SENATE UNVEILS 2001-02 BUDGET RESOLUTION

Majority Plan Targets Job Creation, Tax Cuts, Increased Education Aid

Monday, March 19, 2001

The New York State Senate today unveiled its 2001-02 budget resolution that would further strengthen the state's economy, particularly in Upstate New York, through the Senate's
"Gen*NY*sis" biotech economic development plan, a significant expansion of the successful Empire Zone program, and a $1.8 billion tax cut package that targets high energy costs and small business tax relief.

The resolution also recommends a $925 million school aid increase, funding restorations for health care programs and transportation projects, increased state aid to localities, expanded substance abuse treatment for felons and new measures to help make farms more profitable.

"New York continues to experience job growth and budget surpluses thanks to the tax cuts and job creation programs that have resulted from our partnership with Governor Pataki over the last six years," Senate Majority Leader Joseph L. Bruno said. "Now is not the time to rest on our laurels. We must continue to return surplus revenues to the taxpayers and reinvest them into programs that will make New York more economically competitive, especially in the areas of biotechnology and high tech research and development."

"This is a very balanced, fiscally prudent plan that makes wise investments in our economy and places more than $4 billion in reserve," Senator Ronald B. Stafford (R-C, Plattsburgh), Chairman of the Senate Finance Committee, said. "The recommendations in the Senate Budget Resolution would put New York in a strong position to protect against any potential downturn in the national economy."

General Fund spending under the proposed Executive Budget is estimated at $42 billion. After spending cuts and reestimates, the Senate plan would increase that amount by a net $516 million. On an all-funds basis, the Executive Budget proposes $83.6 billion, while the Senate would increase that to $84.1 billion, an increase of 6.2 percent over the 2000-01 fiscal year. In addition, the Senate plan calls for $1.8 billion in new tax cuts over the next six years, including $260 million that would be returned to New Yorkers in the first year. The Senate Budget Resolution includes the following:

Gen*NY*sis
The Senate has proposed the $500 million Gen*NY*sis program to make New York State a nationwide economic development leader in the areas of biomedical research and biotechnology development. The program allocates $150 million for basic and applied research; $250 million for technology development and transfer, primarily for capital; $95 million for business development and $5 million for administrative costs. Of the $250 million, $240 million would be allocated to eight Gen*NY*sis Centers of Excellence projects on Long Island, in New York City, Central New York, Western New York, the Capital Region, and Westchester, Monroe and Tompkins counties.

Reducing Taxes
The Senate is proposing a $1.8 billion package of tax cuts and economic development initiatives, including $190 million for the expansion of 52 existing Empire Zones, $135 million for the creation of 14 new Zones, and $45 million for tax incentives within the eight Gen*NY*sis Centers of Excellence regions.

The resolution includes the Senate's proposal to automatically adjust income eligibility levels to protect senior citizens from losing STAR property tax savings because of a modest increase in income, such as a Social Security cost of living increase. The Senate also endorses Governor Pataki's CO-STAR proposal to reduce the burden of county property taxes on seniors and farmers.

Other highlights of the Senate tax cut plan include $485 million in energy tax reductions to help offset recent steep energy price increases; a $65 million tax credit for people who care for elderly relatives in their own homes; $40 million in tax reductions for agriculture; and a tax credit to encourage health insurance coverage for small business employees.

Additionally, the Senate plan rejects higher licensing fees on sportsmen, relying on the General Fund to provide continued support for conservation programs that were to be funded through the higher fees.

Aid to Education
The Senate has long prioritized the need for adequate state support for education, distributed in a fair and equitable manner throughout the state. The plan includes a $925 million school-year aid increase to public schools. The Senate denies the priority-based project selection proposal for building aid; restores funding for BOCES and includes the TEACH-2 initiative to keep experienced teachers in the classroom.

Transportation Funding
The Senate is recommending the restoration of $625 million in funding for both the state Highway and Bridge Capital Plan and the MTA Capital Plan. Other restorations include $200 million for the multi-modal program, $150 million for the MTA, $75 million for the NY-SOARS airport capital improvement program, and $50 million for non-MTA mass transportation projects.

Health Care
The Senate recommends the restoration of $210 million in aid to health care providers to address the ongoing needs of hospitals and nursing homes. The funds would also be used to provide restructuring assistance to financially distressed hospitals, address workforce shortages through a nurse loan forgiveness program and provide $30 million to maintain the Excess Medical Malpractice Insurance program.

Helping New York's Farmers
Agriculture remains New York's biggest industry, and the Senate Majority has led efforts to help preserve family farms and enhance rural communities by improving farmers' bottom lines. The Senate's budget resolution builds on earlier farm tax relief and economic development efforts with a $70 million Farm Aid proposal, including $40 million in additional tax relief and $30 million to support two new Senate initiatives designed to provide technical, marketing and business assistance to New York farmers.

A proposed "Agricultural Systems Initiative" (ASI) would give farmers access to research, technology, marketing and other assistance to develop new varieties and improve production practices. A new grant program, the Strategic Farm Planning and Grant Program, would help improve the economic bottom line of participating farms through the development and implementation of a business plan. A similar program in Massachusetts resulted in average increased profits of $19,000 annually for 103 participating farmers.

Helping Local Governments
The Senate's budget resolution continues the state's commitment to assist local counties, cities, towns and villages meet growing demands for vital local services. A new, three-year municipal aid program will provide $79 million to these local governments when fully effective ($38 million in the new fiscal year). Included in that amount is support for a 12 percent increase in revenue sharing with local municipalities over three years.

For county governments and New York City, the Senate's resolution calls for sharing 25 percent of state receipts from 70 cents per month wireless 911 surcharge, valued at $15 million in the first year and growing to $35 million by year three, and $5 million is provided to assist counties with higher costs resulting from the recently increased age limit for Persons in Need of Supervision (PINS).

Road to Recovery
First-year funding for the Senate Majority's proposed "Road to Recovery" program will provide $20 million to divert low-level, drug-addicted, nonviolent offenders from prison into "coerced" regional treatment programs throughout the state. This Senate Majority initiative is expected to provide about $15 million in eventual costs savings by reducing the need for long-term incarceration for addicts who successfully complete the program.

Budget reform: On-time, all the time
The Senate budget resolution advances the Majority's comprehensive budget reform proposal. The plan includes a "quick start" for budget deliberations, requiring earlier submission of the Executive budget, three-way preview of "big ticket" spending areas like Medicaid and education and shifting the fiscal year start date to May 1.

The key provisions of the plan would require a binding revenue forecast by the state Comptroller in the absence of a legislative consensus and automatic adoption of a "default" budget on May 1 if no spending plan is approved by then. The default budget would largely continue the prior year's plan for 12 months.

"Rainy day" Protection
The Senate resolution also recognizes the need to create additional reserve funds to protect taxpayers, as well as government services and enacted tax cuts from unexpected downturns in the state's economy. The Senate plan builds on the Governor's proposal by enlarging the reserve funds through the creation of a new Capital Construction and Debt Reserve fund, bringing the total reserve fund to more than $4 billion by the close of the fiscal year.

"This plan provides the framework for discussions on our final budget plan to be hammered out within the parameters of the Senate's budget reform proposal," said Senator Bruno. "I hope we can reach a quick agreement on how much money is available to put a budget together, convene conference committees, and enact a new budget in a timely fashion."

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