Budget: Cash in, cash out

LOCAL EFFECTS

Major elements: Saratoga Springs loses $1.8 million because the budget agreement changes how aid is given out to municipalities that host video lottery terminals. Municipalities with racinos will now receive aid based on their poverty rates — costing the city 5 percent of its revenue; Saratoga County loses $1.1 million.

The city and county are the only municipalities of 17 in the state to lose all their VLT assistance under the new terms of the program. Albany could lose as much as $1.4 million this year in unrestricted state aid through what’s known as the Aid and Incentives for Municipalities program. Increases in the so-called AIM funding were frozen, and cities outside of New York City will receive what they got in 2008. But cities like Albany, where the fiscal year starts in January, had already budgeted for the increase.

Troy is looking at a roughly $212,000 shortfall; Schenectady will lose out on about $500,000. State leaders hope to offer several mechanisms for municipalities to deal with the frozen aid levels, including a new pension tier and greater purchasing flexibility.

Reaction: “We’re now going to have to revisit our entire budget and rethink every position, every expenditure,” said Saratoga Springs Finance Commissioner Kenneth Ivins.
“This is going to compound problems for the cities,” said Albany Mayor Jerry Jennings, who said the loss of AIM funding could double the city’s projected deficit by the end of 2010.

SCHOOLS

Major elements: Due mainly to federal stimulus dollars, much of the state education funding that was cut in Gov. David Paterson’s proposed budget was restored. Public schools will receive $21.9 billion in state aid in the 2009-2010 school year — an increase of $405 million, or 1.9 percent. Foundation Aid will remain at its 2008-2009 level, or $14.8 billion, for the next two school years. But additional funding for the poorest districts, required by court order, won’t be fully phased in until the 2013-2014 school year. Funding levels for individual school districts were not immediately released on Monday.

Reaction: Billy Easton, executive director of the Alliance for Quality Education, applauded the plan to tax New York’s wealthiest residents as a way to provide education dollars, but blasted the budget for not going far enough to fund school districts. “We have the President and the Congress to thank for all the funds that provide relief,” Easton said. “The state did not use state money.”
Schenectady Superintendent Eric Ely was not pleased with the budget and said it will require him to raise taxes. “I think the budget proposal I’m seeing will negatively impact the poor in New York a lot more than it does the wealthy,” Ely said.

HEALTH & HUMAN SERVICES
Major elements: Again using federal stimulus money, the Legislature’s budget restores $1.2 billion of the $2.3 billion in health care cuts proposed in the governor’s budget. Overall, the health budget would increase $3.3 billion to $48.6 billion, a 6.7 percent increase.
The Legislature’s spending plan adopts many of Paterson’s proposals, including a major shift in Medicaid reimbursement: fees paid for primary care will increase while reimbursement for inpatient care will decrease. It is part of a health reform effort designed to prevent health problems from escalating to the level of hospitalization.

The budget reduces payments to hospitals by $300 million, less than half the governor’s proposed $700 million cut. Still, the hospital industry argues hospitals will be forced to lay off staff and cut services even though the state will provide aid to hospitals hurt most by the new payment system.

The spending plan reduces Medicaid payments to nursing homes and home care agencies by $293 million. Home care agencies will pay a tax on their revenues, totaling $14.2 million.

Health insurance companies will be assessed an additional $728 million and, for the first time, out-of-state insurance companies will have to pay the covered-lives assessment.

The health budget reduces funding for anti-tobacco programs by $10 million and increases tobacco fees by $18.5 million through fees paid by tobacco retailers and a tax on the small cigars called cigarillos.

The budget also gives a little back to struggling families: an additional $4.5 million for food pantries; a boost to the basic welfare grant by $30 a month to $268 for a family of three; and with the help of federal stimulus money, the food stamp stipend will increase $63 a month for a total of $288 based on the national average for a household.

Medicaid enrollment increased 5.8 percent in 2008, and this budget makes it easier for families to re-enroll by eliminating face-to-face interviews, finger-imaging and asset testing.

Reaction: “Health care providers supported the investments in primary care — the lone element of true reform in this budget agreement — and we understood the economic situation would require some cuts,” said Daniel Sisto, president of the Healthcare Association of New York State. “However, this budget goes far beyond what was necessary or appropriate, threatening the safety and well-being of millions of New Yorkers who rely on the health care delivery system.”
HIGHER EDUCATION

Major elements: The state budget provides $2.5 billion the State University of New York system, a $118 million increase from last year. The City University of New York will receive $1.9 billion, a $144.4 million increase.
The Tuition Assistance Program, which awards eligible students annual grants of $5,000, will not suffer the governor’s proposed $50 million cut.

The budget restores $3.6 million for the Collegiate Science and Technology Entry Program, and maintains funding for the Educational Opportunity Program, the Higher Education Opportunity Program and the Search for Education, Elevation and Knowledge Program — all of which encourage enrollment in college through counseling, tutoring and financial assistance.

Reaction: Advocates spent much of Monday poring over the budget to find out the significance for higher education. Denyce Duncan Lacy, spokeswoman for the United University Professions, said late in the day that a team of experts for her organization was still determining the impact on its 35,000 members employed by SUNY.
Still, she was optimistic about the results. “Given the tight fiscal situation the state finds itself in, overall there’s more good news than bad for SUNY,” she said.

ENVIRONMENT

Major elements: Returnable 5-cent deposits on bottles, in place since 1982 on carbonated beverages, will be added to bottled water to promote recycling; 80 percent of deposits on unredeemed bottles, which have previously been kept by bottling companies, will now go into the state general fund. That’s worth more than $100 million a year in extra revenue.
The budget also keeps the state real estate transfer tax in place to fund the Environmental Protection fund, rather than shifting financial underpinnings to unclaimed bottle deposits. There will be $222 million in the fund, up from $205 million sought by the governor but less than this year’s $250 million.

Among programs restored were the Hudson Valley Greenway, at a cost of $1 million. Farmland protection programs, where the state buys development rights, will jump from $17.5 million to $23 million.

Reaction: Business groups opposed to bottle bill expansion claim it could cost more than double the expected $100 million and force some bottlers to close. Local governments in the Adirondacks and Catskills welcomed the demise of a proposal for the state to cap its property tax payments on forever-wild Forest Preserve lands, which could have cost local governments about $9 million annually.
ECONOMIC DEVELOPMENT

Major elements: The budget includes reform of the Empire Zone tax program. Responding to complaints that Empire Zone businesses never live up to initial promises, the reform requires firms to produce more than $1 in investment and wages for every $1 in state investment. Empire Zone businesses that don’t meet the requirement face decertification from the program. Also, the budget ends the Empire Zone program next year — a year earlier than called for in current law.
Left out of the budget is Paterson’s proposal to sell wine in grocery stores, which was touted as a way to raise $105 million in franchise fees from stores and pharmacies that already sell beer.

Reaction: Business organizations on Monday blasted the budget and called it detrimental to economic development. Groups like the Business Council of New York State, the New York State Association of Realtors, the New York Farm Bureau and others mostly objected to the budget’s increases in taxes and fees, and what they dubbed its failure to accomplish property-tax reform.
“As far as we’re concerned, this is the worst budget ever,” said Kenneth Adams, president of the fiscally conservative Business Council.

TRANSPORTATION

Major elements: The budget agreement restores $112 million that was originally cut from the Consolidated Highway Improvement Program, which pays for repairs on local roads. That returns the total amount available under the program to $363 million, the same as last year, said Steve Stallmer, vice president of government and public affairs for the New York State Associated General Contractors. Overall highway spending was trimmed by less than $40 million, a cutback Stallmer called “minimal” given the state’s fiscal difficulties.

Reaction: Operating support for Amtrak’s Adirondack passenger rail service between the Capital Region and Montreal was restored, a move that was welcomed by Bruce Becker, president of the Empire State Passengers Association, a rail advocacy group. The executive budget had cut funding in half, to $2.5 million, a move Becker and others feared would end the service.
And the Capital District Transportation Authority, which faced a $3.1 million cut in its state operating support, saw $2.4 million of that support restored, said CDTA spokeswoman Margo Janack.

That will allow the CDTA board to consider increasing capacity on its most crowded trunk routes, advancing its bus rapid transit project along Route 5 between Albany and Schenectady, and making service improvements in Schenectady County.

It also may allow the board to avoid a second fare increase it was considering for next year, she said. CDTA fares will increase on Wednesday, with the base fare rising 50 cents to $1.50.

PRISONS

Major elements: Camp McGregor, a minimum-security state prison in Saratoga County, is on a list of three prisons to be closed. The camp in Wilton currently has 59 inmates and is part of the Mt. McGregor Correctional Facility complex. The main prison is medium security and will remain open.
The budget calls for closure July 1, and for this fiscal year it means $12 million in savings with the shutting down of three camps. The camp has approximately 50 employees, and about 40 to 45 are correction officers. Camp McGregor has 300 beds, but currently has only 59 inmates.

Also scheduled to close are Camp Gabriel in Franklin County, with a staff of 104, and Camp Pharsalia in Chenango County, with a staff of 79.

Reaction: Donn Rowe, president of the New York State Correctional Officer & Police Benevolent Association, said, “The Legislature made a choice that I believe will negatively impact not only the local economy, but also the inmates who took advantage of the very important programs available through Mt. McGregor.”

— Compiled by Eric Anderson, Jordan Carleo-Evangelist, Chris Churchill, Cathleen F. Crowley, Carol DeMare, Brian Nearing, Lauren Stanforth and Dennis Yusko