About an hour ago, Mike Kink, Policy Director and Special Counsel for the Senate Majority, tweeted that the Senate GOP caucus had yet to show up to start passing the budget bills.
Senate Minority has not yet shown up. 11:30....tick tick tick....two hours late....
Liz followed moments later with this post about the absence of Skelos' crew.
The Senate was supposed to be in session bright and early this morning (at 9:30 a.m.) to start passing budget bills. It's now 11:30 a.m. and the Democrats are all in place. The Republicans are nowhere to be seen.
The minority has been behind closed doors in a no-staff conference for hours now. There's no indication of when they might emerge and if they'll be ready to play budget ball at that time.
The Democrats have had enough, apparently. Travis Proulx, a spokesman for Senate Majority Leader Malcolm Smith just showed up at the door of the DN office and said:
"We're gaveling in, we've been waiting on the Republicans for two hours. It's up to them whether they want to show up."
In other words, the Democrats plan to start passing the budget without the minority in the chamber to debate the bills.
It's an odd way to legislate, some might say. If you wanted to see what this all looks like, take a look at this video from less than an hour ago of a half empty Senate chamber.
The State Senate has posted a full breakdown -- by budget area -- of the agreed to budget online. This a first, as far as I can tell. I suspect that Andrew Hoppin's Senate CIO team played a part in making this happen, though it's certain that it wouldn't be there without direction from the Senate Majority Leader. Definitely a step in the right direction.
Gov. David A. Paterson and legislative leaders on Monday defended their secretive negotiations and the eye-popping $131.8 billion budget they produced over the weekend, even as they warned that further deterioration in the economy could force them to return to the bargaining table in the coming months.
In a subdued appearance in the Capitol, Mr. Paterson, joined by Assembly Speaker Sheldon Silver and Senate Majority Leader Malcolm A. Smith, described the deal as a necessary consensus between cutting spending and finding new revenue in the face of a large, and continually growing, budget gap.
"I think that there's a balance now between taxes on higher incomes and taxes on everybody, so that there's a shared sacrifice," Mr. Paterson said. He also said that he might have to revisit cuts to services and so-called nuisance taxes - like levies on sugared sodas and downloaded songs - that he agreed to abandon in the new deal.
"I would like to tell you that this budget brings about the end of our fiscal crisis, but I can't do that; that would be intellectually dishonest," Mr. Paterson said. But the deal was an important step, he added. "We can see the light at the end of the tunnel."
But as outside analysts began poring over hundreds of pages of the budget, they said they saw little evidence of stern spending discipline, even in the face of a major recession. In closing a budget deficit that in the end surpassed $17 billion, lawmakers relied on billions of dollars in new taxes and fees, some of which may not even raise as much revenue as hoped if the economy continues to worsen. And like every Albany budget, whether in good years or bad, this one includes $170 million worth of what critics call pork-barrel spending for lawmakers' pet projects.
"The disappointment from the business community is that the Legislature doesn't seem to understand how serious this crisis is, and that it threatens our future," said Kathryn S. Wylde, president of the Partnership for New York City, a business trade group. "The response - of holding the state budget basically harmless - just doesn't fly with people who are cutting salaries, laying people off and aren't sure where their business is going."
Mr. Paterson and his staff appear to have won significant concessions from the health care sector by overhauling outdated Medicaid reimbursements, while shifting money away from expensive in-patient care to preventative care and clinics. Over time, officials said, that shift would save both operating costs and capital money.
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"What does the future hold? One way of looking at that is, New York - and every other state - are going to be in desperate straits if the federal stimulus money runs out in two years," said Robert B. Ward, deputy director of the Nelson A. Rockefeller Institute of Government, an Albany research organization. "It won't be long until the drumbeat starts to make this a longer-lasting enhancement of federal aid."
Mr. Silver, the powerful and cagey Assembly speaker, achieved what he wanted in the budget that emerged from the shadows of the statehouse this weekend, cementing his newfound role as the capital's center of gravity.
He won the policy fight, forcing Gov. David A. Paterson to raise taxes on the wealthiest New Yorkers, an idea that the governor decried as potentially disastrous three weeks ago. The $131.8 billion budget, which could hardly be called austere, is largely a reflection of the liberal tilt of Mr. Silver, and the Assembly's predilection for big spending on social programs, no matter the economic climate.
Mr. Silver also dictated the process, turning back the clock to the most secretive budget negotiations the capital has seen in years, casting aside the open government that Mr. Paterson and other Democrats once said would follow the party's sweeping victories in recent state elections. He argued that technicalities in recently passed budget reform legislation allowed the Legislature to circumvent requirements for open meetings among those negotiating the spending plan.
And the speaker preserved the Legislature's cherished spending on pet projects, pushing successfully for $170 million for members to dole out in district spending, leaving that pool of money essentially untouched, despite the fiscal crisis.
He argued that "nonprofit organizations throughout the state have been devastated by the economic downturn," but lawmakers appropriated money for gun clubs, churches, a yoga foundation and the Wantagh American Legion Pipe Band, among thousands of other projects.
Critics say Mr. Silver, a Democrat from the Lower East Side who has been speaker for the last 15 years, is the symbol of all that is broken in state government, a man who long ago forsook principle for power. They also say that he lacks the fiscal discipline to prudently manage the state's escalating future deficits.
Allies say he is the only senior Democrat in state government fielding a competent staff with the expertise to lead the state, and that he will usher in a more activist left-leaning agenda on important policy issues, like the recent agreement among state leaders to eliminate many of the remaining stringent Rockefeller era penalties for drug offenses.
New York's ruling Democratic triumvirate took a giant generational leap backward yesterday to the destructive days of John Lindsay, Abe Beame and Nelson Rockefeller.
The budget created by Gov. Paterson, Assembly Speaker Sheldon Silver and Senate Majority Leader Malcolm Smith is a monstrously bloated, tax-and-spend plan that, in one fell swoop, reverses a three-decade-long effort to strengthen business and prevent taxpayers from fleeing the state.
The wrecking ball of a new state budget, approved in Kremlin-like secrecy by the troika, also ranks as one of the biggest betrayals in process and substance by a governor in New York history.
The reform effort being reversed by Paterson & Co. began in 1975, when then-newly elected Democratic Gov. Hugh Carey, ending 16 years of Republican rule, famously declared that the "Days of Wine and Roses" were over.
Gov. David A. Paterson emerged from behind closed doors Monday to defend the state's newly proposed $131.8 billion budget, but business groups railed against its massive tax hike package as education and health care special interests complained it does not spend enough.
Critics of the 2009 budget rushed to the Capitol and flooded lawmakers' telephones to try to unravel support, especially those from upstate.
But Paterson, who in a session with reporters appeared to undermine some elements of the plan he had just negotiated, said there were few options for a government that saw its projected deficit leap by billions in just a couple weeks, to $17.7 billion.
"None of this makes sense," he said of a plan that imposes record tax increases and cuts many popular programs. But he said the choices were difficult and a "shared sacrifice" by all New Yorkers. "This is in response to a crisis," he said.
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But several Senate Democrats emerging from a caucus meeting said their 32-member coalition is holding steady and will back the budget despite GOP criticisms that it especially targets upstate for cuts and tax increases. With the GOP vowing to vote no, it would take only one Democrat to vote no, resulting in an unbreakable tie because the state has no lieutenant governor.
"We don't like the things that are in there," said Sen. William Stachowski, a Lake View Democrat. He said he would support the budget today. "We've never had to deal with a $17 billion budget hole," he said.
Governor David Paterson and the leaders of the Legislature have struck a deal to create two new tax brackets for those earning above $300,000 and $500,000. The new tax structure would raise an estimated $4 billion annually.
This is largely due to the work of State Senator Eric Schneiderman, the Working Families Party, and others who responded to the state's $15 billion budget deficit by asking the wealthy to pay their fair share and demanding an end to the injustice of people earning $20,000 per year paying the same tax rate as Bernie Madoff, Donald Trump and the hedge funders -- 6.85 percent. Assembly Speaker Sheldon Silver was instrumental in making progressive tax reform part of the final budget negotiations.
Initially, Gov. Paterson proposed the same tired conservative economic policy that has dominated the past thirty years--$9 billion of harsh cuts in education, healthcare and social services, and $5 billion in new taxes that would hit the struggling poor and middle-class the hardest. No sacrifices for the wealthy. Although there are still cuts that will cause a lot of pain for working people and the poor, this budget will be vastly improved.
Dan Cantor, executive director of the Working Families Party, told the Times: "It's a profound breakthrough for tax fairness." In the perennial balancing act between a transformative politics aimed at a more humane and sustainable society, and the necessary compromises to begin addressing people's immediate needs, progressives have scored an important and timely victory.
Gov. David A. Paterson and leaders of the Legislature have reached a deal to temporarily raise taxes on New York's highest earners in order to close the state's yawning budget deficit, lawmakers and officials involved in the talks said on Saturday.
The new plan, which would expire after three years, would represent the largest state income tax increase in recent history, significantly larger than the surcharges imposed from 2003 to 2005, when the state last faced a major recession.
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Currently, New York's highest tax rate, 6.85 percent, kicks in for couples and joint filers making more than $40,000.
"It's a profound breakthrough for tax fairness," said Dan Cantor, executive director of the Working Families Party. "The era of phony prosperity has ended, and a new era of real shared sacrifice must begin."
Concluding the most secretive budget negotiations in recent memory, Gov. David A. Paterson and leaders of the Legislature outlined a $131.8 billion agreement on Sunday that would close the state's gaping deficit with billions of dollars in new taxes, financing from the federal stimulus and a substantial slowdown in the growth of health care spending.
The final days of negotiations between Mr. Paterson, Assembly Speaker Sheldon Silver and Senate Majority Leader Malcolm A. Smith have been conducted under a veil of secrecy so profound that even well-seasoned Albany cynics were taken aback.
And despite the enormous fiscal pressure the state faces, the budget contains $170 million in financing for pet projects - an amount unchanged from last year - suggesting that Albany's appetite for with what critics call pork-barrel spending appeared to be undiminished. Listed in the budget were grants to gun clubs, an upstate museum dedicated to bricks and brick-making, the Soccer Hall of Fame in Oneonta and an organization known as the Urban Yoga Foundation.
A lot of people would probably love to have the headaches of someone who earns more than $500,000 a year. But those headaches grew over the weekend with the announcement in Albany of new tax brackets for the highest earners. While there were no tears spilling into Champagne flutes over brunch on Sunday, there were voices of frustration among those facing higher payments to the State of New York
Jorge Colmenares, founder and owner of Miracol Energy, an investment firm in renewable energy, said that he earned more than $500,000 and that he was happy to do his part. But he wondered about the negative effects of higher taxes on consumers.
"If you continue to take away from people in the form of taxes, it is restricting them more in spending," he said while shopping on Madison Avenue. "On the one hand, I would agree: With the wealth that you can create, you should give back. But is the government using that money correctly? There's a lot of skepticism these days as to whether that's actually going to be the case."
Carmine A. Nicoletti, 51, of Great Neck, who owns a printing company in Queens, declined to state his income, but said that his household earned enough to fall into one of Gov. David A. Paterson's proposed tax brackets.
"I'm O.K. with it," he said of paying more taxes, while at Via Quadronno restaurant on the Upper East Side. "I'd rather pay my share if the economy is going to benefit. I mean, I don't like to pay taxes, but I don't mind if it helps my country. It shouldn't affect my family."
Julian N. Carter, 42, of the Upper East Side, said that he fell into the $500,000-and-higher tax bracket as a banker at Société Générale and that he supported the new tax.
"I'm absolutely in favor of it," he said outside the restaurant Frederick's Madison on Madison Avenue. "Listen, the reality is that someone has to pay the bill, and it has to come from taxes. You can't be selfish. My view is you have to redistribute."
Gov. Paterson and legislative leaders unveiled a record $131.8 billion tax-and-spend budget deal Sunday night.
Despite Paterson's repeated warnings about the state's fiscal crisis, total spending actually increases by $10.5 billion, or 8.7%, according to state leaders. The bulk of that, they say, is $7.2 billion in federal stimulus money that is required to be spent in the coming fiscal year.
The remainder includes $2 billion in spending cuts rejected by lawmakers as well as $1.3 billion in capital and debt service spending. Even without factoring in the stimulus money, state taxpayer-supported funding should grow by at least $800 million, Paterson's office said.
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Among those are vehicle registration fees, a cigar tax, a beer and wine tax, a utility assessment, an auto insurance surcharge, driver's license fees, a rental car tax and a registration fee for tobacco sellers. Bottled water drinkers will pay a nickel more because the drink has been added to the 5-cent bottle deposit law.
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After spending most of yesterday not commenting even on the size of the new spending package, Paterson, Assembly Speaker Sheldon Silver (D-Manhattan) and Senate Majority Leader Malcolm Smith (D-Queens) finally released the details Sunday evening.
To close a record two-year deficit of $17.7 billion, they say, the budget contains a combination of $5.2 billion in spending cuts, $5.2billion in new taxes, $1.1 billion in nonrecurring revenue and the use of $6.2billion in federal stimulus money.
They also say it increases state taxpayer-supported spending by just 1% for the fiscal year beginning Wednesday and reduces New York's long-term deficits 80%.
"We have produced a budget that provides a solid foundation to move forward and address challenges ahead," Paterson said. "We have accomplished this with a budget that holds government accountable to the people of New York, and protects those who cannot protect themselves."
Democratic leaders yesterday released details of a state budget deal that would push spending to a staggering $132 billion next year -- an increase of 10 percent -- while they ask residents to fork over a record-breaking $7.8 billion in taxes and fees.
The huge spending plan is $10.7 billion higher than the bare-bones plan Gov. Paterson released less than four months ago in a call for fiscal austerity.
It comes in the wake of a $4 billion soak-the-rich income-tax hike, the elimination of a $1.5 billion property-tax rebate plan, and $2.3 billion in new and extended business taxes and nuisance fees.
Among other things, the budget would add nickel deposits to bottled water, ratchet up taxes on beer and cigars, and raise income taxes at least 14.5 percent on families making more than $300,000 a year.
But Assembly Speaker Sheldon Silver (D-Manhattan) and Majority Leader Malcolm Smith (D-Queens) refused to give up even a dime of the notorious $170 million slush fund lawmakers use to dole out grants to favored nonprofits and community groups.
More than $6 billion in aid from Washington forestalled much of Paterson's proposed reductions to schools, hospitals, nursing homes and other health care institutions. But $6.5 billion in cuts and $4 billion from increasing taxes on the rich were required to close a two-year deficit of $17.7 billion.
The budget "closes the largest deficit in state history, stabilizes our finances and institutes critical reforms that will help eliminate waste and inefficiency in our government," Paterson said in a statement.
The plan boosts myriad taxes and fees on everything from driver's licenses to marine fishing licenses.
Still, elimination of the popular STAR rebate checks is sure to anger hard-pressed homeowners. The checks sent $1.4 billion back to taxpayers statewide - $370 million to Nassau and Suffolk residents - helping offset ever higher school levies.
The basic STAR and enhanced STAR exemptions - which reduce tax bills - are unaffected.
School taxes may rise in some districts despite the restoration of $1.1 billion in cuts proposed by Paterson. Superintendents said they were disappointed that education aid would grow by just $405 million, with the Island receiving 5 percent instead of its traditional 13 percent share.
The state's new, inflation-busting budget will require New Yorkers to pay more to go fishing and hunting, drive a car or motorcycle, have life insurance, operate the lights and heat in their homes, buy cigarettes, own a cell phone and drink beer, wine and bottled water.
Single taxpayers making more than $200,000 a year will see a jump in taxes, as will bus companies, nuclear plants, food processing companies, racehorse owners, farmers, pesticide applicators, grocery stores and anyone wanting to open a hospice.
In all, the total number of new taxes, fees and various assessments and surcharges will top $7 billion in the new budget that state lawmakers will vote on beginning Tuesday. The governor's office put the number at $5.3 billion, but that misses a number of levies.
The higher taxes will help pay for a budget that will soar to $131.8 billion-$10.7 billion more than what Gov. David A. Paterson proposed just three months ago. Federal bailout money accounts for two-thirds of that sharp increase, with the rest coming from new spending and debt.
The higher tax figures do not include the financial hit from some tax breaks being rescinded. Gone, for instance, are the annual STAR property tax rebate checks that arrive each fall right before Election Day. That will cost taxpayers $1.5 billion this year.
New York Magazine - Tax the Rich! How did the poor win the New York tax war? Welcome to the era of the moneyed underclass.
"It's not an easy time to defend the rich," says Kathryn Wylde, head of the Partnership for New York City. "In the current environment, with the anti-Wall Street sentiment, it's just politically unattractive."
Dan Cantor, who runs the labor-affiliated Working Families Party, gave his own diagnosis. "We just work much harder than the right-wingers. They think they can just do it by writing checks to the politicians. We don't have money. We have our passion."
That's not quite true. In Albany, the wealthiest and most well-connected groups often are representing the little guy. The teachers unions burn through $4 million a year on donations to state lawmakers and lobbying expenses, rivaling the outlays of the state's hospital associations, which also pressed for a tax hike.
Since December, the supporters of the rich tax-an alliance of organized labor and community-activist groups-waged a campaign that further weakened Governor Paterson. They spent millions on ads attacking him and staged feisty protests. (At one near City Hall last month, 1199 SEIU president George Gresham mocked his adversaries: "Where are the wealthy going to go? Iowa?")
Cantor says his party also banged on 72,000 doors, collecting over 12,000 "handwritten" notes calling on Albany to raise taxes.
At the last minute, real-estate and business trade groups pulled a long-dormant nonprofit group, Taxpayers for an Affordable NY, out of the mothballs. But it hasn't done much good. The deeper problem, says Real Estate Board head Steven Spinola, is that "the business community is not as monolithic as the unions."
"Over the last year, New York faced a historic fiscal crisis that tested our resolve. But by working together cooperatively with our partners in the Legislature, we made the tough choices necessary to address that challenge through shared sacrifice and responsible budgeting," said Governor Paterson. "The agreement we are announcing today closes the largest deficit in State history, stabilizes our finances, and institutes critical reforms that will help eliminate waste and inefficiency in our government. We have produced a budget that provides a solid foundation to move forward and address the challenges ahead. We have accomplished this with a budget that holds government accountable to the people of New York, and protects those who can not protect themselves."
There are several items in the budget that were cut, but then restored thanks to funding from the federal stimulus package. Some of these items include funding for public schools, which would have been slashed $1.1 billion under the Deficit Reduction Plan. But in the budget, there will actually be a $405 million increase in aid - a modest increase, but better than the original cut that was proposed.
There will be $2.3 billion in cuts to health care in New York, which is a lower figure than the proposed $3.5 billion in cuts that Governor Paterson was aiming for in his Executive Budget. Among items in the health care portion of the budget are reforms to the Medicaid hospital reimbursement system.
Here are some of the other highlights (you can also read the full list below the fold):
- The budget will expand the bottle bill, albeit slightly. So far, all that is being expanded is bottled water. Based on the summary given, that doesn't seem to include drinks like Gatorade, which do not have deposits on them. Even with the inclusion of bottled water, the state is expected to gain $115 million with that move.
In addition, the state will retain 80 percent of unclaimed deposits. In the past, bottlers kept 100 percent of unclaimed deposits.
- One of the more talked about changes this year is the STAR rebate program. The budget will eliminate the STAR rebate program along with the enhanced New York City STAR tax credit, which is a $1.5 billion savings to the state.
However, the STAR exemption program and the New York City STAR credit will remain in tact and still provide $3.3 billion in property tax assistance to New York's taxpayers.
- It's not Fair Share Tax Reform, but it's a lot better than nothing. Overall, the budget will produce $5.3 billion in revenues from taxes and fees. Among those taxes and fees are two new tax levels that will produce $4 billion in revenue. This is how it breaks down:
- From 2009 to 2011, married couples filing jointly will pay the following rates:
- Income over $300,000: 7.85 percent
- Income over $500,000: 8.97 percent
Again, you can read the full summary below the fold.
The budget is far from perfect. A lot of what was cut in Governor Paterson's proposal was still slashed, but it was also saved by the economic stimulus package funding the state received. Still, there are plenty of individuals and groups in this state that will be in quite a bind, including schools. So while having an on-time budget is a feel-good story, the impact of this budget still will leave plenty of New Yorkers hurting.
The most important piece of legislation that the governor and New York State Legislature will work on in any year is the budget. The budget is the foundation for this state. It tells state departments what their operating funds will be for the year. It tells schools how much state aid they will receive. And it tells counties how much the state will be doling out for Medicaid expenses each year.
Nothing is more important than the budget. While there are other important pieces of legislation that the Legislature will see over time, the budget is a constant. Every year, the budget is a necessary piece of the puzzle.
As a Democrat, I had looked forward to 2009. Not only would we have a Democrat in the White House for the first time since January 2001, but we would also have full control of New York State government. While some were worried about one-party rule and what it would mean for New York, I was excited. I believed that this was the time for reform. This was the time for, as President Barack Obama said, change.
Unfortunately, the budget process is unchanged. It is still closed. It is still secretive. And it is still very much symbolic of how business is conducted in Albany.
When asked by NY1 reporter Josh Robin about the lack of transparency in this year's budget, particularly given the governor's previous track record of fighting for openness when he was Senate minority leader, Paterson remarked:
"I think there should be transparency in terms of the process and openness in terms of government. However, when you are in a budget position, it is very hard to negotiate in public. You never see President Obama and Sen. Reid, and Speaker Pelosi do it. You don't see it in any other state."
The governor then got personal:
"You don't see it in labor negotiations and I dare say that your negotiations with your own media outlet, your contract, is not, the last I checked, publicly observed.
There comes a point in the negotiations where anyone who is really negotiating has to take things off the table. This is a very difficult endeavor, and it's hard to do it when the advocates you are fighting for are right there."
There is only one problem with the governor's rebuttal: Mr. Robin is not an elected official and his salary certainly isn't paid for by the taxpayers of New York. Mr. Robin is employed by a private entity who has every right to keep their negotiations with him, and any of their employees, private.
Governor Paterson, however, works for us. Senate Majority Leader Malcolm Smith works for us. Assembly Speaker Sheldon Silver works for us. Every single member of the New York State Legislature works for us. Every single dollar used in the New York State budget are tax dollars. So while Mr. Robin's negotiations with his employer are private, the negotiations ongoing about how these three men will spend OUR tax dollars should surely be open and transparent.
New York has plenty of problems to address. Transparency in the budget process is just one problem, although it is a big problem that needs to be fixed immediately. New Yorkers have every right to know how there money will be spent, especially when proposed cuts will affect millions of New Yorkers.
It is time for change in New York. If Governor Paterson doesn't want to be a part of that, he will be jobless come January 2011. He is the leader of this state. And we are in need of leadership. It's about time he started to show it.
It appears that deal has been reached to ask a bit more of those New Yorkers who can most afford it instead of balancing the state's budget on the backs of the poor and middle class. Liz has the scoop.
There is a tentative three-way deal on hiking the personal income tax on wealthy New Yorkers, multiple Democratic sources confirm.
The agreement - assuming it holds - sets up the following three tiers:
- $300,000 to $500,000: 7.97 percent.
- $500,000 to $1 million: 8.47 percent.
- $1 million and above: 8.97 percent.
This increase will sunset in five years.
The current top rate is 6.85 percent for those who make $40,000 and above.
I'd add the Working Families Party to the winners column along with the Assembly Democrats and I agree with Liz that the losers column includes The Governor, The Mayor and the Senate Majority Leader.
Good news from Albany. Hopefully this "tentative" deal will hold.
Or, at least that what he is threatening. After failing to wrest concessions from the public sector unions that represent most state employees, Paterson says he's going to put almost 9,000 jobs on the chopping block.
Citing a $16.2 billion budget deficit that appears to be growing larger by the day, Gov. David Paterson this afternoon said his administration will eliminate 8,900 jobs, starting this summer.
"This is not a decision that has been reached lightly," said a letter that went out minutes ago from Paterson's state operations director Dennis Whalen.
"However, given the fact that savings through labor concessions were not achieved, Governor Paterson was forced to make this difficult decision for the good of the entire state."
Budget Division spokesman Jeffrey Gordon said the job cuts will probably start in July and they apply to "full-time equivalents," which means some of the target might be reached by attrition.
In his message to agency heads, Whalen said they will be providing updates and bulletins over the next few weeks.
Still unknown was where most of the cuts may fall, by geography and by agency.
That's pretty damn harsh, especially given that huge chunk of change we just got from the feds, funds that were supposed keep states from having to lay off staff in the middle of a severe recession.
Dennis Whalen's full letter is in the extended entry.
UPDATE: Malcolm Smith's office just released this statement:
These are difficult times and no segment of the state is immune to the harsh reality of the fiscal crisis. We urge the union leadership who represent the public sector workforce to step up and renegotiate a fair agreement that is consistent with the principle of shared sacrifice all New Yorkers must accept during times of economic distress. Public employees are among the most vital contributors to our workforce, but at the same time, they must also be our partners as we strive to change the structure of our state's budget and get New York's economy back on track.
Unshackle Upstate's Brian Sampson is making the news circuit these last few weeks with the message that Fair Share Tax Reform would cause small businesses to fire workers (the Fair Share Tax Reform is making progress in Albany with bills that would create new NYS marginal tax brackets starting at $250,000). He says that 75% of small business owners pay taxes through personal income tax.
Ok, sounds like a reasonable concern, right?
Meanwhile, back in the reality-based community According to James Parrott, of the Fiscal Policy Institute, "only 1.4% of tax units with small business income were in the top two federal tax brackets, i.e., over $250K." The VAST majority of small business owners don't make that kind of money and therefore would never be subject to the Fair Share tax.
And let's think about Unshackle Upstate's logic for a minute. Imagine you are one of the rare group of small business owners netting over $250,000. The new Fair Share Tax Reform tax bracket costs you about $70 a week extra. Are you going to fire a worker to recoup that seventy bucks?
The good news is that Sampson's disingenuous media forays are the last gasps of a sinking trickle down theory. Wanna see a New Yorker laugh in your face? Tell them that tax breaks for the rich create jobs.
I'm told that Dean Skelos and Jim Tedisco just walked out of the 5-way budget meeting. Why? Apparently, so that they could hold a press conference to complain about how they are being shut out of the budget process.
In many ways our current budget crisis, a crisis that seems to deepen by the hour, was always going to necessitate at least a modest increase in the income tax rate at the very top. There just isn't any way to close the gap without asking the New Yorkers who can most afford to pay, the same ones who have benefited most over the last decade or so while seeing their real tax liabilities decline, to endure a slight increase in their state income tax burden. Now, it looks as if that reality is finally taking root in Albany.
Democratic leaders in the State Senate will seek income tax increases on at least some affluent New Yorkers and a sales tax increase of a quarter of 1 percent to help balance the state budget, a Senate official with knowledge of the plans said in an interview over the weekend.
"The hole is too deep to dig ourselves out by cuts alone," said the Senate official, speaking on the condition of anonymity because the details of the proposal were still being hammered out. "The debate now is over where to start."
The move by Senate Democrats, who have a slim majority, will significantly increase pressure on Gov. David A. Paterson, who has said he would consider raising income taxes only as a last resort and only after the Legislature had agreed to steep cuts in state spending.
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The Senate official said discussion within the leadership had moved in recent days from whether such a tax was needed to what contours it would take.
Among the questions were the income level at which it would kick in, the amount of the tax and whether it would include a sunset provision.
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"It's better to tax the rich than crucify the poor," said Dan Cantor, executive director of the Working Families Party, a union-backed group that has lobbied aggressively for higher taxes on the wealthy to help close the state's $14 billion budget gap.
"The Senate is signaling that it needs to balance the budget in a balanced way, meaning smart cuts and fair taxes," Mr. Cantor said.
And while this move was in many ways always inevitable, the Working Families Party has helped greatly to bring it about by creating the space necessary to allow lawmakers to pull the trigger. As Crain's points out, their "outside game", as I like to call it, was key and it should be considered another rather large notch in their belt. It indeed was "textbook".
New York's chattering classes are no longer debating whether state income taxes will be jacked up on high earners. Now the only question is by how much. And the credit-or blame-for successfully framing the debate goes largely to a minor political party that's starting to have a major impact on state government.
The left-leaning Working Families Party has orchestrated a tax-reform campaign straight from the textbook of retail politics. Last week, it staged eight simultaneous rallies that drew nearly 100,000 people statewide, including 50,000 at City Hall. It has knocked on 42,000 doors, generating 7,000 handwritten letters to lawmakers. Radio advertisements saturate the airwaves in Albany. Its YouTube video "highlighting how easy the state's tax system is on millionaires," as a party spokesman put it, is being watched a thousand times a day.
"It certainly has made a difference," says Assemblyman Jonathan Bing, D-Manhattan, pointing to identical bills in the Assembly and Senate that would raise rates on people with adjusted gross incomes above $250,000.
It is not just the advocacy campaign, Mr. Bing says, but the Working Families Party's ability to oust incumbents that grabs legislators' attention. Indeed, the party campaigned relentlessly for months before last November's elections to evict state Senate veterans Serf Maltese and Caesar Trunzo, resulting in the Democratic takeover of the chamber. That, in turn, has made the tax increase achievable.
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"We haven't won anything yet, but I feel like we're winning the debate," says Mr. Cantor, who has run the party since its creation.
State Sen. Eric Schneiderman, D-Manhattan, who is carrying the bill in the Senate, says: "They've been moving public opinion. And they have been effectively reaching out to those of us in the Legislature to encourage us-to show that not only is this the right thing to do, it's the politically popular thing to do."
The opposition has been meek by comparison. A conservative political action committee, New Yorkers for Growth, started an online petition, and the Real Estate Board of New York put together a group called Taxpayers for an Affordable New York, which includes the Business Council of New York State. The latter group sent a mailing to 125,000 high-earning households and launched a Web site that has generated 1,000 e-mail messages to legislators.
And take note of a key part of WFP's campaign, something they haven't done much of in the past. They are finally using using new media tools to augment their already impressive ground game, and doing so with great success. The video mentioned above was a huge hit and the Fair Share Tax Reform site has been very, very successful.
The Fair Share site, meanwhile, has generated 25,000 e-mails in addition to arranging the rallies, letters, commercials and personal meetings with lawmakers.
"They have a system, a very powerful system, for raising money and taking over the airwaves," says Kenneth Adams, president of the business council. "Millions of average New Yorkers across the state don't have those systems-and frankly, neither does the business community-to mobilize to oppose this."
Mr. Schneiderman says the Fair Share campaign has tapped into the growing public sentiment that "the redistribution of wealth to the wealthy went too far." But Mr. McMahon says the Working Families Party and its allies have used "class warfare" to "create the illusion of a mass movement."
Here's what Mr. McMahon does not get: That video cost next to nothing to produce and was distributed for free via YouTube, not by "taking over the airwaves". It was spread virally (it was a big hit on twitter, for example) by folks sympathetic to its undeniable message. Anyone of those supposed "millions of average New Yorkers" could have done the same. They didn't.
It's also rather insulting to the 100,000 or so folks who rallied from one of the state to the other to refer to their movement as an "illusion". As for the "class warfare" swipe, one of the things that makes WFP's video so potent and poignant is that it very simply and effectively illustrates that there has indeed been class warfare engaged in for the last few decades. Guess who has been winning? It's certainly not those "millions of average New Yorkers". This is obvious to everyone when they learn that they pay their state income taxes at the same rate as Donald Trump and Bernie Madoff.
The big takeaway for me is that WFP's game is getting stronger by their embrace of these new tools. Now, they haven't abandoned the "inside game" by any stretch. Trust me, I'm sure they are bringing the heat to lawmakers personally as well. But, they've added new tools to further increase the effectiveness of their outside game. If they can fully integrate an effective new media communications strategy with their already formidable ground game, watch out. This may be but the first example of an even more robust combined effort on their part.
As Liz reported this morning, the so called "fun taxes", which seemed concocted largely to save time for folks writing attack ads on Governor Paterson next year, have largely been axed.
The soda tax (AKA the "fat tax"), which Paterson all-but declared dead not too long ago, despite a valiant YouTube defense mounted by DOH Commissioner Richard Daines, will now be officially confined to the recycling heap, along with the ever-unpopular "iPod" tax that would have applied to all digital downloads (including porn).
Also going: The plan to extend the sales tax to apply to "entertainment-related spending," which would have hit everything from gym memberships (an idea opponents noted runs counter to the administration's focus on preventative care and anti-obesity efforts) to circuses, movies and sporting events.
Paterson's call to increase beer and wine tax rates? Gone. The beauty and barbering tax? Gone. The cable TV tax? That's gone, too.
It seems that New York's cut of the federal stimulus bill has spared us all the burden of paying a tax on all manner of stuff. The taxes done away with today would have raised nearly $1.3 billion dollars. I'm not sure if the "tax tax", the $10 tax on those who file their state income tax on paper (seriously, Gov, what were you thinking?), met the same fate, but the Governor's office sent this release earlier today explaining themselves.
Governor David A. Paterson, Senate Majority Leader Malcolm Smith and Assembly Speaker Sheldon Silver today announced an agreement to eliminate $1.3 billion in tax increases included in the proposed 2009-10 Executive Budget. The agreement eliminates new taxes on common items, including previously tax-free goods and services such as clothing under $110, sugared drinks, digital downloads, cable and satellite television, manufacturers' coupons, haircuts, manicures, concerts, movies, live theatre, health clubs, bowling, golf, skiing and others. Additionally, to help businesses and families in a struggling real estate market, a proposal to limit the sales tax exemption on capital construction improvements made to property is no longer advanced.
"The proposed tax increases we are eliminating today were only put forward as a last resort when the deficit ballooned to an unprecedented level," said Governor Paterson. "Now that enhanced federal funding is available, our highest priority must be to provide targeted relief to those who need it most during this economic crisis - average New Yorkers struggling to make ends meet."
Senate Majority Leader Malcolm Smith said: "Taking these taxes off the table is a smart step forward in a budget process that should actually force government to do more with less. If implemented, these taxes would have impaired small businesses and adversely impacted middle income families. We have to take this opportunity to fundamentally restructure New York's budget to make government more efficient and more effective - and in this fiscal crisis, taxes should be the last thing we consider, not the first. Reducing the rate of growth in our spending while investing in job creation and sound economic development will put New York back on the road to economic recovery."
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A full list of taxes that will be eliminated from the proposed 2009-10 Executive Budget is included below:
Eliminate Proposed Restructuring of the Clothing Exemption. The Executive Budget would have eliminated the sales tax exemption for clothing and footwear priced under $110 and replaced it with two, one-week exemption periods for clothing and footwear priced under $500. This proposal is no longer recommended. (2009-10 Impact: $462 million, 2010-11 Impact: $660 million).
Eliminate Sales Tax on Non-diet Soft Drinks. The Executive Budget would have imposed an additional 18 percent rate of sales and compensating use taxes on fruit drinks that contain less than 70 percent natural fruit juice and non-diet soft drinks, sodas and beverages. This proposal is no longer recommended. (2009-10 Impact: $404 million, 2010-11 Impact: $539 million).
Eliminate Proposed Extension of Sales Tax to Cable and Satellite Television and Radio. The Executive Budget would have imposed sales tax on television and radio services provided by cable, satellite or other similar means. This proposal is no longer recommended. (2009-10 Impact: $136 million, 2010-11 Impact: $180 million).
Eliminate Proposed Limitation on the Capital Improvement Exemption. The Executive Budget would have limited the capital improvement exemption under the tax code to new construction, a new addition to existing construction, or complete reconstruction. This proposal is no longer recommended. (2009-10 Impact: $120 million, 2010-11 Impact: $160 million).
Eliminate Proposed Extension of Personal and Credit Services Sales Tax. The Executive Budget would have made personal services (such as beauty, barbering, manicure, pedicure, massage, health salon, or gymnasium services) and credit rating and reporting services subject to sales tax statewide. This proposal is no longer recommended. (2009-10 Impact: $78 million, 2010-11 Impact: $104 million).
Eliminate Proposed Extension of Sales Tax to Entertainment-Related Spending. The Executive Budget would have imposed a sales tax on entertainment-related consumer spending, including but not limited to, movie theaters, live theatre, concerts, golf, skiing, bowling and others. This proposal is no longer recommended. (2009-10 Impact: $53 million, 2010-11 Impact: $70 million).
Eliminate Proposed Digital Property Sales Tax. The Executive Budget would have imposed State and local sales tax on purchases of prewritten software, digital audio, audio-visual and text files, digital photographs, games and other electronically delivered entertainment services. This proposal is no longer recommended. (2009-10 Impact: $15 million, 2010-11 Impact: $20 million).
Eliminate Proposed Change in Coupon Taxation. The Executive Budget would have applied sales tax to the value of a store coupon used for a purchase. This proposal is no longer recommended. (2009-10 Impact: $3 million, 2010-11 Impact: $3 million).
So, thank you, feds. Thank you for saving us from the dreaded iPod tax and the porn tax and sugary saoda tax and the haircut tax and the bowling tax. Also, thank you for letting the Governor claim credit for "eliminating" these taxes before anyone ever paid them. Or something.
You know things are bad when you can't even raise money for a casino, even a casino accessible by a New York City subway line. But, that is indeed the case as the deal for a "racino" at Aqueduct racetrack bites the dust for lack of capital.
Scratch those plans for the first casino on a subway line in New York City - at least for now.
Plans to build a casino at the Aqueduct racetrack in Queens have collapsed, the latest victim of the financial turmoil that has tightened the credit markets.
Delaware North, the Buffalo company that was contracted to build and operate the casino, has not been able to get the financing to raise the $370 million it was to pay the state upfront, officials said. That leaves the state with yet another hole to plug in its ever-leakier budget.
"Today we informed the governor's office that we are unable at this time to conclude a memorandum of understanding with the state to develop the Aqueduct facility," William Bissett, Delaware North's president, said in a statement. He added that "there has been a deterioration of the credit and equity financial markets in this recession economy which has caused Aqueduct Gaming L.L.C. to restructure the timing for its financial offer."
The company had offered to proceed with the deal but delay its upfront payment; the state, however, was said to be concerned about a legal challenge if it allowed the winning bidder to alter the terms of its deal.
A spokesman for Gov. David A. Paterson expressed disappointment in the news from Delaware North, but said the state remains committed to Aqueduct's redevelopment. He said the state would reopen the bidding process to find an operator for a casino at the racetrack.
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The casino was to include a 184,000-square-foot gambling floor and 4,500 video gambling terminals as well as restaurants, a hotel and a 60,000-square-foot conference center. Construction was to have started early this year. Delaware North operates a similar casino in Saratoga Springs.
Critics have said that the state should not turn to gambling to fill its coffers, particularly in a recession. But the lure for the state is clear: It expected to take in billions of dollars in revenue over the next few decades.
I've never been a fan of the state fattening its bottom line through gambling, whether by the Lottery or by gaming. The fact remains, however, that the ever growing hole in the budget needs to be filled one way or another and we now know that what seemed to be a sure thing, $370 million bucks upfront from Delaware North will not be forthcoming. That's going to hurt.
Still, I think the biggest takeaway here is that they couldn't even raise the money for a casino. In New York City.
Do you pay the same tax rate as millionaires like Donald Trump and Bernie Madoff?
The answer may surprise you. The WFP hit the streets to see if New Yorkers knew just how little you have to make to be in the state's highest tax bracket.
Even while President Obama works to make America's taxes fairer, New York's tax code is anything but. Over the last 30 years, the rich have seen their state taxes cut in half. Today, janitors and cab drivers pay the same state tax rate as Wall Street bankers.
It's not just unfair--with the state facing a $14 billion budget gap and devastating cuts to hospitals and nursing homes, it's madness.
Sen. Liz Krueger, who serves as the vice-chair of the Senate Finance Committee and chairwoman of the Select Committee on Budget and Tax Reform, will be presiding over a public hearing on Thursday that will feature testimony focusing on making taxation in New York more progressive.
The public hearing will include economists that will offer their proposals and thoughts on how to make taxes in New York more progressive.
But the committee doesn't want to limit the testimony they hear to the experts. They want to hear from the taxpayers of New York.
Anyone who is interested in testifying can submit their remarks via e-mail to budgetandtaxreform@senate.state.ny.us. Also, if you are interested in attending the hearing, here are the details on the place and time of the hearing.
Empire State Plaza Convention Center
Meeting Room 4
Albany, NY
Meeting starts at noon
This is a great opportunity for members of the New York State Senate to hear from the citizens of this state regarding our tax system and how to make it more progressive. We need to deviate from the current regressive system of taxation that is rampant in this state. Being more progressive is what New York needs. Hopefully, this hearing will be just what we need to get a great dialogue going about our broken tax system.
A group of powerful business organizations is preparing to fight a proposed "millionaire's tax" they say will drive affluent New Yorkers out of state.
Taxpayers for an Affordable NY includes the Business Council of New York, the Real Estate Board of New York, and the Rent Stabilization Association - a trio of groups that came together once before, in the early 1990s, to fight property tax hikes.
Taxpayers for an Affordable New York, an astroturf org, has even mailed out 150,000 of the mailers you see at the right. The mailers and the website are so full of BS and distortions as to be almost comical. Of course, we're talking about real people and a fiscal crisis that is all too real. There's nothing, not a damn thing, funny about it.
The Working Families Party believes that you are not paying your fair share and they are pressuring your State Senator to increase your income taxes. Amazingly, despite what we have learned these past months, they want New York to continue to spend more then it has and they want you to pay for it. They call it a "millionaire tax" even though the taxes of every family with an income of more than a couple of hundred thousand dollars could be raised by 20 to 50 percent.
Governor David Paterson has said "My belief is (that raising income taxes) is an almost automatic formula for losing population in the state and losing job creation."
Mayor Michael Bloomberg called this plan a "crazy idea". He said "You can't tax people who can move... the city would end up losing its tax base."
Families that earn more than $200,000 comprise only 4% of taxpayers but they pay 54% of the taxes. It seems to us that you already pay your "Fair Share".
If you read this site regularly, you are probably fairly familiar with what the Fair Share tax Reform Act does and what it does not. Take a look at the copy above and count the falsehoods.
So that's a good measure of the momentum building behind the proposal. The fat cats are mobilizing and using all the usual tools to spread fear and disinformation.
It is said that democracy is the worst form of government - except for all the others. You could say the same thing about the "millionaire's tax" - it's the worst solution to our budget crisis, except for all the others.
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More than three quarters of the governor's cuts come from just two areas: health care and education. Is that because Gov. Paterson hates kids and sick people? Of course not. But that's where the money is.
Two-thirds of every dollar our state spends is on schools and hospitals, and much of the remainder (like debt service) can't be reduced. So anyone trying to close the budget gap through cuts would end up doing the same thing.
What about revenues, then? Raising the sales tax hurts the people who can afford it the least - working New Yorkers who spend every dollar they earn on the essentials - not to mention local businesses.
And let's not even get started on raising property taxes - which the governor is proposing through the back door, by cutting aid to local governments.
So what does that leave? If we want to keep our schools and hospitals open, and we can't tax working people any more, there's just the one option the governor has so far seemed unwilling to consider - raising the state income tax. Not for working families, but for those with incomes in the hundreds of thousands who can most afford it.
After all, they're the ones who have enjoyed most of the gains from our winner-take-all economy, and they're the ones who got most of the big tax cuts pushed through by both parties in Pataki-era past. (And some of them, like those whose big checks came from Goldman Sachs or Citigroup, also bear more than their share of blame for getting us into this mess.)
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A painless fix? No - but it's better than shuttered hospitals and laid-off teachers.
The good news is that most New Yorkers seem to agree. Public opinion polls show that a majority of New Yorkers support raising taxes on the wealthy along the lines of the Fair Share Tax Reform plan to help close the budget gap and prevent the governor's cuts.
Believe us, no one likes taxes. But sometimes, raising taxes on those who can afford it is the least-bad option we've got.
The Senate Dems are preparing to conference the fair Share Tax Reform Act of 2009, a bill also known as the "Millionaire's Tax". It was introduced by Senator Schneiderman and had 18 total sponsors signed on in support.
Until now. It seems the bill has picked up two more sponsors ahead of tonight's meeting.
As the Senate Democrats prepare to conference the question of tax reform at 6 p.m. this evening, the so-called Fair Share bill being pushed by the WFP and its labor allies is gaining steam in both houses of the Legislature.
In the Senate, two more Democrats - Tom Duane and Martin Dilan - have signed on as co-sponsors of the bill, bringing the total number of supporters to 20, according to the WFP's Bill Lipton.
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In the Assembly, a same-as bill is being carried by Assemblyman Darryl Towns, chairman of the 48-member Black, Puerto Rican, Hispanic, and Asian Legislative Caucus.
Towns introduced the bill earlier this week and has garnered the support of 30 of his colleagues.
"It's critically important that we solve the budget crisis through real shared sacrifice," Towns said in a statement relayed to me by a labor supporter of the bill. "Fair Share Tax Reform will make New York's tax code more equitable and will also raise revenue necessary to protect essential services."
Leaders of a network of shelters for Suffolk's homeless veterans say they would have to close if forced to bear a proportional share of budget cuts proposed by Gov. David A. Paterson.
Suffolk County United Veterans, whose eight shelters provide housing and counseling services to 60 homeless veterans per day on a budget of $400,000 per year, say such a cut would carve about $96,000 from their annual spending.
"Those funds are our life support," said Wilkens Young, the organization's director.
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Advocates of the shelters say cuts to homeless services would place an undue burden on troubled veterans just as war in Iraq and Afghanistan is increasing their numbers.
"We're in a war and they are coming back home," said Suffolk Legis. Kate Browning, (WF, Third District) whose son is headed for his third deployment this month. "This is not the time to cut these funds."
Browning said Albany should consider alternatives to cuts she says tilt against some of society's most vulnerable populations.
Kate Browning is completely correct here. This absolutely not the time to be cutting these funds and programs.
I very much hope that some federal money can be found to avoid these cuts. Regardless, balancing the budget on the backs of homeless vets is shameful.
Meet Aubretia Edick, Wal-Mart employee for 8 years, of Hudson, NY.
"I'll take a sandwich to work and that's about it," says Aubretia Edick, who is 58 and works in the pharmacy department of a Wal-Mart in Hudson, New York. "I drink a lot of tea. Once in a blue moon I'll go into Save-A-Lot and I'll get some meat. Eggs is kinda like a luxury kind of thing."
Edick first landed a $6.40-an-hour gig at Wal-Mart back in 2001, and over time her wages inched upward, reaching $10.50 last year. But with inflation factored in, it isn't that much better than when she first started. To make matters worse, while Edick was technically full time, her manager often slashed her hours due to the slowing economy. In mid-2008, she was grossing roughly $297 a week-$195 after taxes and deductions.
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Edick's monthly take-home pay-about $800 at the time I visited-doesn't go far either. She lives in a tiny apartment with a broken stove and mostly empty fridge that barely works. Rent and utilities run about $450 a month; when it's cold outside, she often sets the thermostat to 50 degrees to lower her bill. Gas and car insurance cost another $160 or so, depending on prices at the pump. And then there are the doctor visits, covered only after a $1,000 deductible-plus medicines for a thyroid problem, chronic anxiety, and osteoporosis.
To balance the budget, Edick often skimps on food, some weeks spending little more than $10 on groceries, about one-quarter what the federal food stamp program calculates is needed for three "thrifty meals" a day. She patronizes the grimy discount stores whose prices run even lower than Wal-Mart's, and can tick off their notable sales going back for months. "I had some oranges," she recalls with a self-deprecating smile. "A couple of months ago, they had grapes on sale." And, "If it's less than three dollars for a package of six steaks, that looks like a good deal to me." (She tries not to think too hard about the quality of a 50-cent steak.) Her staples include PB&J, canned ham salad, soup: "I'll get chicken noodle or Campbell's Chunky. There's meat in there. You can pour it over noodles and put butter on it. It's like a delicacy."
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For her part, Edick, unlike many Americans, hasn't resorted to handouts. (An estimated 28 million people were on food stamps as of last April, up from 17 million in 2000.) "There's times I'm hungry, and I'll look in the refrigerator for something-I'll find a snack pudding. Some leftover rice," Edick says softly. "I'm not starving or anything like that."
So Citigroup (C) has proposed that the US taxpayer and other preferred shareholders convert up to $75 billion of preferred stock into common stock, thus bolstering the company's tangible equity and putting it in less desperate need of a complete takeover.
And what will the US taxpayer get for this preferred stock conversion? 40% of the company for some of its $45 billion of preferred, say reports. The reports add that Citigroup's goal here is to keep the US's ownership under 50%, so this won't be a de facto nationalization.
Well, that's nice for Citigroup...and another ream-job for taxpayers.
Citigroup's common equity is currently worth $10 billion. If the US were to convert all $45 billion of its preferred at the current stock price, it should end up with 80% of the company, not 40%.
For the US to convert $45 billion of preferred to common and only get 40% of the company, Citigroup's existing common equity would have to be valued at $65 billion, not $10 billion, and the conversion price would have to be about $10 a share. Or the US would only be able to convert $4 billion of its $45 billion, which wouldn't help Citigroup's tangible equity ratio much.
So is that what Citigroup is trying to do here? Persuade the US goverment to convert to common stock at a price miles above the current trading price, screwing the US taxpayer yet again?
I'm not sure what exactly these two stories have to do with each other -- maybe nothing -- but, I think most people could look at these stories and come to the conclusion that something is most definitely wrong here.
