiveness of educational and administrative programs. This program will evaluate what other programs can be cut to reduce costs.

Other Programs

Board of Regents: The Executive Budget presentation proposes increasing the number of Regents from 16 to 18, changing the term of office from 5 to 6 years and authorizing the Governor to appoint 12 members with the Legislature appointing the remaining 6. This proposal would remove the authority of a joint Legislative Session in which both members of the Assembly and Senate elect the Regents. This proposal is specifically intended to give the Governor control of the Board.

School Governance: The Executive Budget presentation proposes extending recently adopted changes in New York City's school governance to Albany, Buffalo, Rochester and Syracuse to provide mayors with greater control. This proposal again takes power from an elected body.

Mandate Relief: The Executive Budget would require the Board of Regents to obtain approval from the State Office of Regulatory Reform for new regulations with significant fiscal impacts: would provide for a WICKS exemption; and would conform the CSE and CPSE membership to federal criteria. The Executive would again gain more influence over the Board of Regents.

STAR: see "Restoring a Fair and Equitable Tax System"

Without adequate state aid, schools will be forced to cut essential educational programs, layoff teachers and increase local school taxes. The Governor's cuts will hurt the programs that work the best. What this budget does is cheat our children and further burden local taxpayers. Budgets cannot be balanced at the expense of our schools, children, College students and homeowners.

Higher Education, Arts & Culture

Education is the key to unlock the golden door of freedom. -George Washington Carver

Higher Education

A strong higher education system provides a crucial foundation for economic growth and the development of a highly trained workforce. The public universities of New York have historically assumed increased importance during times of economic uncertainty. During periods of high unemployment college enrollment tends to rise as potential employees seek to develop better skills to be more competitive in the job market. Additionally, the number of students seeking a higher education at public universities will likely increase during these difficult economic times. Theses students plan to be better qualified and prepared for when they enter the workforce. The need to maintain the quality and value of the public university system of New York has never been more critical than during these difficult economic times.

The Governor's higher education budget proposal would have a detrimental effect on minority college students and their families, institutions of higher education, and New York State. Hikes in tuition can be devastating to students, especially when accompanied by cuts to financial aid programs and essential campus services. When tuition was raised in 1995, TAP was reduced and the opportunity programs budget was slashed, exacerbating the rise in cost for the poorest students and their families. In addition, both CUNY and SUNY's budgets were reduced, and in the two years following, undergraduate enrollments at New York's public colleges dropped by nearly 30,000. It is only in the past few years that enrollments have begun to recover.

New York State currently has the 15th most expensive public college system of any state in the country. Public community college tuition is the 6th most expensive in the country. Since 1995, when tuition at SUNY has remained level, college fees at SUNY senior colleges have increased 128%. In 1995, SUNY students paid an average of $435.39 in fees, while in 2002, students paid an average of $990.67.

To prepare our children for the future and rebuild New York's economy, we must make higher education affordable and accessible for all students. While the Governor continues to promote the research and discoveries of New York's colleges and universities, he regrettably has yet to embrace the concept that their greatest contributions as "engines of economic growth" are the skills provided to students pursuing a college degree in New York State.

The Governor's proposal makes severe cuts in higher education - a total of $660 million. Students attending college within the State University of New York system will also see their tuition increase $1,200 this year - that's more than a 35 percent hike. His budget also forces a $1,200 tuition increase on CUNY students up by 38%. Unfortunately, in the same instant that the Governor proposes raising tuition, he uses this measure to lower state support for SUNY and CUNY by roughly $279.2 million from 2002-03 levels. The Governor's $1,200 SUNY and CUNY tuition hikes and 33 percent TAP cut will mean an extra $1,534 a year for a family of four with an income of $40,000. Many public and private college students couldn't afford to attend college without TAP

City University of New York- The Governor recommends $82 million cut to CUNY operating budget.

The City University of New York (CUNY) was established as a municipal college system in 1926. In 1961, the Legislature designated the municipal system as the CUNY. There are nineteen campuses, including nine senior campuses, seven community colleges, one technical college, a graduate school and an affiliated medical school.

State University of New York- The Governor recommends a $184 million cut to SUNY operating budget.

The State University of New York (SUNY) was created in 1948. It consists of sixty-four campuses including four university centers, thirteen university colleges, two independent health centers, four specialized colleges of technology, five statutory colleges, six colleges of technology and thirty community colleges.

Tuition Assistance Program (TAP)- the Governor's restructuring of the Tuition Assistance Program cuts individual TAP grants by one third.

The Higher Education Services Corporation administers the State's Tuition Assistance Program (TAP), the Federal Family Education Loan Program, and other state and federal aid programs. This program is one of the most of significant investments that New York State provides to students seeking access to higher education. As the cost of receiving a higher education has steadily risen, the need for additional tuition assistance has never been more imperative. The New York State budget should include additional funding for the TAP program to increase average award levels.

The Executive Budget proposes to reduce funding for college opportunity programs by $26.9 million, or 50 percent.

Higher Education Opportunity Program (HEOP)-Cut by $11 million

New York State contains 112 independent colleges and universities, which are often referred to as private colleges and universities. The HEOPs operating in independent colleges are designed to provide higher educational opportunities to under-represented, economically disadvantaged and academically low performing students. Financial aid, counseling, tutoring and other academic support services from HEOPs help ensure the success of students deemed disadvantaged. HEOP students perform at the same or at a higher rate than other students who are not in HEOP. The Governor recommends reducing funding to HEOP programs by 50%.

The Governor also proposes to cut other opportunity programs such as EOP, SEEK, and College Discovery by 50%.

C-STEP and STEP Programs

Science and Technology Entry Program (STEP) and Collegiate Science and Technology Entry Program (C-STEP) are designed to enhance the graduate rates of students seeking careers in technical and licensed professions.

The Executive Proposal recommends the complete elimination of $10 million in funding for the Science and Technology Entry Program (STEP) and its collegiate counterpart (CSTEP). These programs have proven to be extremely successful at increasing the participation rate of underrepresented and disadvantaged students in mathematics, science, technology, health-related fields.

The Executive recommends reducing support for Aid to Independent Colleges and Universities (Bundy Aid) by $18.7 million or 42.3 percent. This reflects an Executive Proposal to eliminate funding for graduate degrees conferred at New York's independent colleges and universities.

The Governor proposes cutting our community colleges' base aid by 15 percent, or $345 for each student - which will drive up tuition costs and local taxes on homeowners and businesses.


Tough budget choices will have to be made this year, but skyrocketing tuition costs and preventing students from receiving financial assistance are the wrong choices. An investment in education today is an investment in our future.

Health & Elders
In all things purely social we can be as separate as the five fingers, and yet as one as the hand in all things essential to mutual progress - Booker T. Washington.



The Governor is making the wrong choice by proposing massive cuts to the State's Medicaid Program in his Executive Budget. These cuts and new taxes will impose a severe financial hardship on the State's ailing health care industry -- an industry that is already reeling from previous cuts, new Medicare cuts, workforce shortages, new technology costs, disaster preparedness activities, and meeting the needs of the thousands of New Yorkers who still remain uninsured.

The Executive Budget proposes a $1 billion cut in state Medicaid spending. According to a January 2003 study by Families USA on the economic impact of Medicaid spending in each of the 50 states, a $1 billion reduction in New York State Medicaid funding would result in a $2 billion decline in business activity; the loss of 17,410 jobs and $720 million in wages and salaries.

Every dollar cut in Medicaid funding is magnified by losing Federal and local funding as the direct result.

The State Fiscal Year (SFY) 2003-04 Executive Budget proposes reinstating nearly $1 billion (all funds) in old cost containment actions that were slated to expire in March 2003.

The Executive proposes new actions that would save the State over $640 million through the implementation of new cuts and the re-imposition of provider assessments (taxes) which had been eliminated in 2000. These measures would precipitate the loss of nearly $1.6 billion in combined Federal, State, and local reimbursement to health care providers. This money would go into the state economy and keep vital health care jobs and services.

These cuts would create the loss of up to 38,000 jobs in New York State at a time when unemployment is already on the rise. Moreover, this job loss would result in a serious reduction in services in an industry already plagued by workforce shortages and other revenue shortfalls that have impacted the service delivery system.

The cuts will reduce not only access to care but also the quality of such care as providers are forced to cut staff or rely on less trained staff to deliver services.

Health Care Reform Act

The Health Care Reform Act of 2000 (HCRA 2000) is scheduled to expire on June 30, 2003. The Governor proposes a two-year extender for HCRA through June 30, 2005.

Proposed changes would deny or limit access to needed health insurance coverage to thousands of low income working families and their children. These changes would also impose a greater financial burden on health care providers and insurers, which could jeopardize their ability to continue providing services.

Loss of Medicaid funding could force health care facilities to cut jobs and eliminate services. Hospitals in New York State would loose roughly $545 million annually due to new taxes and new Medicaid inpatient reimbursement cuts. A $1.49 billion Medicaid cut on providers could send our stressed-out system into a crisis.

On top of Medicaid cuts the Governor has proposed reinstating a .7 percent tax on hospitals, as well as a .6 percent tax on many other health care providers like home health agencies and home care agencies. In the Governor's State of the State address he blasted tax hikes. Under his budget, hospitals and nursing homes will not only struggle to provide quality health care, they will also be forced to lay off workers to make ends meet.

The Governor proposes increased surcharges on hospital and clinic patient bills and an increased assessment on health insurance companies. In many instances, these increases will be passed on to consumers in the form of higher out-of-pocket expenses or premiums.

These cuts and costs are passed down to the consumer. Essentially the people of New York pay twofold when Medicaid is sacrificed and health care providers are taxed. It's a domino effect in which those who are most vulnerable end up being hit the hardest.

To further close the gap between lost revenues and to meet the cost of previous HCRA commitments and new General Fund shifts, the Governor recommends cuts in funding for valuable public health programs related to poison control, emergency medical services, cancer initiatives, worker retraining, and anti-tobacco efforts.

The Governor proposes to achieve Medicaid savings by eliminating Medicaid coverage for an estimated 234,000 low-income children, shifting their coverage to the Child Health Plus program. Child Health Plus provides no long-term care benefits, so this action could seriously disadvantage disabled children in need of such services.

The Governor's proposal would eliminate health care coverage for approximately 22,000 low-income adults under the Family Health Plus program by rolling back eligibility standards.

The Elderly


Although many seniors rely totally on Supplemental Security Income (SSI) to meet their living expenses, the Governor denies passing through to them a Federal cost-of-living adjustment, amounting to $14 per month for individuals and $21 per month for couples. Rather than allowing the elderly and the disabled to receive this money, the Governor proposes to divert it to defray a portion of the State's cost associated with the SSI State supplement payments.


Across all service categories, the aged, blind and disabled account for approximately 73 percent of Medicaid expenditures, even though this group represents only 31 percent of recipients. Consequently, cuts to Medicaid adversely affect the poor elderly and disabled population that have no other recourse and must rely on Medicaid for needed medical care. Our elders deserve better health care.

Among the proposals that will have the most harmful effect on the elderly are new cuts of $71.8 million (All Funds) on the home care industry. Proposed reductions in home care rates will limit elders access to home care services. Severe workforce shortages have already caused some upstate providers to curtail services, thereby denying access to many families desperately in need of this care.

The Governor also proposes new Medicaid reductions to nursing homes of $388.2 million (All Funds). Such cuts could severely impact the quality of care at these facilities as homes are forced to lay off workers in an industry already plagued by workforce shortages. Nursing homes are also going to be effected by these cuts as they receive about 70 percent of their net patient revenues from Medicaid. Forcing Nursing homes to close their doors is not an option during difficult economic times.

The Governor's budget calls for over $2 billion in cuts to Medicaid and other health care spending. The $38.4 billion Medicaid program currently costs the State more than $12 billion and provides assistance to those who need it most.

Prescription Drugs

Another area of grave concern to the elderly is the rising cost of prescription drugs. Most elderly individuals take multiple drugs on a daily basis to maintain good health. The escalating costs of these drugs have become a serious cause of concern for those living on a fixed income, forcing many elderly to choose between essential medications and the necessities of life like food or rent.

The Governor recommends various reductions to the Elderly Pharmaceutical Insurance Coverage (EPIC) program that effectively would dig deep into the already empty pockets of our elderly by increasing fees and deductibles paid by program participants by 10 percent. The price of prescription drugs is skyrocketing. People are being forced to choose between essential medications and necessities of life - like food and heat.

The Governor's proposal to reduce reimbursement to pharmacies for filling prescriptions for EPIC participants would result in reduced access to greatly needed medications for the elderly. This is the wrong solution to an increasingly difficult problem. The Governor wants to raise fees 10 percent on seniors for the prescriptions they need. Essentially, the Governor's budget asks us to pay more for health care and, in turn, receive poorer care.

Community Services

The Executive's proposed budget for SFY 2003-04 eliminates funding for several programs that foster wellness, independence, and community involvement.

The Congregate Services Initiative (CSI) which provides the elderly with services that promote their physical and mental well being in congregate settings, such as senior centers will be cut.

The Executive also recommends the elimination of funding for Naturally Occurring Retirement Communities (NORC), a program that encourages elderly citizens to remain in their homes and in the community.

The Retired and Senior Volunteer Program (RSVP), a program that achieves the dual goal of providing services to needy citizens while providing encouragement for older volunteers to remain active in the community will be cut.

Foster Grandparent Program, which allows the elderly to become "foster grandparents" to children with special or exceptional needs will be cut.

The Governor's budget significantly decreased funding for respite programs. These programs offer services that provide caregivers relief from the stresses or responsibilities of providing care to frail or disabled relatives or friends, thereby enabling the caregivers to maintain the person at home for as long as possible.

Many of our hospitals and nursing homes are already losing money and facing severe staffing shortages. Cutting Medicaid will only threaten the quality of care available for our families.

The Governor must recognize that cutting programs like EPIC and Medicaid is unacceptable and only makes difficult times much worse. Proposals to reduce eligibility levels for the Family Health Plus Program will hit families in need the hardest.

Forcing people to accept second rate health care and placing an even larger financial burden on seniors, the disabled, and low-income families is not an answer to the problem.

Hospitals and nursing homes rely on Medicaid reimbursements to provide much needed services to New Yorkers. Less Medicaid funding jeopardizes quality of care and causes staff shortages, reduced services and cut programs.

Local governments have been demanding relief from escalating Medicaid costs. The Assembly proposed the state pick up the costs of new programs like Family Health Plus. A tax on health care providers and an increase in the tax on hospital and health care services will end up being passed onto consumers. Many hospitals and insurance providers have already said they would pass these costs onto consumers


According to some estimates, health care costs could leap over 15.4 percent this year. As health care costs shift to employees, we find that working families are being forced to put more and more money on the table for a lower quality of health care service. They'll force working families into shouldering the burden. The Governor talks, time and again, about the necessity to avoid tax hikes. In the end, New York's working families still end up carrying the burden of hidden fees and taxes.

But no matter how strained our budget may be, there is still no excuse for cutting health care programs like Medicaid that serve the most vulnerable. People depend on these programs, and Medicaid cuts put the health of our loved ones at risk.

Housing and Community Development
The Governor and his Budget fail to provide adequate or affordable housing. Without a doubt, housing is a right, not a privilege and we must ensure that residents of New York State are not reduced to living under horrific conditions or in the streets.-Assemblyman Keith Wright

Housing and community Development

The State Of New York supports four major housing organizations/programs:

* Division of Housing and Community Renewal
* Housing Finance Agency
* State of New York Mortgage Agency
* STAR program- see "Restoring a Fair and Equitable Tax System"


The Division of Housing and Community Renewal (DHCR), created in 1926, is responsible for the supervision, maintenance and development of affordable low- and moderate-income housing in New York State. Housing operations, community development and rent administration are just a few services performed by the Division of Housing and Community renewal.

The Division, headed by a Commissioner has three main offices and nine regional offices. Housing Operations oversees and regulates the State's public and publicly assisted rental homes. Community Development is the administrative component of the division. This sector concentrates on the administration of housing development and community preservation programs, including State and Federal grants and loans to housing developers to partially finance construction or renovation of affordable housing. Rent Administration handles the rent regulation process for over one million rent-regulated apartments in New York City and locations in counties of Albany, Erie, Nassau, Rockland, Schenectady Rensselaer and Westchester subject to rent laws.

The Division of Housing and Community Renewal also has a community development component; neighborhood preservation program, housing trust fund and low-income housing trust credit program. The community development component supports the Housing Trust Fund Corporation and the Affordable Housing Corporation, which are public benefit corporations that provide State-Funded loans and grants to for-profit and not-for-profit entities to develop housing for low-income families, tenants with special needs and the low-income elderly. The community development staff also administers the allocation of Federal low-income housing tax credits across the state.

The Housing Program oversees the management of State-assisted housing projects. These include:

* 245 housing developments constructed under the State's Mitchell-Lama housing laws. These Projects provide more than 100,000 dwelling units to low- and moderate-income families.
* 74 public housing projects that provide over 20,000 apartments for low-income families.
* Almost 900 low-income apartment projects partially financed by state and federal capital funds.
* Administers approximately 3,500 Federal Section 8 program vouchers.

The Executive Budget recommendations for the Division of Housing and Community Renewal total more than $309 million. The 2003-04 Budget will:

* Provide over $74 million in housing capital funds, including $7 million for the nationally recognized Homes for Working Families Program;
* Provide $7.9 million to administer the development of low-income housing and over $16 million to supervise the operation of publicly assisted housing, including the State-financed Mitchell-Lama portfolio;
* Provide $7.8 million in administrative funding for the Neighborhood and Rural Preservation Programs. This is a reduction of $10 million from 2002-03 enacted funding levels and will require a major restructuring of the programs; and
* Continue the Divisions administration of the Federal funded Weatherization Assistance Program, providing grants to local not-for-profit groups and governments to assist low-income households in reducing their energy consumption and lowering their fuel bills.
* The financial support for housing and community renewal has seen a $17, 461, 735 drop in funds.
* $26, 893, 735 was available for the program 2002-03. The recommended amount for 2003-04 is $309, 432, 000.

A primary concern for many Tenants this year will be the expiration of the rent Regulation Laws. These laws have become a very heated subject in the State of New York. In New York City apartments can cost in excess of $2,000 for a tiny studio. In order to maintain the integrity of these communities current residents have been given certain rights that cap the ability of landlords to raise rents.

While this issue is not part of the Executive Budget it has a tremendous impact on the resident who lives in rent regulated housing. This issue may also play some part in the final passage of the Executive Budget.


The New York State Housing Finance Agency is a public corporation created in 1960 to finance low- and moderate-income rental housing. The Agency issues taxable and tax-exempt bonds to provide mortgage loans to developers of mixed-income and affordable rental projects.

The Executive Budget includes $29 million appropriation and $121 million in reappropriations for the Housing Trust Fund program, which provides grants to finance construction or rehabilitation of low-income apartment buildings. The Affordable Housing Corporation will receive $25 million in new funds and $90.4 million in reappropriations to stimulate local economical growth and stabilize distressed communities across the State by providing grants up to $25,000 to first-time low- and moderate-income home buyers. At these funding levels, the two programs will be able to construct 1, 9666 new housing units in the upcoming State fiscal year.

The Agency receives no direct operating support from the State. Its operating budget is funded with fees and revenues the Agency generates through its financing activities.

From 1995 through 2002, the Housing Financing Agency has provided $2.7 billion in loans for multi-family rental housing.

In 2002-03 General Fund Aid to Localities appropriation of $665,000 supported the Capital Grant/ Low Rent Lease Subsidy program, providing rental subsidies for approximately 204 low-to moderate-income individuals.

In 2003-04, full funding for the Capital Grant/Low Rent Lease Subsidy program, providing rental subsidies for approximately 144 low to moderate-income individuals is provided in the Agency's operating budget.


The State of New York Mortgage Agency is a public benefit corporation created in 1970, to increase the affordability of homeownership for low- to moderate-income residents in New York State. This is accomplished by the Agency's issuance of taxable and tax-exempt bonds and the use of proceeds to purchase low-interest rate mortgages loans. In 1978, the agency's mission was expanded to include the issuance of mortgage insurance to promote the stabilization of neighborhoods throughout the State.

The Agency receives indirect operating support from the State. Statute requires the State to guarantee certain obligations of the Agency. In 2002-03, the Executive Board recommended approximately $191 million in appropriations. The Executive Budget recommends more than $248 million in appropriations in 2003-04 to satisfy this requirement, although no cash disbursements are projected to be made from this appropriation. All State of New York Mortgage Agency programs and operations are supported by Agency funds, consisting of mortgage income, application fees, insurance premiums and investment proceeds.


The 2003 Legislative session faces the challenge of reauthorization of two very important laws that expired at the end of last year. The first deals with power plant sighting and the second establish rules for state energy planning.

The power plant sighting law (Article 10 of the Public Service Law) sets forth the procedures for approval and permitting new electric generation facilities. After nearly a decade of no activity, recent years have seen a significant increase in power plant construction to meet the growing power needs of New York State. This has been particularly true in the metro New York City region. Since most of the present and proposed power plants are located in lower income areas, the issues of environmental justice and cumulative environmental impacts are crucial to any sighting decision, but were under-emphasized in Article 10.

Too often, power plants are approved to be constructed on sights in communities of color. These plants have a negative environmental impact that must be considered. These facilities can be detrimental to the local environments and those families that live in the local community.

The recent installation of ten small power plants in New York City by the New York Power Authority highlighted the need for greater scrutiny of sighting decisions in densely populated urban areas. This session the Assembly Energy Committee moved a bill, and the full Assembly subsequently passed, that provided a more comprehensive approach with an eye to improving public input and community empowerment.

The other law that expired last year was the State's energy planning law. This comprehensive statute sets forth the requirement of a State Energy Plan every four years. Critics of the last two energy plans have stated that the plan failed to provide the detailed blueprint necessary to chart policy decisions during this critical time of deregulation and price instability.

The issue of energy affordability has received very little attention, however, the energy crisis in California and the Enron price fixing accusations have brought this important issue to the for front. During difficult economic times people should not face the possibility of not having food on the table in order to have heat in the house. A comprehensive deregulation plan must be implemented that fosters a competitive environment that does not take advantage of consumers.

A man without knowledge of himself and his heritage is like a tree without roots. -Dick Gregory

Immigration in New York

New York City, NY has been and still is considered the capital of the world because of the many nations represented in the population of the city. Since the Ellis Island Immigration Center, New York has been the first stop for thousands of immigrants each year.

In the last ten years, over one million new residents settled in the State of New York. The foreign-born population has risen from 2.8 million to 3.8 million, which is more than the State's total population increase. New York's foreign-born population increased 37% during the 1990s. This increase was the third highest numerical increase in the country. Foreign-born residents now account for one-fifth of the State's total population, which is way above the national average of 11%. About 6.8 million people in New York are immigrants or the children of immigrants which is about 37% of the State's population

As far as New York City is concerned, the 2000 census recorded 2,871,032 foreign-born residents in New York City. That was 35.9% of the overall population.

Caribbean immigrants make up a large portion of those coming into New York City. Immigrants from the Dominican Republic accounted for one in five immigrants in the city, averaging about 22,000 annually. New York City also experienced many immigrants coming in large numbers from Jamaica, Haiti, and Trinidad and Tobago. Asian immigrants constituted 22% of the immigrants in the city. The largest group coming from Asia is the Chinese, averaging around 12,000 annually.

Other than these groups coming into New York, Middle Easterners also come into New York to start a new life. Since September 11th however, immigrants from the Middle East and other Muslim countries have been the target of abuse and civil rights violations. The United States Immigration and Naturalization Service (INS), under anti-terror laws across the nation have made immigrants register with authorities. The only problem is that under this law only certain people are affected. Males over the age of 16 from Afghanistan, Algeria, Bahrain, Eritrea, Lebanon, Morocco, North Korea, Oman, Qatar, Somalia, Tunisia, The United Arab Emirates and Yemen are required to register with INS.

On the positive side of immigration, New York, especially New York City, has benefited much from the immigration population. According to the National Immigration Law Center, $13.3 billion (69%) of the $19.3 billion in taxes paid by immigrants went to the Federal government in the form of income taxes in New York. In 2000, the foreign-born population accounted for 12.4% of the total civilian labor force and foreign-born men 16 years old and older have a higher labor force participation (80%) than native-born men (74%). Immigrants not only contributed the areas of economy and labor but also cultural awareness and diversity. Throughout the five boroughs there are festivals celebrating all the cultures in New York City. The Chinese celebrate their New Year in February and in September West Indians celebrate their culture in the annual West Indian Day Carnival Parade.

The contributions of the immigrant population in New York are endless. People have come all over the world to start a new life and have a piece of the American dream that people from everywhere long for. Because of the many opportunities, coming to New York has been the first step to achieving this new life.

NYC Population 1900-2000

New York's Population Growth

NYC Foreign-Born Population 1960-2000

Justice & Human Rights
True peace is not merely the absence of tension but the presence of justice and brotherhood. - Martin Luther King, Jr

Justice & Human Rights

Criminal Justice Services

New York State prisons remain overcrowded with a disproportionate number of minorities serving sentences as the result of the Rockefeller Drug Laws. The causes for this are largely due to difficulty securing adequate representation as counsel and drug prevalence in urban communities.

Incarceration remains a costly and ineffective manner to address chemical dependencies. Many prisons still lack programs that assist inmates in dealing with the addiction which has lead to their incarceration. This situation leads to high rates of recidivism as the inmates are not prepared to deal with their addiction when they are released from prison.

With the recent implementation of alternatives to incarceration programs and drug treatment facilities, non-violent offenders are returning to the community rehabilitated, saving the State $90 million.

In recent years, Drug Courts have begun to help divert low-level drug offenders away from prisons into rehab programs. These programs ensure that these offenders receive the treatment they desperately need while ensuring they receive appropriate supervision. While Drug Courts are a step in the right direction, they are no substitute for comprehensive reform of the Rockefeller Drug Laws. Governor Pataki promised to dramatically reform the State's Rockefeller drug laws. His proposals do not represent adequate reform.

Governor's Proposal

The Executive Budget does not include a recommendation for the construction of a new prison but increases funding by $2.2 billion to "right-size" the prison system. This year, the Executive Budget will result in a $29 million reduction associated with a decrease in the inmate population takedown plan and those who are due for early release. The Executive Budget reflects a new funding approach for local criminal justice activities by establishing a community corrections block grant, which will consolidate probation and alternative to incarceration programs.

The Governor proposed other measures as well:

-Suggested expansion of the DNA database to include all convicted criminals;
-Urged abolishing parole for all convicted felons--a key tool to reintegrate inmates back into the general population;
-Pressed for the lengthening of orders of protection;
-Called for extending the domestic violence laws to protect unmarried couples;
-Allow non-violent A-1 drug offenders to be eligible for twice the existing merit time benefit; those sentenced 15 years to life for selling 2 ounces of possessing 4 ounces of drugs would be eligible for early release after serving at least two-thirds of their sentence.
- Expand the allowable minimum sentence for an inmate to participate in the Earned Eligibility Program from a six-year minimum to an eight year minimum sentence; and
-Enhance the EEP program to allow non-violent inmates to be automatically released if the inmate has excellent program participation and good record of behavior while incarcerated.

As a result of the proposed budget, the department will be able to phase out additional beds currently in use in the prison system. It is estimated that there will be a 1,900-inmate drop in the prison population. The prison population reached 71,472 in 1999 before dropping to the current figure of 67,000. There will also be a reduction in 66 positions resulting in approximately $4.5 million in savings.

The "war on drugs" has directly affected the social problems of minorities. Certain benefits are not provided when they get out of jail, which makes the transition from prison to community life much more difficult. If resources that are not readily available when one gets out of prison it is more likely they will commit another crime. Such resources, which become limited, are:

-Access to Health Benefits- Under Federal law, individuals leaving prison with a felony conviction are ineligible to receive any Federal benefits for one year, if the conviction was for drug possession or for five years, if the conviction was for trafficking.

-Access to Housing Benefits - Federal housing authorities can consider substance abuse by individuals and their family members when making decisions to evict from, or to deny access to, federally subsidized housing due to the 1996 "One Strike and Your Out" legislation.

-Access to Higher Education- Individuals convicted for a drug possession are ineligible to receive financial aid for one year after one conviction, two years after a second, and indefinitely after a third.

Civil Legal Services

In New York State today, the vast majority of low-income people do not receive appropriate legal assistance in the areas of housing, government benefits, disability, health care, homelessness prevention, domestic violence and family law. Unfortunately, the problem has been exacerbated by the reduced amount of state funding for civil legal services during FY 2001 and 2002, as well as reductions in funding from IOLA, the Interest on Lawyers Accounts Fund, and funding reductions and restrictions on the federal level. The FY 2003-2003 Executive Budget contains no funding for these critical civil legal services.

It is important to maintain the viability of civil legal services, while attempting to establish a permanent funding source that will provide greater income levels.

18-B Assigned Counsel/Law Guardian Rates

The acute shortage of appointed counsel in both criminal and family court matters has reached crisis proportions due to unrealistically low rates, which have not been raised since 1986.

Appointed counsels in New York City and around the state have refused to take new cases. Meanwhile, more and more family and criminal court judges have seen fit to raise rates on their own.

On February 5, 2003 a New York City Supreme Court Judge issued a permanent injunction requiring New York City to pay assigned counsel and law guardians $90 an hour until the Legislature and the Governor act to end the assigned counsel crisis. Also pending is a class action suit filed by Nassau County criminal legal defenders in federal court alleging equal protection violations on behalf of 18-B criminal defendants who are overwhelmingly African-American and Hispanic.

While there was a broad consensus on the need for action, no legislation was enacted last session. The Assembly, however, did pass a bill to raise the rates and establish a state fund earmarked for this purpose. With this year's budget the Governor did submit an Article VII bill dealing with 18-b assigned counsel and law guardian rates, which contains a number of provisions from the Assembly bill. It is critical that these changes be enacted as quickly as possible because the crisis is undermining the process of criminal and family court.

In the proposed budget, the Governor includes an increase in fees for court-appointed assigned counsel:

* Increasing the $40 per hour in court work fee; and $25 per hour for other work;
* Increasing $75 per hour for felony and family court work and $60 for other work;

Raising fees will increase public confidence in the justice system and encouraging skilled counsel to handle assigned cases are just some of the reasons for increasing the assigned counsel fees. Raising rates will reduce the number of wrongfully convicted people in our criminal justice system.

The Executive Budget keeps Aid to Defense at last year's level. Funding for Aid to Defense was cut 45% in the early 1990s and has remained static at $13.8 million. The Executive Budget does not extend any funding to the several programs designed to provide criminal legal services such as:

-Prisoners' Legal Services of New York, which provides inmates with an important non-violent way to resolve disputes. It helps to ensure a safer environment for prisoners as well as guards.

-Neighborhood Defender Service of Harlem, which provides criminal defense to residents of Harlem, Washington Heights and Inwood.

-NYSDA's Public Defense Backup Center, which provides assistance to defenders.

New Family Court Judges

The creation of new family court judgeships should be a priority. A record number of new cases-683,390--were filed in New York Family Courts in 2001. For several years now the Uniform Court System has stated that there is a need for additional family court judges. With the recent increase in the PINS age from 16-18, along with other significant legislation recently enacted, the need for family court judges has become even more acute. Recently, the Uniform Court System announced that 8 judges currently serving in other courts would transfer into family court in New York City. In the last few years as part of a court reform package, the Assembly Majority has proposed to add 25 new family court judges across the State.

Labor & Workforce Development
Money is the manifestation of power. - S.E. Anderson


The executive Budget as currently configured not only shortchanges but literally ignores the needs of the working families of the State of New York.

This budget unfairly shifts the economic burden on those who are least likely to be able to absorb the devastating affects of the outcomes of some of the harshest proposals to be advanced in some time.

Given the State's current economic situation - recession, rising unemployment, declining wages, low job creation (New York State is ranked 40th in the nation), and absence of both a significant Worker Retraining and Retention Initiative and an aggressive Economic Development Program in place - we are in all likelihood heading for a further decline if new and innovative measures are not undertaken which would genuinely and significantly alter the current economic environment.

The proposed cuts, limits, caps, reductions, surcharges, restricted eligibilities, eliminations and yes taxes will adversely impact our workforce. They will have to do without, or do with less when more is required. This will take away the very small cushion of security still left post-9/11 and further push back our drive to the path of self-reliance and sufficiency.

In order to minimize the foregoing adverse impact and reduce the effect of the recession, we urge Governor Pataki to utilize the state's unspent fund allocations under the Federal Workforce Investment Act ("WIA") of 1998 which expires this year and may not be re-authorized. New York State has not spent a substantial portion of its allocated WIA funds and there is a likelihood these funds may be recalled by the Federal government. The state's entire $96.7 million allocation for 2002 remains unspent while only $43 million of the $116 million allocation for 2001 has been spent.

At the state level, the Governor should spend idle unspent project funds allocated in past budgets. For instance, of the $34 million allocation to the state Training Alliance Program in the 1998 budget, only $9 million has been spent to date.

The budget as currently drafted is imbalanced, lacks vision and is shortsighted. It is unfairly biased in favor of the wealthy and large corporations and gives neither reprieve nor hope to the poor and working class.

Transportation & the Environment
Armed with the knowledge of our past, we can with confidence charter a course for our future. - Malcolm X


Mass Transit Funding

Transit systems in New York State move almost 3 billion people every year. An efficient, affordable and convenient mass transit system is essential to the people of New York. Mass transit helps to alleviate traffic congestion, which, in turn, reduces pollution. Reduced pollution levels are critical to the health of New Yorkers, leading to fewer cases of asthma and other related respiratory conditions. Furthermore, mass transit is critical to the economy of the State: businesses rely on mass transit for employees and consumers. Mass transit funding supports urban, suburban and rural mobility; accessibility and opportunity for welfare to work program participants; transportation for school children; and accessibility for the elderly and people with disabilities.

The Governor recommends transit operating aid totaling $1,733,357,000 for State Fiscal Year (SFY) 2003-04 - equal to funding provided in 2002-03. The breakdown of transit funding is as follows:

* $1,459,087,000 for the Metropolitan Transportation Authority (MTA);
* $1,083,214,000 for the Transit Authority (TA) in New York City (included in the MTA's funding);
* $375,873,000 for Long Island Rail Road and Metro-North Railroad;
* $162,958,000 for downstate transit systems including Rockland, Staten Island Ferry, Westchester, Nassau, and others;
* $111,312,000 for upstate transit systems including the Capital District, Central New York, Rochester, Niagara Falls and others.

Metropolitan Transportation Authority (MTA)

More than 7 million people ride the MTA transit system every week. More than 60,000 people are employed by the MTA. The MTA is critical to the people in the metropolitan New York City region.

The MTA recently announced a $2.8 billion budget deficit. To eliminate the deficit, the MTA proposed fare and toll increases and service cuts. Subway fares would increase from $1.50 to $1.75 or $2.00. Tolls would increase 50 cents. Service cuts would include closing 177 token booths in subway stations in Manhattan, Bronx, Brooklyn and Queens. While the MTA points out that every station would still have at least one 24-hour staffed token booth, the elimination of booths would mean less security and major inconveniences for riders. The MTA is currently holding public hearings about the proposed token booth closures and fare increases.

Although the MTA announced a multi-billion deficit, MTA officials have not provided an adequate explanation of how it occurred. In 2002-03, the MTA received $1.73 billion in state transit operating aid and the Governor proposes to provide the same amount for 2003-04. The MTA also received over $600 million from debt refinancing in 2002. Tax revenues and rider-ship goals were met. Still, the MTA claims a $2.8 billion deficit exists and the only option is to cut service and raise fares. With so much impact on the lives of the people who rely on the MTA for efficient, affordable and convenient service, the MTA should be required to open up its budgeting process and be held accountable to the people of New York. The MTA should be required to improve its budget adoption process to better incorporate valuable public as well as provide more transparency in its financial accounting practices. Better financial oversight is prerequisite to ensuring that the MTA handles its financial affairs in an accurate, efficient and responsible manner.

A summary of proposed changes are as follows:

MTA New York City Transit/Staten Island Railway

* Increase the basic fare for MTA New York City Transit subways, local buses, and paratransit services, and for Staten Island Railway, to up to $2.00
* Increase the one-way Express Bus fare to up to $4.00
* Increase the price of the 1-Day Fun Pass to up to $7.00
* Close 177 subway station booths and related turnstiles

MTA Long Island Rail Road and MTA Metro-North Railroad
* Increase fares on MTA Long Island Rail Road and MTA Metro-North Railroad (including West-of-Hudson) by up to an average of 33 1/3%, and change rules governing on-board ticket purchases so that the purchase of tickets on the train will be up to $3.50 more than the prices at ticket offices and Ticket Vending Machines

MTA Long Island Bus
* Increase the MTA Long Island Bus basic fare to up to $2.00
* Increase Able-Ride paratransit fares by as much as $1.00
* Increase the price of the 1-Day Fun Pass to up to $7.00
* Discontinue the acceptance of tokens

MTA Bridges and Tunnels
* Increase one-way crossing charges at MTA Bridges and Tunnels facilities by as much as $0.50 for two-axle vehicles with a maximum gross weight (MGW) of 7,000 lbs. and under, $0.50 for franchise buses, and $2.00 for two-axle vehicles over 7,000 lbs. MGW.

Capital Program

The Governor proposes a five- year capital plan totaling $15.4 billion for SFY 2003-04 through 2007-08. The capital plan provides funding for State and local highways, roads and bridges, aviation and rail projects. As part of the plan, the Executive proposes a $1.65 billion construction contract letting level. This is a $100 million decrease from the $1.75 letting level in SFY 2002-03.

Department of Transportation (DOT)

The Executive proposes to eliminate the Engineering Services Fund (ESF). The ESF was a centralized account from which engineering expenses were paid. The Executive has proposed a new Preparation of Plans of Purpose Account (PPPA) for engineering services costs previously paid through the ESF. Proposed funding for the PPPA is $578,259,000, a $41,962,000 decrease from ESF funding in SFY 2002-03.

DOT workforce reductions would total 523 Full-Time Equivalent positions, decreasing from 10,113 to 9,950. While the Executive reports the reduction would be due the elimination of the ESF, an early retirement incentive would be offered to all DOT eligible employees. Therefore, the proposed reduction could occur throughout the agency and may not be limited to engineering-related positions. Currently, there are 4781 FTE engineering-related positions. The estimated savings from workforce reductions and related administrative cost decreases would be $53,000,000.

Federal capital funding of $1,697,000,000 is proposed by the Executive, a $206,000,000 increase from SFY 2002-03. All Federal funding is from the Transportation Equity Act of the 21st Century (TEA-21) which is set to expire September 30, 2003.

The Metropolitan Transportation Authority operates and maintains the major public transportation systems in the Metropolitan Transportation District, which consists of New York City, Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester counties. In an attempt to close a projected MTA budget gap of $2.8 billion for the 2003-2004 fiscal year, numerous fare and toll increases, as well as subway station booth closings, have been proposed.


The Department of Environmental Conservation (DEC) is responsible for conserving and improving New York's natural resources and environment, as well as controlling water, land and air pollution to enhance the health, safety and general welfare of state residents. In addition to these responsibilities, in the past the DEC has been responsible for administering the Environmental Protection Fund (EPF) and implementing the $1.75 billion Clean Water/Clean Air Bond Act of 1996. As of this year, virtually all of the Bond Act funding has been appropriated and those projects and positions it sustained will need to be supported by another funding stream. The Governor is looking to use the Environmental Protection Fund as a source of funding for a number of these positions.

This year marks the EPF's tenth anniversary. Created by the Legislature in 1993 as a dedicated account, the EPF has provided funding for a variety of clean water, open space, farmland, parks and solid waste programs. Last year, in a victory for the environmental justice movement, the State Assembly negotiated a commitment that at least 25 percent of the spending from the EPF's waterfront redevelopment and state parks accounts must be for projects in underserved inner-city communities. This important feature was not included in the Governor's 2003-2004 budget proposal, but will hopefully be added during negotiations. The Governor did, however, propose a new appropriation of $500,000 to fund the Department of Environmental Conservation's new environmental justice initiative.


Funds originally allotted from the 1986 Environmental Bond Act to the state Superfund contaminated site cleanup program are now depleted. Yet, there are still hundreds of hazardous waste and substance sites waiting to be cleaned up. There are also thousands of brownfields sites, with over 6,000 in New York City alone. In upstate New York, these sites not only threaten public health, but are a barrier to urban revitalization; it is estimated that 40 percent of Buffalo is brownfields. Only the most contaminated sites are on the Superfund list, which triggers enforcement solutions and access to government cleanup money.

The Executive Budget proposes spending $138 million this year to keep the Superfund going, but the latest iteration of the Governor's brownfield proposal eliminates tax incentives to stimulate brownfield cleanups and reuse. If not corrected, that will lead to several more decades of delay for urban redevelopment programs and several more decades of uncontrolled sprawl growth in rural and agricultural areas. At the Governor's proposed rate of funding, it will take more than 20 years to clean up currently identified contaminated sites. The highest cleanup standards should be maintained. Where that is not possible at a site intended solely for industrial use, there should be maximum removal of toxics and annual monitoring to ensure that a former brownfield does not support inappropriate human activity, like residential homes or daycare centers.

Additional Environmental Revenue Sources

New York's environmental community is keenly aware of the fiscal challenges the state faces in the upcoming year. In order to sustain and fund environmental programs during the revenue crisis, many environmental groups are calling for the expansion of the Bottle Bill. The inclusion of additional redeemable bottles, such as juices, Snapple-type drinks and bottled water would significantly increase the amount of unclaimed nickels, thus providing a new revenue stream that should be dedicated for environmental and solid waste projects. Expansion of the nickel deposit to a dime would increase the available revenue even more.

Women's Issues

The true worth of a race must be measured by the character of its womanhood... - Mary McLeod Bethune

Women's Issues

Last year the Governor signed into law the "Women's Health and Wellness Act" Chapter 554, expanding insurance coverage for prevention, early detection and treatment of breast and cervical cancer, osteoporosis and other women's health needs, as well as coverage for prescription contraception for all women. It also includes a "conscience clause" that exempts religious groups that employ and serve only members of their faith from providing contraceptive coverage.

This year's Executive Budget is the same as last year's. There is no increase to childcare services at the State University of New York and City University of New York, as well as Child Care Centers at both the community and senior colleges. As a result, parents who attend these colleges, (primarily single parents) may have to put their education on hold due to lack of childcare services.

The Executive Budget continues to support Domestic Violence Training and Technical Assistance, Domestic Violence Hotlines, and Batterer Intervention Programs. However, they are maintained at the same level of funding as last years.

The Governor provides no increase in funding for the following programs:

HIV services for infants and pregnant women $6,500,000
HIV Counseling and testing by family planning $4,000,000
HIV out reach prevention services to teens and women $1,000,000
Grants for Women's HIV clinics: ob-gyn $2,100,000
Outreach prevention services to teen and women $1,375,000
Breast Cancer Detection and Education $7,320,000
Breast Cancer Research $2,600,000
Family Planning Services $18,315,000
Family Life Education Program $350,000
Women, Infants and Children (WIC) $26,307,000
Prenatal Care Assistance: Non-medical services $2,640,000
The Executive proposes to eliminate funding for Osteoporosis Prevention Education and reduce Hypertension Programs by $940,000.

Families & Human Services
You are young, gifted and Black. We must begin to tell our young, There's a world waiting for you, Yours is the quest that's just begun -James Weldon Johnson.

Social Services

The Office of Temporary and Disability Assistance (OTDA) was created pursuant to Chapter 436 of the Laws of 1997. OTDA, along with the Office of Children and Family Services (OCFS), are the successor agencies to the Department of Social Services (DSS). OTDA is responsible for the administration of public assistance programs including: Family Assistance; Safety Net Assistance; and Supplemental Security Income (SSI); the Federal Food Stamp Program; the State Food Assistance Program; the Home Energy Assistance Program (HEAP); child support services; refugee assistance programs; and homeless shelter and service programs. Through its Division of Disability Determinations, OTDA evaluates the medical eligibility claimants for Federal SSI and Social Security Disability Insurance benefits. OTDA works closely with OCFS and the Department of Labor, which administers employment-training programs to enable participants to transition from public assistance to unsubsidized employment. The Executive projects the number of Public Assistance recipients (includes Safety Net recipients) to increase by 5.3 percent in SFY 2003-04.

The Executive requests All Funds appropriations totaling $4,799,688,000 in State Fiscal Year (SFY) 2003-04. This represents an increase of $664,429,600 or approximately 14% from the SFY 2002-03 level to support both State Operations and Aid to Localities.

Federal TANF Block Grant

SFY 2003-04 will be the seventh year in which New York has received its Federal public assistance funding through the Temporary Assistance to Needy Families (TANF) Block Grant. Federal Authorization of the TANF Block Grant expired on January 11, 2003, with spending authority extended until the end of SFY 2002-03. Congressional reauthorization, or at the very least a continuation of the TANF Block Grant at current funding levels, is envisioned in the Executive proposal. The Executive's recommended SFY 2003-04 budget is predicated on Congressional reauthorization of the TANF Block Grant at the current $2.44 billion allocation for New York.

New York's caseload and expenditures were significantly higher in FFY-1995 than in the subsequent years. As a result of the change in the number of New Yorkers being served in the TANF program, the State has annually experienced Federal TANF funding above the amount needed to support the Federal share of the Family Assistance Program. This funding overage is referred to as the "TANF Surplus". Most of the TANF programs that assist low-income families and communities are funded through the TANF Surplus. The Executive's budget projects the TANF Surplus to be $1,823,410,000 for SFY 2003-04.

The Executive proposes to use the TANF Surplus in the following manner for SFY 2003-04:

Child Care (Includes CAP and EAF)* $408,000,000
Earned Income Tax Credit $382,000,000
Title XX $241,000,000
Tuition Assistance Program (TAP) $225,000,000
Supports to Foster Stable Families $225,000,000
Child Welfare EAF $140,000,000
Child and Dependent Care Credit $107,000,000
Local JD/PINS $105,000,000
Employment and Transitional Initiatives $  50,000,000
NY Foster Care Tuition $  41,000,000
Advantage Schools $  20,200,000
Home Visiting $  16,000,000
Food Pantries $  12,000,000
OCFS Juvenile Delinquent Programs $  12,000,000
Pregnancy Prevention $  10,000,000
Systems $  10,000,000
Adolescent Pregnancy Prevention (APPS) $    7,700,000
PINS and Preventive Services $    7,000,000
YEETP $    4,300,000
Alternatives to Incarceration $    4,000,000
School Based Health Centers $    3,500,000
Title XX - WIC $    3,000,000
Displaced Homemakers $    2,800,000
Child Welfare Quality $    2,000,000
WIC $    2,000,000
Green Teams $    1,010,000
OCFS Community Based JD Services $    1,000,000
The Executive proposes to use TANF funds for the Tuition Assistance Program (TAP). Using TANF to provide financial assistance to college students was to be a one-time occurrence in SFY 2002-03, yet the Executive has again included TAP as part of the TANF Surplus.

The Executive's budget proposal has eliminated funding for the following successful programs:

Pre-kindergarten programs $ 60,000,000
Summer Youth Employment $ 25,000,000
Extended Day programs $ 11,300,000
Blueprint $   1,500,000
Wage Subsidy $   5,000,000
Technology Training $   7,000,000
VESID/LIVES $   1,000,000
Language Emerging and ESL training $   1,050,000
Homeless Assistance $   4,000,000
Skills Development $      500,000
Basic Education $   5,000,000
ACCESS - Welfare to Careers $   1,140,000
Supportive Housing for Families $   2,000,000
Kinship/PINS/Caretaker $   1,000,000
(Disability Advocacy Program (DAP) $   1,000,000
Emergency Homeless Programs $      500,000
Adults and Family Literacy $   1,000,000
CAP - Childcare Assistance Program and EAF - Emergency Assistance for Families

State Operations

The Executive projects the number of Public Assistance recipients (including Safety Net recipients) to increase by 5.3 percent in SFY 2003-04. However, since the enactment of Welfare Reform in 1997, the Executive has been claiming that public assistance caseloads have significantly dropped. In SFY 2002-03, the Executive projected a 1.0 percent increase in caseloads. To date, OTDA has not provided evidence that such an increase has occurred and the Agency's published data actually reflects a decrease in caseloads during calendar year 2002 of 48,135 recipients.

The Executive recommends an All Funds State Operations appropriation totaling $467,352,500, which represents an increase of approximately $2.171,100 above SFY 2002-03.

Aid To Localities

The Executive proposes an All Funds Aid to Localities appropriation totaling $4,302,335,500 in SFY 2003-04, which reflects an increase of $686,750,500 or 19 percent from SFY 2002-03. This increase is attributable to the Executive's projection of a more than 5 percent increase in the Public Assistance caseload which includes a greater than 10 percent Safety Net caseload increase. The Executive further proposes a nearly 3 percent increase in the monthly average payment (MAP). These increases are reflected in the $682,144,000 increase in the appropriations for the Temporary and Disability Assistance programs.

Areas which provide funding to local social service districts drastically affected by the Executive's proposal include:

* Community Projects Fund (reduced by 100 percent or approximately $3 million)
* Food Assistance Program (reduced by $1.6 million or 73 percent)
* And other Legislative Initiatives.

A $2,000,000 Contingency appropriation is included in the Executive's proposal for the Shelter and Supported Housing Program.

Capital Projects

The Executive proposes a Capital Projects appropriation totaling $30,000,000 for the Homeless Housing Assistance Program (HHAP) which is the same level as the appropriation for SFY 2002-03.

Article VII Proposals

The Executive includes the existing shelter allowance schedule in the Temporary and Disability Assistance appropriation. The Executive is currently under court order in the Jiggets v. Grinker litigation to promulgate a shelter allowance for public assistance recipients that is reasonably related to the cost of living in New York City. This proposal is an attempt to moot the litigation and codify the very shelter allowance schedule that the court ruled inadequate.

The Executive also proposes legislation to limit the pass through of Federal Social Security Income cost of living adjustments (COLA) to SSI recipients which are scheduled to occur on January 1, 2004. Instead, the legislation would authorize the State to utilize the funds to offset its financial commitment to the Program. Thousands of SSI recipients would not see the cost of living increase in their benefit checks if the Executive's proposal is established. This piece of Article VII legislation is stated to save the State $25.7 million in SFY 2003-04.

Lastly, the Executive has included Article VII legislation to allow the merger of the Office of the Welfare Inspector General (OWIG) with the Audit and Control Unit of the Office of Temporary and Disability Assistance (OTDA). Including the Welfare Inspector General in the OTDA would undermine the authority to both investigate and prosecute acts of alleged fraud or abuse conducted by the OTDA.

With the State's labor market slowly declining and the country experiencing a recession, this is not the appropriate time for the Federal Government nor the Executive to implement new requirements that could make a significant impact on the way New York State utilizes TANF funding. Decreasing funding to programs that assist individuals most vulnerable during economic instability is a poor use of Executive power and does not fulfil the obligations of good government to meet the needs of its citizens.

Restoring A Fair And Adequate Tax System

Raise the Roof- Caucus Staff


The Executive Budget estimates that New York State faces a $9.3 billion budget gap during the upcoming 2002-2003 state fiscal year. On the one hand, this gap would be much larger if sate services and aid to localities had not been cut back so much, relative to even the Budget Division's own baseline, over the last decade. On the other hand, this gap would be much smaller, or nonexistent, if New York State had been only slightly less generous in its multi-year tax cutting. For example, if the state had enacted only 82.5% of the tax cuts that it actually enacted during its 1994 to 2000 tax cutting spree, there would be no budget gap and Governor Pataki would still be able to take credit for the largest multi-year tax reduction program in the history of this or any other state - $11.1 billion during the upcoming state fiscal year and an estimated $53 billion during his eight years in office.

Balancing the state budget during the current recession

During a recession, unemployment increases, the number of hours worked declines, consumer spending declines, etc. translate into a reduction in government tax revenues - sometimes absolutely and almost always in terms of the rate of growth. Some aspects of government spending, particularly spending on safety net programs like unemployment insurance, income support programs, and Medicaid, also increase during recessions as an increasing number of workers are laid off. With revenues declining and some expenditures increasing, states and localities almost always face increasing budget deficits during recessions. The situation this year is compounded by the bursting of the Wall Street bubble and the results of the September 11th attacks.

Federal Assistance - for the states Generally and for New York State specifically

For the States generally: In the current economic stimulus debate at the national level, the National Governors Association and others have succeeded in making this dilemma part of the debate. In late July, the U.S. Senate adopted an 18-month "state fiscal relief" measure which would have provided the states with $7 billion of fiscal relief over 18 months by temporarily increasing the federal Medicaid match rate (referred to formally as the Federal Medical Assistance Percentage or FMAP) and increasing Title XX Social Service Block Grant payments. New York would have received about $1.1 billion of that assistance. This proposal by Jay Rockefeller (D-WV) and Susan Collins (R-ME) was added as an amendment to the Schumer-McCain prescription drug bill (S. 812) by an overwhelming bi-partisan majority (75-24). While the Schumer-McCain bill passed the Senate, it was never considered by the House of Representatives; and President Bush did not include any provision for state fiscal relief in the economic stimulus package that he currently has pending before the Congress.

On the bright side, support remains strong in the US Senate, and Representatives Peter King (R-NY) and Sherrod Brown (D-OH) have obtained broad bi-partisan co-sponsorship for a 12-month State Fiscal Relief Act that they will be reintroducing in the near future. This bill would provide a 2% increase, retroactive to October 1, 2002, in the federal Medicaid match rate for all states that maintain their current Medicaid eligibility levels. Under this bill, states that have high unemployment (defined as having a state unemployment rate higher than the national average for three consecutive months) would be eligible for an additional 2.5 percentage point increase in their FMAP provided that they maintain current eligibility levels."

New York's public and private sector leaders should work with New York's congressional delegation, the Bush Administration and public and private sector leaders from other states to ensure that the federal government provides "state fiscal relief" as part of its efforts to deal with the effects of the current recession.

For New York and any other states that are ever the victims of international terrorist attacks reforms must be accomplished. The United States has never before had to deal with the effects of terrorist attacks on American soil. The country now knows that such attacks are possible. And, the Congress should put into place laws that will treat New York, and any other areas that might bear the brunt of such attacks in the future, in a fair and equitable manner.

New York's public and private sector leaders should work with New York's congressional delegation, the Bush Administration and public and private sector leaders from other states to secure amendments to the Stafford Act (the Federal Emergency Management Act) that would allow New York State and New York City to receive federal aid for tax revenue losses directly attributable to the WTC attacks and which would allow other states and cities to receive such aid in the event of future attacks. Governor Pataki initially raised this issue in his October 2001 request for federal help, but since then the state's emphasis has shifted to federal money for other purposes. HR 5523/S 3055, as introduced in the last Congress by Congresswoman Carolyn Maloney et al. and Senators Schumer and Clinton, would allow states and localities to receive federal reimbursement for a substantial portion of revenue losses directly attributable to terrorist attacks.

But because of its balanced budget requirement, New York like the other 48 states with balanced budget requirements of one kind or another, is almost always forced to cut spending and/or increase taxes during a recession. Unfortunately, cutting state spending and/or increasing state taxes during a recession serves to make the situation worse rather than better. It is also the opposite of what the federal government is doing to stimulate the economy and serves to cancel out the impact of some or all of those federal actions.

Closing the remaining budget gap in a fair, balanced and economically sensible manner

While federal assistance and one time revenues (from rainy day funds or "gimmicks" such as tax amnesty programs) can reduce the size of the recession-generated budget gap that the state must close, it is now clear that New York will not be able to get through the current recession without some painful spending cuts and/or tax increases. In this context, the key challenge involves choosing that mix of spending cuts and/or tax increases that will do the least harm to the state's economy during the current economic downturn.

A sound framework for evaluating these difficult choices is provided by Joseph Stiglitz, a professor of economics at Columbia University and one of the recipients of the 2001 Nobel Prize in economics, and Peter Orszag of the Brookings Institution. In a recent paper published by the Center on Budget and Policy Priorities, Siglitz and Orszag point out that while some state officials apparently believe that reducing spending is preferable to raising taxes, "economic analysis suggests that tax increases would not in general be more harmful to the economy than spending reductions. Indeed, in the short run (which is the period of concern during a downturn), the adverse impact of a tax increase on the economy may, if anything, be smaller than the adverse impact of a spending reduction, because some of the tax increase would result in reduced saving rather than reduced consumption." 1

For example, if taxes increase by $1, consumption may fall by 90 cents and saving may fall by 10 cents. Since a tax increase does not reduce consumption on a dollar-for-dollar basis, its negative impact on the economy is reduced in the short run. By contrast, some types of spending reductions would reduce demand in the economy on a dollar-for-dollar basis and therefore would be more harmful to the economy than a tax increase.

Applying this basic set of economic principles, Stiglitz and Orszag conclude that "direct spending reductions will generate more adverse consequences for the economy in the short run than either a tax increase or a transfer program reduction. The reason is that some of any tax increase or transfer payment reduction would reduce saving rather than consumption, lessening its impact on the economy in the short run, whereas the full amount of government spending on goods and services would directly reduce consumption."

In comparing tax increases and reductions in transfer payments, the impact on the economy depends primarily on the propensity to consume of the households affected. A recent Congressional Budget Office report noted that, "As a general proposition, higher-income households save more of their income than do lower-income households. Although occasionally some data emerge to indicate otherwise, a large accumulation of evidence continues to show that as a household's income rises, the proportion of that income that is consumed falls." 2 The more that tax increases and transfer payment reductions are focused on those with lower propensities to spend (that is, on those who spend less and save more of each additional dollar of income), the less damage is done to the weakened economy. Since higher-income households tend to have lower propensities to spend than lower-income households, the least damaging approach in the short run involves tax increases concentrated on higher-income households. Across the board tax increases and reductions in transfer payments to low-income families would generally be more harmful to the economy than increases in taxes on higher-income families.

Stiglitz and Orszag also point out that these arguments are even stronger for state policymakers who are more interested in the impact of policy options on their own state's economy than on the national economy. "In particular, government spending that would be reduced if direct spending programs are cut is often concentrated among local businesses. . . . By contrast, the spending by individuals and businesses that would be affected by tax increases often is less concentrated among local producers. Since part of the decline in purchases that would occur if taxes were raised would be a decline in the purchase of goods produced out of state." They also point out that this is particularly true for expenditures by high-income households, who "appear to consume relatively more goods and services produced in other regions of the country (or abroad) than lower-income families do."

As New York policy makers consider options for balancing the state's budget during the current economic downturn, Stiglitz and Orszag present the following policy relevant conclusions:

1. Tax increases on higher-income households are the least damaging mechanism for closing state fiscal deficits in the short run. Reductions in government spending on goods and services, or reductions in transfer payments to lower-income families, are likely to be more damaging to the economy in the short run.

2. Given the existence of balanced budget rules at the state level, some form of federal fiscal relief to states is warranted since state spending reductions or tax increases would be counter-productive at this time by restraining the economy at a time when it is already slowing.

Suggestions for pursuing the second of these two conclusions that were presented above:

An approach to implementing the first of these two conclusions can be drawn from North Carolina. In late 2001, North Carolina policymakers, as part of an effort to deal with the impact of the recession on their state's budget, adopted legislation increasing that state's top personal income tax rate from 7.75% to 8.25% for three calendar years - 2001, 2002 and 2003. New York's top personal income tax rate is currently 6.85%.

It has been estimated by the Fiscal Policy Institute that a surcharge of seven tenths of one percent (.007) on the portions of a taxpayer's New York Adjusted Gross Income above $100,000 and another seven tenths of one percent (.007) on the portions above would generate between $2.7 and $3 billion per year (depending on the accuracy of the Division of the Budget's projected decline in personal income tax receipts). Imposing such a surcharge for two years (2002 and 2003) would temporarily raise New York State's top tax rate to the same level as North Carolina's top rate.

While this proposal would increase state tax revenues by between $2.7 to $3.0 billion annually, approximately 20% of this amount would come from nonresident taxpayers, who on average have much, much higher incomes than New York residents, and the federal treasury would be covering a third of the remainder as a result of the federal deductibility of state and local income taxes.

The overall change in the disposable incomes of affected taxpayers will, in fact, be positive for another reason: President Bush's generous tax cuts. If you earn $300,000 a year, President Bush's 2001 tax cuts will be reducing your federal income tax bill by about $5,000 this year - and this break might be even larger if the President succeeds in his efforts to get the Congress to accelerate the remaining steps of the 2001 tax cut and to enact additional tax cuts. But even if none of the President's additional recommendations are adopted, a taxpayer at this income level would still see a net tax cut of over $3,500 under this surcharge proposal because of the Bush tax cuts and the benefits of federal deductibility.

Other proposals of this type have also been advanced. Adding a one percent surcharge on the portions of Adjusted Gross Income above $150,000, as some legislators have suggested, would raise about $2 billion per year. And, the Schuyler Center for Analysis and Advocacy has suggested adding a temporary additional tax bracket of 7.85% (one percent above the current top rate of 6.85% that kicks in at taxable income levels of $20,000 for single individuals and $40,000 for married couples) on the portion of taxable income over $100,000 for individuals, over $200,000 for married couples, and over $150,000 for heads of households. This plan would increase revenues by approximately $1.4 to $1.6 billion per year.

All of these proposals would have a less negative effect on the New York economy than cuts in state and local services produced or provided locally or increases in fees or regressive taxes. These proposals all have several other advantages as well. First, they would only increase the effective tax rate for those taxpayers who are currently paying less of their income in state and local taxes than the other 90% to 95% of New York taxpayers. Second, a substantial portion of these tax increases would be paid by residents of other states and other countries. Third, because of federal deductibility of state and local income taxes, the federal government would be paying for about a third of the bill.

Dealing with New York's Structural Budget Problems by Reestablishing a Fair Tax System

In both the long run and the short run, reestablishing a fair and adequate tax system is a far preferable solution to New York's continuing fiscal problems rather than further spending cuts. When polled about state budget priorities, most state voters would gladly forego tax cuts in order to avoid cuts in social programs or the layoff of state workers. While there is a very vocal minority of talk-show callers who take an adamant anti-government position, most New Yorkers understand that the services provided by government make an important contribution to the functioning of the state's economy and the maintenance of essential quality of life services. Most New Yorkers are also supportive of programs that provide a social safety net and assist the needy in effective and efficient ways.

New York State has a great deal of room within which to implement a "fair tax" solution, because tax changes that made the system less fair and less adequate are at the root of the problem. The personal income tax is still progressive but it is less progressive than in the past and, thus, less able to balance out the regressive nature of the state's property and sales taxes. The state's corporate income taxes have become more and more like Swiss cheese. General business corporations for example, have gone from carrying over 10% of New York State's tax load in the late 1970s to less than 4% today.

Restore a Bit of Progress to the Personal Income Tax:

The personal income tax cuts enacted in 1987 and expanded in 1995 have proven to be both unfair and unaffordable. The cuts were basically "off the top," reducing New York's highest marginal tax rate from 13.5 percent on unearned income and 9.5 percent on earned income to 6.85 percent on both types of income.

Since the mid-1970's, New York State has cut its top PIT rate from 15.375 percent to 6.85 percent. Before the 1987 tax cuts, the state's top rate was 13.5 percent on investment income and 9.5 percent on wages, salaries and business income. By restoring only a small portion of the progress that was eliminated by the 1987 and 1995 tax cuts, approximately $2 billion could be generated for socially and economically productive investments in the state's human and physical infrastructure.

Eliminate Corporate Loopholes That Don't Create Jobs:

The state's annual Tax Expenditure Report shows that business corporations receive over $1.6 billion in tax breaks each year. The Pataki Administration has attempted to solve this "problem" by dropping many of the state's corporate loopholes from this annual accounting. In addition, untold millions more are lost via transfer pricing and other techniques used by large, multi-national corporations to avoid paying their fair share of taxes. New York could reduce leakage from these tax preferences if it adopted "combined reporting" and replaced its current Corporate Alternative Minimum Tax with an Alternate Minimum Assessment of the type adopted last year by New Jersey.

Combined reporting, as currently required by California, Colorado, Illinois, New Hampshire and the 12 other states, requires a business to file a single combined return for all of its business activities. This prevents profitable multi-state and multi-national corporations from avoiding state corporate income taxes through accounting tricks that shift income and expenses among their numerous subsidiary corporations in order to reduce their overall tax liability by having inordinately large portions of their income show up in subsidiaries that are only taxable in so-called offshore tax havens where tax rates are inordinately low, or in states that do not have corporate income taxes, or in states (like Delaware) that have corporate income taxes but which do not tax the income from trademarks and other intangibles. The adoption of combined reporting in NY would raise an estimated $340 million or more on an annual basis.

New Jersey's new Alternate Minimum Assessment (AMA) applies only to businesses with gross profits of $1 million or more. Those businesses are required to pay a new low rate assessment on either the portion of their gross profits over $1 million or on the portion of their gross receipts over $2 million, whichever is less. This new assessment is estimated to raise between $202 and $234 million per year in New Jersey. In New York, a similar assessment would raise an estimated $400 million or more on an annual basis.

Ensuring that taxpayers get their money's worth from business tax incentives. As part of a general clean up of the state's tax laws, it is essential that certain basic "common sense" safeguards be added to the state's growing list of economic development tax incentives:

* Tax credits created in the name of job creation should include accountability mechanisms to ensure that the promised job creation actually materializes.

* Tax credits designed to help areas with poorly performing economies should have logical criteria and should not write into permanent law criteria that make permanent some notion of what those under-performing areas may be at a particular point in time.

* Tax credits or other government largesse should not be used to encourage or to reward the creation of jobs at or below the poverty level. Doing this only drives more money out of the federal, state and county treasuries in the form of the income supports that our society appropriately provides to the working poor.

* Subsidies should not go to firms that violate environmental, worker safety, or other laws.

* In the new information-based economy, investing in K-12 education; ESL, GED, and adult literacy programs; and, training for incumbent workers has greater pay-off than subsidies for low-wage jobs. Education must be protected from corporate welfare.

* Retail and service businesses that serve local markets should not be subsidized except in extreme cases.

* No subsidies should be given for intrastate relocations.

Enact a Corporate Disclosure Law:

A growing number of corporations use transfer pricing and a variety of other subterfuges to minimize the percentage of their net income that is subject to tax by any state. New York State should require every publicly-traded corporation that does business in the state to report its gross and net income, deductions and credits, and the amount of New York state taxes paid, much as corporations already do at the federal level. This would allow taxpayers and policy makers to identify companies in the state that may be making profits but, through the use of clever business structures and tax expenditures, are paying little or no New York taxes. Only with that information can the state truly know how well its tax policies are working. The Securities and Exchange Commission, as part of its response to the Enron scandal, should require every publicly-traded corporation to file, as a supplement to its annual report to stockholders, a 50-state spreadsheet that shows its allocation of property, payroll and sales among the states and its tax payments to each of the 50 states.

Reform the STAR Property Tax Relief Plan:

In 1997, Governor Pataki got the message that by cutting the top rate on the state's progressive personal income tax, he was cutting the wrong tax, in the wrong way, at the wrong time. In his 1998 State of the State Address, he put a positive spin on this recognition of the fact that the income tax is a fair tax and that the overwhelming majority of New Yorkers do not feel oppressed by it. "Last year we knew it was time to build on the tax cuts of the first two years. From this podium, I told you that it was time to cut taxes again. Different taxes. Oppressive taxes. Property taxes." It is, however, unfortunate that this focus on oppressive taxes did not take center stage until after the state had cut the income tax by over $5 billion a year with only half of this amount, at most, staying in the New York economy.

While the Governor's STAR plan addresses an important need, it does so in an inefficient manner. By allocating property tax relief in a way that is unrelated to the amount of a household's property tax bill relative to its income, it delivers much less relief to those who are truly overburdened by property taxes than would a substantial expansion of the state's circuit breaker tax credit -- at one-half the $2.7 billion fully implemented annual cost of the STAR program -- and much more to homeowners for whom property taxes represent a very small percentage of their income.

Under STAR, the amount of tax relief to which a homeowner is entitled can vary with the median home value in his or her county of residence, but not with the magnitude of that household's property tax burden relative to its income. The plan's one income test (whether a senior homeowner's income is above or below $60,000 a year) creates an illogical notch effect, while begging the question of a rational sliding scale based on income. While the Governor reports that some people are being literally taxed out of their homes, his plan does not target its relief to such households. In addition, two taxpayers with the same income and the same size property tax bill could get widely varying levels of relief depending on where they happen to live.

The STAR plan is also flawed in that it provides relief only to homeowners. This ignores the fact that tenants as well pay property taxes. While homeowners pay property taxes directly, tenants, through their rental payments, carry a substantial portion (usually estimated as being more than one-half) of the property taxes paid by the owners of their buildings. But under STAR, neither tenants nor landlords receive any relief. Only the owners of owner-occupied dwellings are helped by STAR.

Providing property tax relief only to those who own their own homes has an undesirable discriminatory effect, according to the 1990 Census. At that time, over 62% of white, non-Hispanic householders lived in owner-occupied dwellings, while the comparable figures for Hispanic householders was 16.5% and for black, non-Hispanic householders it was a little less than 27%. Expanding the circuit breaker would also eliminate the potential for such unequal treatment since it provides relief to renters as well as homeowners. (Under the current circuit breaker, which goes only to New Yorkers with annual incomes below $18,000, tenants are allowed to count 25% of their rent as going toward property taxes. In an expanded circuit breaker for higher-income households, this percentage could be adjusted if appropriate.)

To ensure fairness, property tax relief should not discriminate on the basis of geography or on the basis of whether someone is a renter or a homeowner. STAR fails on both of these counts. Enriching the state's real property tax circuit breaker credit would provide a more targeted, cost-effective means of providing property tax relief to those who are truly overburdened by the current system.

1 Peter Orszag and Joseph Stiglitz, Budget Cuts vs. Tax Increases at the State Level: Is One More Counter-Productive than the Other During a Recession?, Center on Budget and Policy Priorities, November 6, 2001.
2 Economic Stimulus: Evaluating Proposed Changes in Tax Policy, U. S. Congressional Budget Office, January 2002.