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New York State lawmakers approve $121.7 billion budget

BY JAMES T. MADORE | james.madore@newsday.com

9:56 PM EDT, April 9, 2008

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ALBANY - Despite mounting signs of a recession, state lawmakers Wednesday adopted a $121.7-billion budget that boosts spending above the inflation rate, with vast sums going to public schools, health care, colleges and business development.

The 2008-09 fiscal plan is 4.9 percent larger than this year's, though, for the first time in a decade, spending will be less than what was originally proposed by a governor. Still, New York is growing expenditures while other states, such as New Jersey, Florida, Maine, Vermont and California, are cutting costs and threatening to fire state workers.

"They are spending at an unsustainable level and they know that full well," said E.J. McMahon of the conservative Empire Center for New York State Policy. "This is excessive and irresponsible."

Gov. David A. Paterson acknowledged that the budget wasn't perfect. But he said it was the best that could be achieved amid fallout from Gov. Eliot Spitzer's resignation on March 17 and the pressing need to get a fiscal plan in place near the midnight March 31 deadline. The budget was the tardiest in four years, but far from the 133-day late record set in 2004.

Paterson also said lawmakers, having recognized the tough economic times, were willing to consider his proposal to cut spending by 5 to 10 percent in 2009-10. This could be achieved by eliminating hundreds of the state's 640 public authorities, ineffective economic development initiatives such as the Empire Zones program, and property-tax rebate checks under the School Tax Relief (STAR) program, he said.

"Is this the answer to the economic problem? No," Paterson said of the new budget. "What it is, I think, is a change in priority for how this state is going to operate. ... We need to start thinking about some workable, sensible, achievable goals that we could meet for next year."

The new budget trims $1 billion from state government operations and grows Medicaid spending by 1.2 percent compared with last year's drop.

A promised increase in STAR rebate checks for middle-class homeowners was postponed. Seniors, however, will see fatter checks. In Nassau, the average amount for them will be $735, a gain of $235 over this year. In Suffolk, the average amount will be $619, an increase of $198.

While the spending plan includes no hikes in personal income tax or other broad-based levies, it raises $1.5 billion in taxes and fees.

Smokers will pay an additional $1.25 per pack of cigarettes for a total tax bite of $2.75. Shoppers making purchases at online retailers that don't have a physical presence in the state will likely pay more now that sales tax will be collected. And motorists who drive too fast or who drink and drive will suffer higher penalties in the form of surcharges ranging from an additional $20 to $170.

But Spitzer's proposals to increase the cost of auto insurance and gasoline were scuttled by lawmakers. Ditto for plans to tax illegal drugs and expand the Quick Draw lottery game.

However, Spitzer's calls for a record hike in aid to public schools ($1.75 billion) and upstate's sagging economy ($700 million) were largely heeded by Paterson and the legislature.

Assembly Speaker Sheldon Silver (D-Manhattan) yesterday touted additional money for affordable housing and medical insurance for poor children, initiatives pushed by Spitzer.

Silver and Senate Majority Leader Joseph Bruno (R-Brunswick) discounted the comments of some economists that the 2008-09 spending plan wouldn't hold up in a recession, causing lawmakers to return to Albany after the fall elections to make further cuts in expenses or raise taxes.

"It's a concern of mine," said Bruno, "but I don't predict it will happen."