Albany fight looms over millionaire's tax

ALBANY -- A showdown is shaping up over the state's so-called millionaire's tax, with some Assembly Democrats saying this year's budget could be held up in their battle to keep the temporary levy's $1 billion in revenue.

Gov. Andrew M. Cuomo and Senate Republicans want to end higher taxes on people making more than $200,000 and focus only on slashing spending to close a $9-billion to $11-billion budget deficit.

But some Assembly members from New York City say it's the wrong time to reject revenue and are privately urging Speaker Sheldon Silver (D-Manhattan) to dig in his heels to avoid draconian service cuts -- even if it means upending Cuomo's goal of an on-time budget.

Others say they want to see the governor's budget next week before deciding how hard a line to take on the tax. "Many of us in the Assembly are going to take the position that we need to fight for the tax," said Assemb. Brian Kavanaugh (D-Manhattan).

"It won't solve this year's budget deficit but it will certainly help us to avoid some of the most damaging cuts to education and health care," said Assemb. Richard Gottfried (D-Manhattan), the Health Committee chairman who will negotiate Medicaid spending cuts.

Monday, Silver said he was not ready to draw a line in the sand until he knows "what cuts are going to be there as a result of not having that tax in place." "Then people make a determination based on that," he told Newsday. "Nobody wants a late budget."

The "millionaire's tax" was approved in 2009 as government revenue plummeted after the Wall Street meltdown. It created two new tax brackets: 7.85 percent for single individuals making between $200,000 and $500,000 a year, and 8.97 percent for those making more than $500,000.

Most New Yorkers pay a 6.85 percent income tax rate. The measure is set to expire at the end of 2011, costing the state $1 billion for this fiscal year's budget, collected in the first three months of 2012. Over an entire year, the "tax" brings in $4 billion.

Cuomo, who campaigned on a pledge of not raising taxes, has said he considered extending it into 2012 to be a "new tax" that he opposed.

A spokesman for Senate Majority Leader Dean Skelos (R-Rockville Centre) said the Senate GOP wanted to immediately repeal the tax.

The tax could be extended, said Assemb. Robert Sweeney (D-Lindenhurst), if it's linked to issues dear to the Senate GOP, such as school aid, and Cuomo's property-tax cap plan. "We're in the preliminary rounds," Sweeney said. "For everybody to walk away from the table getting something that's important to them, there has to be some give and take."