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Wages, taxes dominate state budget talks

Members of the State Senate work in the

Members of the State Senate work in the Senate Chamber as the legislative session winds down at the Capitol in Albany. (June 20, 2012) Credit: AP

ALBANY -- A minimum-wage hike, an array of business-tax cuts and child-care deductions, and a renewal of the so-called millionaires' tax are on the table as New York lawmakers rush to complete a state budget.

A partial rollback of a Metropolitan Transportation Authority surcharge on businesses is also in the mix.

Perhaps the only major item not alive is casino expansion, which could be headed back to the drawing board again. Lawmakers say they'll take up the issue in the second half of the legislative session.

Though the fiscal year doesn't begin until April 1, lawmakers are hoping to enact a budget by Thursday -- the last scheduled legislative day before the Passover-Easter break. To do so, they likely would have to announce a deal Monday to honor the three-day waiting period before printing and voting on legislation.

Gov. Andrew M. Cuomo said completing a third consecutive on-time budget -- which hasn't happened in three decades -- "would make a statement" about his administration.

"That government is functioning; that government is performing," the first-term Democrat said.

Following the Albany maxim that no issues are settled until all are settled, he added: "I wouldn't say at this point that anything has been ruled in or that anything has been ruled out."

But legislators said final discussions center on the minimum wage -- proposals would raise the rate from $7.25 per hour to $8.75 or $9 -- and a variety of taxes. Among them:

Rolling back a portion of an MTA surcharge, which is different from the MTA payroll tax. It is a surcharge on the state franchise taxes of most corporations operating within the area served by the MTA.

Increasing tax credits for child care and dependent care.

Phasing out rather than renewing a surcharge (known as 18-a) imposed on utilities in 2009 after the stock market meltdown.

Renewing the "millionaires' tax" and other tax rates rather than waiting until next year.

Enacted in December 2011, the new tax code raised tax rates on joint filers earning more than $2 million and singles earning more than $1 million, generating $1.9 billion in state revenue. It reduced rates for low earners and a large portion of the middle class. It is set to expire in 2014 -- when Cuomo and all 213 legislators are up for re-election.

An influential business group -- a key Cuomo ally during his first two years in office -- has strongly opposed renewal of the millionaires' tax. Kathryn Wylde, head of the Partnership for New York City, said her group has a "deep concern with the possible early extension" of the tax rates.

Wylde acknowledged the group "reluctantly" supported the surcharge on high earners as a temporary fix for the state's budget woes.

"Circumstances have changed dramatically and we are convinced that extension of the surcharge at this time is the worst possible message New York State could send to our most important job creators and revenue generators," Wylde said in a letter to Cuomo and legislative leaders.

Final talks also include a proposal to restore about $90 million of a $120 million cut to nonprofits that provide services to the developmentally disabled; Cuomo proposed the cut after federal officials reduced New York's Medicaid funding because of overbilling.

Another idea is to restore about $50 million in a special category of school funding called High Tax Aid, legislators said. If not restored, Long Island districts would lose about $34 million.

Meanwhile, casino talks apparently have stalled. Last year, lawmakers gave first approval to a constitutional amendment to allow up to seven new, non-Indian-run casinos in New York. They must approve it again before it goes to a public referendum; it could be on the ballot in November.

Cuomo changed course in January, saying he wanted to initially limit casino expansion to three upstate sites for now. Further sites could be developed later, he said -- perhaps after an "exclusivity" period that allows the first three to flourish.

But a key upstate senator said that an upstate-only casino proposal likely can't win enough support statewide. Casinos in neighboring states and gambling proponents will spend heavily to defeat casino expansion in New York, so Cuomo needs to broaden the expansion proposal, Sen. Tom Libous (R-Binghamton) said.

"I really think you have to go beyond three or it will fail," Libous said.


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