State budget cuts hits LI residents, schools, businesses

It came 125 days late and its birth was marked by the kind of political spectacle that veteran Albany watchers have labeled as absurd, but New York State does have a final budget, and it will impact life on Long Island in big ways.

Schools here will lose $173 million in aid and hospitals $19 million. Gone too are millions of dollars more that paid for environmental programs. The poor will get less state help and millionaires will get less of a tax break when they donate to charities.

Still, the state is projected to spend - in actual dollars - $136.5 billion, 7 percent more than the $126.9 billion spent in the last budget.

Here's how some key measures will affect Nassau and Suffolk:

SALES TAX

Long Island retailers and shoppers alike are not thrilled that legislators are restoring the 4 percent sales tax on clothing and shoes under $110 starting Oct. 1. Shoppers will pay an 8.625 percent tax on items that used to carry a 4.625 percent tax in Nassau and Suffolk counties. The measure will bring in $330 million in revenues this year.

"To increase more tax is just crazy," said Caroline Klein, 49, a Syosset mother of two. "It's a lot of money. I'll minimize my holiday spending more."

Once the increase takes effect, it will continue through March 31, 2011. Starting April 1, 2011 through March 31, 2012, a 4 percent exemption will again be in effect and apply to purchases of qualifying items under $55.

Most everyone agreed that the tax comes at a bad time, especially with the continuing high unemployment rate.

"The one thing they say about taxes like this is that they are regressive and they affect people with less income disproportionately because they pay the same rate," said Joel R. Evans, a professor at Hofstra's Zarb School of Business.

Exactly how the 4 percent tax will affect retail sales remains to be seen. Some retail experts say that, despite the complaints, consumer buying habits won't change significantly for the back-to-school and holiday seasons, as retailers continue to offer sales.

EDUCATION

The dismal picture school districts braced for back in January became a reality with this budget, said local superintendents.

"Most of our budgets were built around an anticipated reduction in aid," said William Johnson, superintendent of Rockville Centre schools. "We anticipated it."

Of the $1.4 billion in cuts to schools statewide, Long Island districts will see a 7.2 percent reduction in state aid compared to last year, or $172.6 million. The prospect led dozens of Island districts to lay off teachers and staff.

Passing the budget comes just in time for tax levy deadlines: next week in Nassau and early next month for Suffolk.

In East Islip, where cuts include eight teaching positions, co-curricular activities and clubs, and reduced music and arts programs, East Islip Superintendent Wendell Chu said they're anxious to see what happens to $607 million in new federal funds expected to save thousands of teaching jobs. The U.S. Senate is expected to pass the measure this week, and the House will take it up Tuesday.

In Farmingdale, Superintendent John Lorentz said there's still uncertainty until he sees exact numbers, district-by-district.

"It's the middle of August, classrooms are supposed to be set. We're not confident we can maintain the same level of teachers and support staff," he said. "We've delayed some hiring, which is delaying the schedules."

ENVIRONMENT

The budget hits environmental and related programs hard, with staff and program cuts that result in $195 million gap-closing measures for the agencies. One of the biggest hits was a $78 million cut in the state's Environmental Protection Fund.

Adrienne Esposito, executive director of Citizens Campaign for the Environment, a Farmingdale advocacy group, called the cuts "extensive and unprecedented" and said they will result in more "polluted bays, closed beaches, reduced recycling, more development and threatened drinking water."

She estimated that, on Long Island, the EPF cuts will amount to $31 million.

Allison Jenkins, fiscal policy program director for Environmental Advocates of New York, said the $78 million cut in the EPF will reduce funding for programs already in the pipeline, including land conservation, waterfront revitalization and municipal park projects.

HEALTH CARE

The $18.8 million loss in state revenue in next year's budget for Long Island's 23 hospitals will mean cuts in programs and the number of health-care workers, said Kevin Dahill, chief executive of the Nassau-Suffolk Hospital Council.

"There's no question in my mind," he said. "You can't keep cutting revenue and not expect they are going to have to scale back."

The budget approved Tuesday held few surprises for hospitals, mostly because they learned their fate back in June when Gov. David A. Paterson passed emergency legislation that targeted health care - a maneuver to get part of the stalled budget passed.

But Dahill said hospitals remain concerned that Congress will not extend additional Medicaid dollars to the states. He said that could cost New York's hospitals up to a billion dollars over a year. The U.S. Senate is expected to vote on a bill for a six-month extension this week, and the House is scheduled to vote on the measure Tuesday.

Arthur Gianelli, chief executive of Nassau University Medical Center in East Meadow, said NUMC alone will lose more than $2 million in state reimbursements next year. That combined with a "dramatic increase" in pension contributions means that the public hospital will have to make cuts, he said.

"Everything is on the table," Gianelli said. He said the hospital will look first to reduce non-personnel expenses. If that is not enough, he said, some people may lose their jobs. Cutting programs, he said, was last on his list.

The budget and the future

This budget closed a $9.2 billion gap. To get there, students on Long Island could find themselves in larger classes or paying higher tuitions. If you smoke, you're spending more in tax per pack.

Whether such discrete moves make sense depends in no small measure on your political persuasion and circumstances. Opinions also differ, though, on bigger questions: Does the budget help or harm the state's financial outlook and the broader economy?

E.J. McMahon, executive director of the Empire Center for New York State Policy, a conservative think tank, blasted the budget as "a house of cards." It's full of risky assumptions, he said, about how much can be saved by state workforce reductions and realized by limiting tax breaks on the charitable contributions of multimillionaires.

"At the margins," McMahon said, "there are hundreds of millions of dollars worth of shaky assumptions. And it's hard to pick out one that's shakiest of all."

Also, the budget is bolstered with at least $5.7 billion in federal stimulus dollars, McMahon said, a source of cash that at some point will run out. That means permanent cuts or tax increases in the future to keep spending levels flat, he said.

Frank Mauro, executive director of the liberal Fiscal Policy Institute, faults the budget for going too far in reducing spending by state agencies. He was especially critical of cuts to education that will cost teachers' jobs. The economic future of the state isn't helped, he said, by pulling back on government spending when times are bleak.

"We don't know if the recovery is on a solid foundation yet," Mauro said. "So I think it's better to assume we still need to be priming the pump."

The pump will still pump, though. Actual spending in the budget is projected to be $136.5 billion, a 7 percent increase over the $126.9 billion spent in the last state budget.