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Senator Bruno discusses the Senate proposal with Albany reporters in the Capitol Building. |
Plan Would Reform Municipal Liability Laws, Pensions, Medicaid, Unfunded Mandates
Tuesday, March 4, 2003
The New York State Senate today unveiled a comprehensive mandate relief proposal designed to help local governments operate more efficiently and preserve more of their local resources to address budget pressures facing localities statewide, while limiting the need for spending reductions and tax increases.
"For years, the Senate has recognized that burdens on local governments are burdens for taxpayers, and as a state we must do all we can to give municipalities the ability and flexibility to address their fiscal needs in a responsible way," Senate Majority Leader Joseph L. Bruno (R-C, Brunswick) said. "This package of budget and legislative proposals represents real relief from frivolous lawsuits, increased pension costs, growing Medicaid expenses and from a broad range of other mandates that are costing local governments and taxpayers billions of dollars."
MUNICIPAL LIABILITY REFORM
The Senate�s Municipal Liability reform package would save local governments across New York State a billion dollars by enacting common sense reforms to limit judicial awards which have spiraled out of control in recent years. From 1988 to 1996, annual tort case filings in New York State grew by almost 60 percent, from 53,104 to 84,089. Last year, the City of New York paid out more than $550 million in settlements and judgments in lawsuits claiming the city negligently caused injuries. According to the Public Policy Institute, in 1996, the �tort tax� cost every taxpayer in New York $800.
"Every sector of New York�s economy is affected by the threat of virtually open-ended liability created by the state�s current tort laws and unfortunately municipalities throughout our state face the brunt of this out of control system," said Senator Dale M. Volker. "The costs are huge because, all too often, our civil justice system assigns blame and assesses damages on an irrational and unpredictable basis. Just about everybody loses in the ongoing game of lawsuit lottery. Consumers lose when liability costs drive up prices while reducing the availability of goods and services; workers lose when jobs are lost to foreign competitors with less product liability exposure; the poor lose when the threat of lawsuits makes it difficult for non-profit groups to deliver services; and taxpayers lose when local governments are seen as the deepest �deep pocket� of all."
The Senate�s municipal liability reform package includes provisions that would have direct savings for localities including repealing joint and several liability, placing a $250,000 cap on non-economic damages and extending Court of Claims jurisdiction to localities. Additional portions of the package would help localities save money by reducing the overall cost of New York�s tort system. These proposals have generated a groundswell of support in New York and across the nation.
PENSION RESTRUCTURING
The Senate�s proposal to restructure the pension system would benefit taxpayers and provide a billion dollars in relief to local governments, while also ensuring that the pension fund is sound and that benefits are protected for New York�s retired workers.
"By giving counties the ability to issue debt, which they currently do not have, this measure will help them to better absorb the costs of retirement and benefit enhancements and assist them in their efforts to stabilize local taxes," said Senator Mary Lou Rath (R-C, Williamsville).
The plan, initially introduced last session and reflected in Governor Pataki�s recent pension proposal, would help localities face unaffordable increases in pension costs by allowing for the five year amortization of any increase in contributions exceeding 25%. Additionally, the plan would allow counties to issue debt for local contributions for the Early Retirement and Incentive Program enacted in 2002. The unprecedented $30 billion decline in the performance of New York�s pension fund following the September 11th attacks and the lingering national recession have led to a tremendous increase in the pension related costs to local governments.
MEDICAID REFORM
Initially passed by the Senate last December, the Senate Medicaid reform package would eliminate the requirement that counties repay the State a total of nearly $172 million that was previously advanced to counties over the past several years. Since 1992, the State advanced funds to assist counties in addressing the cash flow impact on local governments associated with the conversion of certain mental health services to Medicaid, specifically rehabilitation services provided to residents of certified community residences.
"This is an essential first step in addressing these pressing problems for localities," said Senator Kemp Hannon (R-C, Garden City), Chairman of the Senate Health Committee.
The total Medicaid cost for this year is expected to approach $40 billion in New York State, and waste and fraud within the system inflates the bottom line and costs localities and taxpayers. The Senate is proposing measures to crack down on fraud and abuse within the Medicaid system by increasing independent investigations to prevent these losses and save localities money.
WICKS LAW REFORM
The Senate has introduced numerous proposals to reduce the costs of local government construction projects. The Senate took a leading role in establishing and extending the New York City School Construction Authority�s exemption from Wicks Law, which has saved New York City
taxpayers hundreds of millions of dollars.
"The State Senate has been a consistent supporter of reducing the burdens on local taxpayers, and one of the major reforms that can be done is reforming the Wicks Law on municipal construction projects," said Senator Dale M. Volker. "Studies show that Wicks Law adds 15-30% to the cost of construction projects, and these additional costs are placed on local taxpayers. That is just plain wrong and by reforming this law, we can allow municipalities and school districts to save millions of dollars and pass those savings onto taxpayers."
The Senate proposes a phased-in increase in the Wicks Law threshold. The current limit for the plumbing, electrical and HVAC components of public construction projects is $50,000. Some estimates project this adds 20-30% onto the final cost, which is passed on to local taxpayers.
MANDATE RELIEF
The mandate relief package, much of which has been endorsed by the Governor�s Task Force on Local Government Reform, would save local governments and taxpayers tens of millions by eliminating dozens of expensive state mandates. The package includes five major components aimed at reducing local fiscal burdens, providing localities with greater administrative flexibility, reducing the burden of state regulation, eliminating unnecessary state reporting and approval requirements and encouraging local consolidation and cooperation.
"The need for comprehensive mandate relief has never been more apparent," said Senator Betty Little (R-Queensbury), Chair of Local Governments. "If we are unable to provide the level of financial resources to our local governments that we would like, the least we can do is help them do more with less. Local governments have no place to go but to the local taxpayer and higher property taxes are not the answer to the State�s fiscal problems. Mandate relief is a part of the solution."
Some specific elements of the package include: authorizing credit card payments of taxes, fees and civil penalties to municipalities, removing State Comptroller approval from many purely local decisions, permitting a person to serve in more than one volunteer fire department, prohibiting duplicative requests from state agencies, eliminating onerous accounting requirements, requiring non-indigent prisoners to pay the cost of food and medical care, easing service mergers and sharing property taxes for local governments, exempting New York City schools from State procurement laws and authorizing local governments to accept bids electronically, allowing localities to charge fees for police services at special events, permitting the State to purchase lands in the forest preserve for fair market value rather than the amount of back taxes, exempting municipalities from DEC regulatory fees, and others.
CONSTITUTIONAL AMENDMENT PROHIBITING UNFUNDED MANDATES
A Constitutional amendment proposed by the Senate plan would prohibit the State from imposing unfunded mandates on local governments and school districts. Also, compliance with new State mandates, once determined to be unfunded, would be voluntary for localities. Under the amendment, any associated increases in cost must be offset by state funding to carry out the new mandate.
"As a county legislator, I found unfunded mandates to be very frustrating. One of the reasons I ran for statewide office was for the opportunity to work to provide necessary services to localities without jeopardizing the whole system by providing unnecessary services," said State Senator Mary Lou Rath (R-C, Williamsville). "By giving local governments flexibility in addressing their costs and helping to ensure that mandates do not unfairly tie their hands, this initiative will help localities to do that."
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