2011-12-22 / Other News

A Hometown View From Albany

The Sweeteners To Get A Tax Restructuring Bill Passed
By Marc Gronich,
Capital Bureau Chief

It is often said making laws is like making sausage. You don’t really want to know what goes into making either one. The details of the tax restructuring bill, passed on December 7th, has come to light after many followers of the governmental process were critical that the measure was formed in secrecy and without much public input.

The 62-member state Senate passed the measure unanimously and the 150-member state Assembly passed the measure with eight negative votes, two of those from Democrats, including area Assemblywoman Inez Barron.

“I have serious concerns and major problems with this bill,” Barron told the Canarsie Courier from the Assembly floor before the measure was voted on. “My concerns are many. I think the state needs a fair progressive tax structure that generates the revenues that address supplying the needs of the goods and services our residents are entitled to.

Senator Martin Goldman Senator Martin Goldman “I think it stinks,” she added. “This is based on a 24-hour analysis of hearing but not seeing. What people say is not always what appears in print and what is in print does not always have the time to be digested and analyzed.”

How right she may be.

The special session was called to alleviate a midyear budget gap of nearly $300 million and a projected $3.5 billion deficit that the state is facing next year.

After much lobbying and haggling over specific language, a special session that was called for noon did not begin in the state Assembly until just before midnight. There was a lot of hurrying and waiting going on as drafts of the bills were printed and reprinted.

This erupted into a middle class tax cut that at the same time imposed a tax hike on the wealthiest of New Yorkers, such as Alex Rovt, a Mill Basin resident, ranked 301 among the Forbes 400 of wealthiest people around the globe. This tax hike on a few New Yorkers is expected to net the state only $1.9 billion in annual revenue. The so-called millionaire’s tax, a 2009 surcharge on those earning more than $200,000 a year that was set to expire at the end of this year, had been generating about $4 billion annually.

Assemblywoman Helene Weinstein Assemblywoman Helene Weinstein So do the math: That’s $2.1 billion less. How do you make up that difference?

In addition, lawmakers went on a feeding frenzy and chalked up another $108 million in spending as an early holiday present for constituents. Well, actually not necessarily constituents as much as some of the most influential advocacy and special interest groups lobbying lawmakers and their key staff members in the upper echelons of the legislature who write these bills. These brainiacs showed those special interest folks the drafts of the bill and, as a result, everything was in danger of falling apart.

Assemblywoman Inez Barron Assemblywoman Inez Barron What was in this $108 million grab bag of goodies?

Almost half of the money, $50 million, went to assist those Upstate residents, west of Albany, devastated by Tropical Storms Irene and Lee.

That was sorely needed and probably could not wait until next year.

But the other part of the money was divided among 15 programs that mainly impact Downstate residents.

When reading this list of goodies, ask yourself: Could this have waited for better times ahead? Were these programs working? Was there accountability?

$25 million for the Summer Youth Employment Program;

$8 million for the Youth Employment Readiness Training Program;

$7 million for the Child Care Facilitated Enrollment Program;

$3.5 million for the Higher Education Opportunity Program;

$955,000 for the Education Opportunity Program (EOP);

$1 million for the Science and Technology Entry Program;

$778,000 for the Collegiate Science and Technology Entry Program;

$2 million for the Advanced Technology Training And Information Networking program;

$1.7 million for the Liberty Partnerships Program;

$1 million for the Center for Employment Opportunities;

$1 million for Search for Education, Elevation and Knowledge Program;

$2.5 million for the Career Pathways Program;

$2.5 million for the Displaced Homemakers Program;

$55,000 for College Discovery; and, finally,

$1 million for three months of the Foreclosure Prevention Program.

This is one program near and dear to the heart of area Assemblywoman Helene Weinstein. She fought for this money along with other state assembly members. The topic was covered in this column, November 17, 2011.

“We have important youth job training programs, and credits for summer youth employment monies are included in this legislation,” Weinstein summed up, “as well as credits for small businesses and businesses in general that hire formerly unemployed youth. We increase the summer youth employment, funding for displaced homemakers, and there’s $1 million for mortgage foreclosure prevention for the last quarter. We also raised the income level to qualify for subsidized child care.”

“This is about being creative as to how we’re using the revenue,” said Senate Democratic Leader John Sampson. “Not to just spend, but to invest, so our rate of return will be much higher.”

But does it make sense to cut income taxes, eliminate the MTApayroll tax for private schools, spend an additional $108 million on 26 specialty programs, all of which takes money from the already depleted state coffers and replaces it with $1.9 billion in revenue raisers, also known as taxes? How does this close a budget deficit for this year and next?

“It takes us from about $3.5 billion in deficit for next year down to about $1.5 billion, which, in Albany terms is very manageable,” said Senator Kevin Parker. “Next year we can even look at restoring some things.”

The MTA Payroll Tax was eliminated for approximately 80 percent of the business entities that currently pay it. That translates to more than 700,000 employers. This includes eliminating the tax for 290,000 employers with payrolls of less than $1.25 million, 415,000 self-employed taxpayers, and all public and non-public schools.

Some state senators are already looking towards next year when the Cuomo Administration will have to find a way to put back the money taken from the MTAcoffers.

“Three hundred and twenty million is being taken out of the MTA so now we have to make sure that the $320 million going back into the MTA is being spent responsibly,” Senator Martin Golden said. “We have to make sure that’s part of legislation going forward in April of 2012. I have a lock box bill here that would take any money that the MTAmakes and keeps it with the MTA, so the governor doesn’t sweep that money like they did two years ago and two years before that and better manages responsibly the operating funds of the MTA.”

Golden says the key to success next year is to control spending and apparently Cuomo agrees.

“I think that’s what the issue is, we spend too much,” Golden admits. “We have to stop spending.”

“We have a $3.5 billion deficit,” Cuomo summarizes. “We have about $1.5 billion in revenues in this (tax) package, net, and we’ll need $2 billion in spending control. So we’re going to have to find efficiencies; we’re going to have to cut the waste and that’s fine. That’s the balance. I never said we’re going to raise revenues to close the entire gap.”

As was the case this month and will be for next year, the devil is always in the details. Stay tuned.

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