Paterson releases amendments to budget

ALBANY, N.Y. (WIVB) - Governor Paterson Release: Governor David A. Paterson Tuesday announced the release of his 21-day amendments to the 2010-11 Executive Budget. Major recommendations include amendments to the MTA Mobility Tax, the proposed sale of wine in grocery stores, aid to the Yonkers School District, tuition assistance for nursing programs, aid to SUNY statutory colleges, and other initiatives.

Financial Plan

As previously announced on February 3, the State must address an additional $750 million deficit through the end of 2010-11, due to further revenue deterioration related to the timing and composition of financial services sector compensation, and recession-driven increases in Medicaid entitlement enrollment. Overall, the projected deficit that the State must address through the end of 2010-11 now totals $8.2 billion, up from $7.4 billion at the time of the Executive Budget.

This additional $750 million deficit is closed through the identification of $1.2 billion in new 2010-11 resources, leaving a $485 million reserve for fiscal uncertainty, which would protect against potential further economic and revenue deterioration.

Federal Fiscal Relief ($1.06 billion): The State financial plan includes the receipt of $1.06 billion in enhanced federal fiscal relief. This funding was put forward in President Obama's budget, the House of Representatives' Jobs for Main Street bill, and legislation sponsored by United States Senate Majority Leader Harry Reid and Senator Jay Rockefeller. While there is strong evidence indicating that this aid will be approved, if federal action is not taken, deeper spending reductions would be required across a range of policy areas, including, potentially, education, health care, social services, and others.

"Fiscal relief for State governments dealing with substantial budget deficits is a critical component of President Obama's economic and financial recovery agenda," Governor Paterson said. "I urge Congress and the New York delegation to swiftly enact this proposal and help prevent what would be even deeper cuts to vital public services at the local level."

Wine in Grocery Stores ($162 million): The proposal to allow the sale of wine in grocery stores would be amended to increase the required franchise fee for businesses with gross sales of over $1 million, producing additional revenue of $162 million in 2010-11. Overall, this franchise fee would now generate a total of $300 million over the next two years ($250 million in 2010-11 and $50 million in 2011-12). This revenue would be dedicated to financing rising, recession-driven Medicaid costs and preventing deeper cuts to health care programs.

Other amendments to the Executive Budget have a net positive financial plan impact of $13 million in 2010-11. Major recommendations are detailed below:

Mobility Tax: The Mobility Tax would be amended to ensure that the MTA will receive previously projected Mobility Tax revenues in 2010 and in future years; improve regional equity by introducing a two-tiered tax rate; and provide substantial additional tax relief for small businesses.

• The amended proposal increases the tax rate for New York City businesses to 0.54 percent of payroll, up from 0.34 percent. It also cuts the tax rate in half for businesses outside of New York City to 0.17 percent. New York City businesses would now contribute 88 percent of all mobility tax revenues, up from 70 percent. This will ensure a more equitable distribution of tax liability in line with the fact that New York City is the destination for over 90 percent of weekday ridership.

• The new structure will restore 2010 mobility tax revenues to $1.54 billion, which is equal to original projections (net additional revenue of approximately $230 million for MTA). It also addresses projected out-year deterioration, providing more than $200 million in additional annual revenue on an ongoing basis in 2011 and beyond.

• Self-employed individuals and partners with income below $100,000 would be exempt from the payroll tax, up from the current threshold of $10,000. As a result, an additional 400,000 small business owners (including 250,000 in New York City) would now be exempt from the payroll tax.

Aid for the Yonkers City School District: The proposed amendments restore $1.96 million in Video Lottery Terminal (VLT) Impact Aid for the City of Yonkers, thereby maintaining the full $19.6 million payment that is scheduled to help support the City's school district. Yonkers is the only recipient of VLT Impact Aid that is required to use its payment to fund its school district. Because these funds are scheduled to be paid in June 2010, the recommended restoration will avoid a reduction against the City school district in the current school year ending June 30.

Reallocate SUNY Reduction from Statutory to State-operated Campuses: A portion of the proposed reductions to statutory SUNY colleges (Cornell: $3.2 million, Alfred: $304,000) would be reallocated to SUNY State-operated