| Budget Equity XVI |
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Preliminary Analysis of the Governor’s Executive budget 2007 - 2008 |
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Assemblyman Darryl C. Towns Chairman |
Assemblyman Carl Heastie Caucus Budget Co-chairman |
Assemblywoman Crystal D. Peoples Caucus Budget Co-chairwoman |
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TABLE OF CONTENTS |
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MESSAGE FROM THE CHAIRMAN It is with a high degree of optimism that I write this message, as the recently elected chairman of the forty-six member Black, Puerto Rican, Hispanic & Asian Legislative Caucus. This optimism stems from the foresight of our Chief Executive, Eliot Spitzer and his vision of how the Empire State can regain its position of prominence after a decade of decline. This document entitled Budget Equity XVI represents a collaborative effort by numerous organizations and offers an alternative view on how to remedy the various long standing issues in our communities, through the fair and equitable distribution of State resources. With an aggressive agenda to rein in property taxes, health care spending and education costs, we must work together to solve the enormous gaps in services for New York State residents. To that end, Governor Spitzer and Lt. Governor Paterson have presented some very interesting and positive recommendations for solving many of the problems. Many battles faced during the past administration will not have to be fought because of this proposed budget. As you examine this document, please bear in mind, that our goal is to make this year's budget submission the very best it can be for all the State's residents, especially those individuals that have been historically excluded from experiencing the full benefits of all this State has to offer. |
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Message from Budget Workshop Co-Chairman In his Executive Budget for the 2008-2008 fiscal year, Governor Eliot Spitzer has presented a refreshing change from many years of highly flawed Executive Budget proposals presented by his predecessor. Governor Spitzer has composed a comprehensive plan to provide our children with a sound basic education, an affordable Higher Education, expanded health-insurance for children and increased local assistance. There are however, some concerns with the health care budget. I am excited that Eliot Spitzer has taken the lead with a strong education policy to make our schools strong and educate the future of New York State. Universal Pre-K and smaller class sizes are all initiatives the Assembly Majority have been advocating for years. Accountability in our schools is another long over looked component to successful educations. I look forward to working with this Governor to make sure that our state upholds its obligation to provide our children with a "sound basic education". After years of proposed cuts to TAP and opportunity programs coupled with proposed tuition hikes at our state Universities it is a relief to see that Governor Spitzer truly understands the importance of an affordable education. It is evident in the Governors Budget proposal that he understands the importance of having a workforce with the education and skills to compete in this emerging global economy. His proposal to keep TAP and opportunity programs funded is testament to his understanding of New York States needs. This year's budget is a refreshing change from the previous administration; it is a relief to see an Executive Budget proposal that understands the needs of New York State. There is always room for improvement and I look forward to working with the Governor to provide New York with a Budget that provides for New York's neediest while providing opportunity for the growth of our youth. |
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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 XVI would not have been possible.
We would also like to thank our staff for the editing, processing and production of this document:
Michael Burton Chief Content Editors:
Tyrone Benton Coordinator: Paul Upton |
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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. |
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PRELIMINARY ANALYSIS OF THE |
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Governor Spitzer has proposed an historic investment that will deliver educational excellence across New York State. This commitment to funding education and satisfying the terms of the Campaign for Fiscal Equity are what the caucus has been advocating for many years. $7 billion new statewide investment in our schools over the next four years
The Governor proposes $1.4 billion more for our schools this year alone. New York City will also invest an additional $2.2 billion in the New York City school system. Governor Spitzer's budget directs money at programs that have proven success including class size reduction, full-day pre-k, time-on-task programs like after school programs, teacher quality initiatives and middle school & high school restructuring. The Caucus has long championed the idea of Reform + Resources = Results, and this budget reflects many of these priorities. These include:
Governor Spitzer's budget proposal would not take away money from any school district and every district would in fact receive an increase in state aid. The Governor's expansive charter school proposal could adversely impact those children throughout New York attending our states public schools. This proposal requires serious consideration and public input before any action is taken on this proposal. Contracts for Excellence to ensure that the new investment delivers results The Governor's budget proposal would establish Contracts for Excellence - plans on how to use the new funding -- to ensure that the new investments are used wisely and achieves the results our kids and parents deserve. It is only right that every school district should have the resources needed to educate every child and that once these resources are delivered the people of New York should expect success. Parents and students have the greatest stake in our education system and we need the state to treat parents as educational partners. The Governor's plan will empower parents by giving them far more information about their children's schools, and ensure that their concerns are heard. Districts will be required to consult with parents, as well as teachers and administrators, in developing Contracts for Excellence. Parents will have the right to file complaints if their school district does not fulfill its contract. Under the Governor's plan, if districts do not deliver results, then superintendents and school board members may lose their jobs. The Governor's plan establishes accountability from the district level to the school level, making it much harder to neglect schools in poorer neighborhoods. Parents will receive new report cards on their principal and school that would include information on teacher quality, curriculum, and parental involvement. School districts would be required to report their expenditures on a school by school basis. A fair, transparent and simple school aid formula that will remove politics from the process The budget would establish a new fair, transparent and simple formula for distributing state aid that is based upon the actual needs of our students and will for the first time ensure that New York State has a fair and equitable system. This new "foundation formula" will ensure that politics do not determine how much money our schools receive. This type of formula has been advocated for by this caucus for many years. The foundation formula provides a basic amount of funding for each district based on enrollment, and adjusts funding levels up based on the number of students who have special needs, the number of students in poverty, and the number of students who are learning English as a second language as well as other critical factors. It provides a predictable, objective way to allocate education aid that is based on the student population of a district and takes into account a district's financial ability to invest in its own school system The State Assembly has consistently supported this type of reform in each of the last three years the Assembly has adopted strong education budgets that were similar to the budget proposed by Governor Spitzer. |
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Many believe that education is the key to success. Some say that knowledge is power. Mahatma Ghandi quotes, "learn like you'll live forever." These are very powerful statements and have proven to be very relevant statements that have transcended through out time. In our society, we adhere to the correlation between higher education and prosperity. With that being said, the attainment of a post high school degree is not affordable to everyone. Although this is the land of opportunity and the place where one can pull themselves up by their boot straps, some New Yorkers can't even afford boots to do that. Our government is obligated to help us get those boots and make higher education more accessible. In the Governor's Executive Budget, he has outlined a formula that will help New Yorkers achieve a degree of higher education. New York State is home of the nation's largest public university system - the State University of New York (SUNY). The SUNY system is comprised of sixty-four campuses through out the state of New York. There are 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. The SUNY system what created in February of 1948 by former governor Thomas E. Dewey. New York State is also home of the nation's largest university system - City University of New York (CUNY). CUNY was established as a municipal college system in 1926. The system was designated as CUNY in 1961. Today it consists of nineteen campuses, including nine senior colleges, seven community colleges, one technical school, a graduate school, and an affiliated medical. As you may have already known New York has some of the biggest names in higher education. However, size means nothing without students to attend the schools. One of the major factors that determine whether a student plans to attend a school or chooses to continue their education is money. Many students just cannot afford the cost of a good school. Nevertheless, NYS has programs set in place to make higher education more accessible to all New Yorkers. One of the most notable provisions of the Governors budget is he is not asking for a raise in tuition. Tuition Assistance Program (TAP) TAP is state aid for higher education. The purpose of this aid is to supplement any financial aid given to a student in the state of New York. The executive budget proposes that the State provides $857 million in support for TAP which is an $18.7 million reduction from the previous year. The reduction is to be offset by the elimination of the $ 30 million in funding for administration of the Ability to Benefit Test as a means for measuring academic eligibility for receiving TAP. These saving even provide enough extra funding to accommodate growth in the Part Time TAP enacted last year. EOP - Education Opportunity Program The Educational Opportunity Program (EOP) seeks to provide admission opportunities for economically and educationally disadvantaged students of all races who are residents of New York State. While students and families are expected to assist themselves financially as much as possible, the university realizes that most students admitted to the EOP require almost full support through available grants, scholarships, jobs and loans. The program provides supportive services designed to help students who need assistance in academic, financial, social and personal matters. One objective of the EOP is to see that each student admitted is provided with all the services and assistance necessary for success in whatever degree program he or she is to complete. The ultimate goal of the program is to make higher education possible for students that did not have traditional credentials for college admissions, but have the potential and motivation for academic success. EOP students perform at the same or at a higher rate than other students who are not in the program. The Executive recommends $19.85 million in funding for the Education Opportunity Program in the 2006-2007 budget. HEOP - Higher Education Opportunities Program HEOP education funding appropriated to be used by independent colleges to expand opportunities for the educationally and economically disadvantaged. This upcoming year the Governor proposes to maintain the Higher Education Opportunity Program (HEOP) at $24.2 million. HEOP requires $2.2 million in additional funding in order adequately meet the needs of the students participating in the program. SEEK - Search for Excellence, Education and Knowledge CUNY's Search for Excellence, Education and Knowledge (SEEK) program was proposed to be $16.3 million during 2006-2007. STEP - Science and Technology Entry Program and C-STEP - Collegiate Science and Technology Entry Program The Science and Technology Entry Program (STEP) and the Collegiate Science and Technology Entry Program (C-STEP) are intended to help increase the graduation rates amongst students who wish to pursue careers in technical or licensed vocations. For STEP, student eligibility entails being a NY State resident, for at least two school year terms while enrolled in the 7th grade until the 12th grade. They must also be under-represented in the fields in which they are interested, such as technical, scientific and licensed professions, in addition to being economically inconvenienced. CSTEP is a program that increases career awareness by having career development conferences, increasing graduate school and professional recruitment opportunities. It is targeted for minority students who are NY residents, economically disadvantaged and who are enrolled in licensure qualifying programs. These programs have received a recommended funding amount of $19 million in the Governor's proposal. |
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Health and Elders In the Executive's proposed budget the governor redesigns New York's Health care delivery system with the stated goal of addressing rising Medicaid costs and ensuring that resources are used more efficiently. The propose cuts to hospital and nursing homes could severely limit the availability and quality of care throughout the state. The burden of the Governor's estimated budget cuts and taxes fall disproportionately on hospitals and nursing homes. Specifically, nearly $1 billion in cuts are targeted at the hospital and nursing home sectors as follows:
Reorganization of the Health Department The Governor has proposed the creation of three new offices to streamline the delivery of health services: the Office of Health Insurance, the Office of Long Term Care Services and Programs, and the Office of Information Technology. The Executive proposes several initiatives to combat Medicaid Fraud through the Office of the Medicaid Inspector General. This is estimated to save the State $400 million. Reimbursement restructuring Actions proposed by the Governor in Medicaid, HCRA and Public Health translate into $1.3 billion in overall savings to the State in 2007-08. Critical changes f or hospitals include modifications to the Graduate Medical Education methodology, a proposed re-weighting of the hospital DRG system to reflect more recent shifts in cost centers, and a new rate adjustment to direct more funding to public hospitals serving a high percentage of Medicaid recipients. These changes are in need of careful public comment and revision to ensure that there is no decline in services as a result of this restructuring. GME Medicaid Fee-for-Service Payments. This is the same proposal from the last two years that the State Legislature rejected. The proposal would reduce payments for hospitals whose Medicaid GME reimbursement exceeded their estimated 2001 Medicaid teaching costs. Hospitals may be impacted if they reduced the number of residents in training from the previous base (1990) or where costs or payer mix may have changed from the base, or any combination of these factors. Re-weighting DRGs The proposed budget would implement updated DRG weights for Medicaid reimbursement based on 2004 non-Medicare costs and statistics, effective January 1, 2008. No phase-in is contemplated. Short stay and long stay length-of-stay trim points would be similarly updated using 2004 data. The proposed language would provide for budget neutrality if the resulting rates are projected to increase Medicaid spending. That is, the Department of Health (DOH) would be authorized to reduce rates, proportionally, if the revised rates are shown to increase Medicaid spending. There is no comparable adjustment to increase rates if the revised rates appear to save Medicaid spending. DOH has been working on updating Medicaid DRGs for some time. HANYS and the allied associations have been supportive of an effort to update the basis for reimbursement. HANYS has also provided a number of recommendations to DOH for consideration. However, no information on the results of re-weighting or its impact has been shared. Based on the recent Medicare experience, it is critical to have available for review and analysis the details related to DOH's work. The Medicare experience also suggests that any update could have significant redistribution effects, especially after such a long time between updates. Those effects need to be fully understood. DOH has indicated that it may still be weeks away before information is available for consideration. Gross Receipts Tax (GRT) The Governor's proposed budget continues the 0.35% gross receipts tax, which would otherwise expire April 1. When the GRT was reintroduced in 2005 at 0.35%, it was estimated to be worth $106 million to the state. A cap was imposed on the amount of GRT money that the state could use and if collections exceeded the threshold of $106 million, the excess was to be rebated back to the hospitals. It is now clear that the amount collected in GRT has been significantly higher than initially budgeted. The budget proposal waives this reconciliation by removing the cap and capturing the money that was supposed to be rebated to hospitals. The reconciliation is worth $44 million. Continuation of the GRT has a projected value to the State of $136.9 million. Trend Factor Medicaid rates on and after April 1, 2007 would not receive a 2007 trend factor-in effect this is a 2.5% Medicaid cut. The 2.5% trend factor that was implemented in January 1, 2007 would be removed from the 2007 rates on April 1, affecting the remaining nine months of the calendar year (April-December). Removal of the 2007 trend factor would be permanent, eliminating the 2.5% for all subsequent calendar years. Medicaid-Only Case Mix Effective January 1, 2008, the aggregate case-mix index (CMI) used to determine Medicaid payment rates would be calculated based solely on a facility's Medicaid residents. In most cases, the exclusion of Medicare residents from the calculation would lower a facility's CMI. Workforce Recruitment and Retention Funding The Executive proposes a reduction and subsequent three-year phase-out of workforce recruitment and retention funding for nursing homes. The Governor justifies the phase-out of the workforce funding with the concurrent phase-in of the updated nursing home payment rate methodology, or "rebasing." For the final three years, the Governor further proposes a redistribution of the nursing home workforce funding that follows Medicaid-only payments. Nursing Home Quality Improvement Grants The Governor proposes elimination of continued funding for nursing home quality improvement grants. These grants were originally authorized as part of the HCRA workforce recruitment and retention investment of 2002. Nursing Home 6% GRT The executive budget proposal makes permanent the 6% GRT on nursing homes. Pharmaceuticals The Governor proposes several methods such as bulk purchasing and a reduction in pharmacy reimbursement rates to save money on pharmacy costs. Governor Spitzer proposes to require all eligible EPIC participants to enroll in Medicare Part D unless such enrollment would create a financial hardship for the EPIC participant. Expanding access to health care Governor Spitzer proposes to expand access to health insurance coverage to the 2.6 million New Yorkers currently uninsured, of whom nearly 400,000 are children. He proposes to expand the eligibility of Child Health Plus from 250 of the Federal Poverty Level to 400 percent (this means the income threshold for the program will be $82,650). This program is also enhanced by additional outreach efforts so that eligible individuals receive care under these programs. There is more that could be done to expand the amount of working families that are eligible for health care. The State and Federal governments have made an agreement that requires that the State take measures to increase the rate of employer based health coverage. The State needs to make some minor changes to the Healthy NY program to help many employers for low wage jobs to provide health insurance to their employees:
The home health aides; food service, laundry and garment workers; and security officers and commercial cleaners earn income that qualifies them for the program. The overly restrictive employer size and "crowd out" provisions, however, disqualify too many of their employees. By allowing employers to take advantage of the Healthy New York subsidy - which averages about twenty-two percent of premium - the State would allow them to provide and maintain health coverage. The alternative for many of these employers is to drop coverage altogether. Child Welfare Governor Spitzer increased spending on child protection, child maltreatment prevention and foster care services. Through Article VII language, he also permanently reauthorized the foster care block grant. The foster care block grant provides an open-ended funding stream and sets the State reimbursement at 65 percent, net of Federal funding, for child preventive, protective, aftercare, independent living and adoption services and administrative costs, and caps reimbursement for foster care services. The Executive Budget would make this block grant permanent and increase its capped reimbursement funding by $36.3 million to total $455.1 million. It increases the open-ended funding for child preventive, protective, aftercare, independent living and adoption services and administrative costs nearly $84 million (from $381.7 million to $465.6 million). The Budget also provides for the full implementation of the October 2006 COLA and supports an April 2007 COLA for foster care providers. Advocate Recommendations: While the increased reimbursement of $36.3 million for foster care services will be a welcome improvement, there remains a concern that this will be insufficient for localities to implement the lower caseload standards recommendations by a recent OCFS study of child welfare worker caseloads. Further, a capped block grant does not allow the state the flexibility it needs to respond to unexpected influxes into the foster care system. Advocates recommend that the state eliminate the capped reimbursement for foster care and replace it with a fifty percent match, net of Federal funds. It is recommended that the State increase its share of funding for protective, preventive, aftercare and post-adoption services. If the state preventive match were increased to from 65% to 75%, counties would have a greater incentive to invest in services that prevent foster care placement, saving the State money in the long run and preserving more families. Income Security Governor Sptizer left much of the flexible fund for family services intact, and preserved funding for many of the valuable work support and family assistance programs funded with TANF dollars that had been removed from Executive Budgets in the past, such as adult and family literacy, Supported Housing for Families and Young Adults (SHFYA) and supports for relative caregivers. New York State's welfare system has helped many families transition to jobs, but has done little to ensure that people have the skills, knowledge and experience necessary to find family-supporting work after leaving public assistance. Income support policy should have the expressed goal of reducing poverty throughout New York State. Advocates recommend: Raise the public assistance grant and provide annual inflation adjustments. An increase in the public assistance grant is long overdue and is desperately needed to alleviate the extreme financial distress of New York State's public assistance recipients, the majority of whom are children. Frozen since 1990, the basic welfare allowance has lost over half its purchasing power and is less than half the Federal poverty level. Advocate groups recommend that the basic allowance be increased from $291 to $435 for a family of three. Maximize the number of public recipients participating in education and vocational training. In order to reach the 50 percent work participation rate required by new Health and Human Services Regulations, New York must think beyond a work-first approach. Up to 30 percent of the caseload can meet work requirements by participating in vocational education. Currently, only 11 percent of New York's TANF recipients engage in education and training programs. New York State should take the lead in encouraging counties to enroll individuals in school to give them a competitive edge in the labor market. Increase the Earned Income Disregard. To strengthen work incentives, fifty percent of earned income for public assistance recipients should be disregarded up to 135 percent of the Federal poverty level. This will essentially supplement low wage worker's income until families are more able to sustain themselves without cash assistance. Public Assistance An increase in the welfare grant could be paid for out of the Federal block grant for the Temporary Assistance and Needy Families (TANF). There is currently a block grant "surplus" amount that exceeds welfare payments to welfare participants by more than one billion dollars. However, much of the block grant is used to pay for state programs that should be funded out of the general budget (e.g., the Earned Income Tax Credit). The non-rent portion of the public assistance grant has not been increased in more than 15 years, during which time the cost of living has increased by nearly 50%. In 1975 public assistance for a three person family was equal to 110% of the Federal Poverty Level. To keep pace with the rising cost of living, the $291 a family of three received in NYC for non-shelter needs in 1990 would today have to be increased by 49%, to $435.00. In addition, the price of fuel oil and natural gas prices have on average more than doubled since the fuel for heating allowance was adjusted in 1987. Since that time average prices for electricity have increased by 84%, the cost of natural gas has increased 160% and the cost of fuel oil has increased 239%. For example, public assistance families in Albany using fuel oil to heat their homes are given only $828 per year to pay for home heating costs. Families heating with natural gas are given only about $700. Despite the 61% decline in the public assistance rolls since 1998, more than 600,000 New Yorkers including more than 350,000 children, still require public assistance to meet their most basic needs. A large portion of the people remaining on public assistance cannot be expected to increase their income through earnings. In New York City, 45% of the caseload is not expected to engage in work activities because they are child only cases, are disabled by HIV/AIDS, have a head of household over 60, have a head of household on SSI or SSI pending or they have significant disabilities. While comparable data is not available for districts outside of New York City, according to OTDA data from 10/02-9/03, a statewide average of 23,400 individuals were exempted from work activities each month as a result of a disability |
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Governor Spitzer's first Executive Budget faces many structural challenges - in light of an enormous surplus - a structural deficit will grow substantially in subsequent years. The challenge is to meet the significant needs of the labor market and workforce without radically shifting the delivery of services. This could not be more relevant than his challenges relative to his Healthcare budget. The previous administration's buzzword was "rightsizing" the healthcare industry in New York State. The Berger Commission for Healthcare in the 21st Century sought to close, downsize or consolidate 20,000 nursing home and hospital beds in New York State. The recommendations of the Commission to the Governor and the Legislature raise a number of legal, jurisdictional and ethical questions which must be addressed in this legislative session. The Spitzer administration's budgetary priority of rationalizing the delivery of Healthcare in New York State must be closely examined. Specific attention must be paid to the Governor's proposal to eliminate the Hospital Trend factor which he sees as a step toward an overall strategy of moving to a more rational reimbursement system, limiting the Graduate Medical Education (GME) payments through a revision of the reimbursement provisions and his proposal to freeze Managed Care, Family Health Plus and Child Health Plus premiums. In the area of Workers Compensation Reform, the Governor's attention to the need for a substantial change in the system is welcome. Particular attention needs to be made to a growing problem in New York State - employer non-compliance with the State's Worker Compensation Program. According to a recent report by the Fiscal Policy Institute (FPI) a conservative estimate of between 500,000 and 1 million workers who should be covered are not. The system must be repaired with particular attention to a significant overhaul, not just tinkering. Some other budgetary issues of concern are:
Some significant needs of leveling the playing field must be enacted as well such as:
The arrival in Albany of a new administration brings with it many opportunities to adequately address these many complicated and entangled issues. The challenge will be the political will and dedicated focus of doing what government is mandated to do which is take care of those most in need as its proprietary concern. Time will tell this administration's commitment to this ideal. MINORITY- AND WOMEN- OWNED BUSINESS ENTERPRISES The Governmental Operations Committee has jurisdiction over much of the Executive Law, including Article 15-A, which regulates participation of Minority- and Women-owned Business Enterprises (MWBEs) in state contracts. The Committee has held a series of joint hearings with the Subcommittee on the Oversight of Minority- and Women-owned Businesses, the Assembly Standing Committee on Corporations, Authorities and Commissions, the Assembly Standing Committee on Small Business, the Puerto Rican and Hispanic Task Force, and the Black, Puerto Rican, Hispanic and Asian Legislative Caucus, and the Legislative Commission on Government Administration across the State on the effectiveness of the MWBE program. To further highlight this issue, the Speaker created the Subcommittee on Oversight of Minority-and Women-Owned Business Enterprises in 2005. This Subcommittee is Chaired by Assemblywoman Crystal D. Peoples and was formed to help ensure proper oversight of the MWBE program. Last year the Committee advanced a package of bills to strengthen and improve Article 15-A. The Committee was successful in enacting the streamlined certification process, the statewide disparity study, and a statewide advocate program into law as part of the State Fiscal Year 2006-07 budget. The Caucus will continue to advance this effort. |
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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 minority jail population are largely due to difficulty securing adequate representation as counsel and drug prevalence in urban communities. Three years ago the Legislature was able to accomplish some reforms to the Rockefeller Drug Laws but these reforms do not go far enough. The Rockefeller Drug Laws require comprehensive reform. Incarceration remains a costly and ineffective manner to address chemical dependencies. Many prisons still lack programs that assist inmates in dealing with the addiction that 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 and the changes in the Rockefeller Drug Laws from 2004 are a step in the right direction, they are no substitute for comprehensive reform of the Rockefeller Drug Laws. It is important to consider the establishment of a state public defense commission. It would go a long way toward 1) providing client-centered representation, 2) decreasing racial disparity, and 3) ensuring equal justice to those unable to afford counsel. THE DEATH PENALTY Opponents of the death penalty believe it should not be reinstated on moral grounds, because human life is sacred, because it is racist and because of the risk of killing the innocent. Current law has a maximum sentence of life imprisonment without parole (LWOP) and if nothing is done legislatively, the decision in People v. LaValle will make LWOP our highest punishment for first degree murder. The death penalty is also inordinately expensive. In the decade that we have allowed capital punishment to divert money and resources from local and state treasuries, based on conservative estimates are that we have spent more than $170 million to obtain seven death sentences. Assuming that figure to be correct, each death sentence has cost $24 million to achieve. This is not a good investment of state resources. THE CONVERSION OF THE CAPITAL DEFENDER OFFICE TO HELP COUNTIES PROVIDE DEFENSE SERVICES In the process of redirecting death penalty savings to non-capital expenditures, it has been recommended that the Capital Defender Office be converted into an Indigent Defense Services program. This proposal has much merit and should receive consideration. Instead of simply closing the Capital Defenders Office using its highly talented staff to address the crisis in indigent defense services that is plaguing our counties, it would be a far more efficient use of the existing structure and experienced personnel. Rather than close the office and throw the talents and state money already spent down the drain, if the death penalty is not reinstated, the Capital Defender Office should be used to help provide indigent defense services in this understaffed, overworked system. The CDO, converted into a resource to provide county fiscal relief and constitutionally required services, could handle non-capital first-degree murder cases. It could be available - as some have requested - to handle now decertified capital cases (See, "Changes urged for Capital Defenders," Press Republican, 10/12/04 [suggesting that the CDO stay with cases until the end, whether the death penalty is sought or not]. It could contract with counties that need its help, handle SORA or Rockefeller re-sentencing currently required by law but is not funded. Alternatively, the office could be used by the Appellate Divisions to handle the terrible backlogs that frequently emerge in indigent appeals. If the death penalty is not reinstated, the conversion of this important defense resource should be a number one priority as the State moves forward. The State could assist counties, jumpstart the journey toward an adequate defense system, and fulfill its long-neglected constitutional obligation by immediately converting the Capital Defender Office into the beginning of an infrastructure for providing state-funded defense assistance. The Capital Defender Office - with function and name changes - could immediately be placed at the disposal of counties to provide mandate relief for what, for them, has become a fiscal and constitutional crisis - the required delivery of public defense services. PROGRAMS THAT HAVE REQUESTED RESTORATIONS
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Immigration recommendations brought forward by Advocate groups include: 1. HELP IMMIGRANTS INTEGRATE INTO U.S. SOCIETY
2. PROTECT THE RIGHTS OF IMMIGRANTS
3. SUPPORT JUSTICE FOR IMMIGRANT WORKERS
4. REMOVE LANGUAGE BARRIERS IN GOVERNMENT AGENCIES
5. INCREASE FUNDING FOR ENGLISH CLASSES
6. ENSURE ACCESS TO HEALTH CARE
7. RESTORE ACCESS TO THE SAFETY NET
8. ENSURE PRESERVATION AND DEVELOPMENT OF AFFORDABLE HOUSING
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The Right Choice for New York: New York State's budget situation is improving but substantial challenges remain. State revenues are growing fast enough to cover the growth in state expenditures but they are not growing fast enough to make up for the loss of the nonrecurring resources that were used to balance the state's 2006-07 budget and to cover the cost of implementing the new multi-year tax cuts that were enacted into law last year. New York faces a $1.6 billion budget gap for the state fiscal year scheduled to begin on April 1, 2007, but according to Governor Spitzer's 2007-08 Executive Budget less than 3% of that gap is attributable to differences between the underlying growth in state revenues ($3.8 billion) and the increase in expenditures necessary to maintain services at their 2006-07 level ($3.9 billion). Instead, the gap is attributable primarily to the scheduled implementation of previously enacted tax cuts ($954 million) and the net difference between nonrecurring revenues received and nonrecurring expenditures incurred during 2006-07. In addition to this $1.6 billion "inherited" gap, the Governor's Executive Budget proposes new initiatives that are estimated to cost $1.9 billion in 2007-08, thus increasing the gap to $3.5 billion. The Governor is proposing to close this gap with $2.8 billion in General Fund cost savings and the use of $671 million of prior year surplus revenues. The value of the cost savings plan is projected to grow to $4.7 billion in 2010-11. In the upcoming fiscal year, the Governor proposes to generate $1.3 billion or 46% of the total from what the Executive Budget refers to as health care reform; a little over $1 billion or 38% of the total from a variety of efficiency and other cost reduction measures; and $449 or 16% from the closing of tax loopholes, primarily loopholes that have been created by aggressive tax planning efforts by multi-state corporations.
While some of the proposed savings from health care reform may make sense, freezing reimbursement rates across-the-board will jeopardize the health of many hospitals and nursing homes. The November 2006 final report of the Commission on Health Care Facilities in the 21st Century (which was referred to as the Berger Commission), like Governor Spitzer, called attention to the fact that there are underutilized beds in a number of hospitals in New York State. But the Berger Commission report also made the following important points: Providers are in weak financial condition. For the past eight years, the state's hospitals, as a group, have lost money. A majority of the state's nursing homes, even some that are fully occupied, operate at a loss. Such losses cannot be sustained indefinitely. * * * Negative or inadequate fiscal margins limit the ability of providers to reinvest in their systems, obtain the latest technologies, access capital, and upgrade their physical plants. Many of our hospitals and nursing homes are outdated and in need of capital improvements. * * * Turbulence afflicts our health care providers; facility closures and declarations of bankruptcy are too common. Since 1983, 70 hospitals and over 63 nursing homes have closed in New York State. Some of our oldest and proudest names in health care struggle under the unintended consequences of bankruptcy proceedings. Patient access to stable health care services is at risk. An across-the-board freeze in hospital and nursing home reimbursement rates is a very "blunt instrument" approach to health care reform and could very well result in the closure of needed facilities. According to the Berger Commission report, the state's current reimbursement mechanisms "distort patterns of service delivery and induce facilities to pursue high margin services, sometimes at the expense of more essential community needs." Freezing that system in place may, in the short run, reduce costs but it will exacerbate rather than ameliorate the problems identified by the Berger Commission report. As with the proposed health care reform savings, the "government efficiency" category also includes some blunt instrument expenditure reductions, the most significant of which ($328 million) is the Executive Budget's proposal to simply dropping New York City from the state revenue sharing program (now called Aid and Incentives to Municipalities or AIM). Revenue sharing should be distributed through a rational, needs-based formula that is applied to all the state's municipalities in an even-handed manner. If such a formula indicated that New York City and any one or more other cities were not in need of assistance this year, a decent argument could be made for dropping New York City from the program; but that is not the case. The third category of cost savings, closing corporate loopholes, includes proposals that address a number of specific abuses - some that have been around for a while and others that are newly minted - that have come to be used by multi-state corporations that can engage in transfer pricing and income shifting among subsidiaries. In addition, the Executive Budget proposes an important and systematic reform, known as combined reporting, that has the greatest potential for leveling the playing field among firms in any given industry and making it harder for tax planners to invent new ways for multi-state corporations to avoid paying state taxes. By adopting combined reporting, we would join the 17 other states, including California, Colorado, Illinois, New Hampshire and Texas, that require multi-state and multi-national corporations to file a combined return for their entire "corporate family" rather than being able to use inter-subsidiary transactions to move income to countries or states where that income is not taxable. Under combined reporting, a corporate family files a single tax return covering the income of all of its subsidiaries, with that income apportioned among the states based on a common formula. Most states use three factors (property, payroll and sales) in apportioning corporate income. But, New York is in the final year of a transition to a system in which it will apportion corporate income solely on the basis of the share of a firm's sales in New York State. Rather than closing corporate tax loopholes one at a time, combined reporting provides a systematic approach to stopping income-shifting schemes. Combined reporting also has the advantage of protecting the state from new methods of transferring profits among subsidiaries that invariably arise once a single loophole is closed. According to the Message from the Budget Director in the Executive Budget, "Consistent with Governor Spitzer's commitment, this Budget does not increase taxes. The Budget does reflect an increase in revenues from closing certain tax loopholes and tax shelters that allow certain taxpayers to reduce their tax obligations. All of these provisions have been carefully reviewed to determine that the actions proposed do not represent tax increases, but rather limit the ability of certain taxpayers to take advantage of unintended provisions in law to reduce their tax exposure through sophisticated tax planning techniques." In this message, the Budget Director also pointed out that many of the tax loopholes that are being addressed by this year's Budget have already been addressed by other states and the federal government. Establishing a Fair, Adequate and Economically Sensible State-Local Tax System In both the long run and the short run, reestablishing a fair, adequate and economically sensible tax system is a far preferable approach to balancing the New York State budget than neglecting the state's human and physical infrastructure by not investing in the state's future. To address the unmet needs identified in this edition of Budget Equity, and to avoid those costs savings proposals that are likely to have negative effects on the state's economy or on the health of New York residents, state policymakers should consider steps that would make the tax system fairer while raising the revenue necessary to balance the budget in an economically sensible manner. The most important step in this direction would be for New York to reform its personal income tax structure in a way that ensures that the wealthiest New Yorkers pay their fair share in state and local taxes. Among the many ways in which New York could move in this direction would be by (a) adopting the top brackets from New Jersey (8.97% on income above $500,000) or North Carolina (8.25% on income above $200,000); or (b) replacing New York's current bracket structure with its 1972 brackets (2% through 15%) adjusted to reflect the changes in the cost of living over the past 30 years. Under this latter option, 90 to 95% of New Yorkers would pay less than under current law while the state would collect $7.7 billion more in revenue. This indicates how far and in what direction New York's tax system has changed over the past 30 years. Reforming the STAR Property Tax Relief Program. 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 $4.5 billion a year (now $7 billion a year) with only half of this amount, at most, staying in the New York economy. While Governor Pataki's STAR plan was aimed at an important problem, it works 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 current $3.2 billion annual price tag 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 homeowner's property tax burden relative to his or her income. The plan's one income test (whether a senior homeowner's income is above or below $60,000 a year, with that amount now adjusted annually to reflect changes in the cost of living) creates an illogical notch effect, while begging the question of a rational sliding scale based on income. While Governor Pataki argued for STAR on the basis that some people were literally being taxed out of their homes, STAR 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 also 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. The result is extreme racial disparity. Over 62% of White households live in owner-occupied dwellings, while the comparable figure for Black households is 29%. Replacing STAR with an expanded circuit breaker credit would also eliminate such unequal treatment since it provides relief to renters, as well as homeowners. 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. As a key part of his 2007-08 Executive Budget, Governor Spitzer has proposed an increase in STAR benefits based on income. Under this proposal, no homeowner would see a reduction in benefits, but homeowners with incomes below $235,000 a year would see their STAR benefits increased by at least 30%. The largest increases (a doubling of STAR benefits) would go to homeowners whose incomes are $80,000 or less a year if they live in New York City or one of its five main suburban counties, or $60,000 or less a year if they live elsewhere in New York State. Some of these increases would be fully effective during the upcoming 2007-08 school year while others would be phased in over a 3-year period. This reform plan is a step in the right direction but it does not go far enough to make the STAR program fair to all of New York's residential property taxpayers. While the Governor's proposal would vary STAR benefits by income, so that a millionaire would get less than a middle-income family, it does not vary the benefit based on the relationship between a family's income and its property tax bill. Thus, two families living in the same school district would get the same benefit if they both made $50,000-even if one has a property tax bill of $3,000 a year and the other had a bill of $6,000 a year. In addition, the Governor's proposal does not address the problem of two families with the exact same income and the exact same property tax bill getting substantially different benefits if they happen to live in different parts of the state. And, STAR would continue to provide benefits only to homeowners even though it is clear that property taxes are paid on rental properties (frequently at a higher effective rate than owner-occupied residences) and that those property taxes are divided in some proportion or other between landlords and tenants. Seeking federal policies that make it easier rather than harder for the states to balance their budgets New York's government, labor, business and civic leaders should work with their counterparts in other states and at the national level to secure the enactment of federal policies that will make it easier rather than harder for the states to balance their budgets.
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