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Cuomo, Lawmakers Reach Budget Deal

11:11 PM, Mar 21, 2013   |    comments
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By Joseph Spector and Jon Campbell

Gannett Albany Bureau

ALBANY, NY -- Gov. Andrew Cuomo and legislative leaders reached a tentative agreement late Wednesday on a budget for the 2013-14 fiscal year, a plan that would extend higher income taxes on millionaires and provide a $350 rebate check to families next year.

The $135 billion budget deal includes a three-year plan to increase the state's minimum wage to $9 an hour, starting with a jump to $8 in 2014.

Parts of the spending plan were being printed late Wednesday, clearing the way for a weekend vote by the Legislature. If approved, it would mark the earliest adopted budget in decades, well ahead of the start of the state's fiscal year on April 1.

"In any event, we plan and hope to make the April 1 deadline," Cuomo, a Democrat, told reporters. "We are on track to do that, certainly, given the progress that we have been making."

Cuomo and top lawmakers announced the "conceptual" agreement around 8:15 p.m. Wednesday after a number of thorny issues were dropped from budget discussions.

Several non-financial issues -- such as changes to the state's new gun-control law and reducing marijuana penalties -- were not included in the final budget deal after being discussed for several days in marathon, closed-door negotiating sessions.

While the state's fiscal year doesn't start until next month, lawmakers were hopeful to reach a deal this week because a legislative spring recess had been set to begin Friday.

Lawmakers will now work through the weekend to pass the budget bills by Sunday. If approved by the Legislature, it would be the third consecutive year the state had an on-time budget -- after decades of late budgets.

The state is closing a roughly $1.3 billion budget gap for the upcoming fiscal year.

Higher income tax rates on millionaires would be extended for three years under the deal, bringing in about $2 billion a year in revenue. The rates -- along with a modest income-tax cut for middle class workers -- were set to expire in 2014.

The minimum wage would increase to $9 by 2016. The wage deal was a compromise with Senate Republicans after the Democratic-led Assembly wanted it to increase to $9 in January. It is currently $7.25 an hour.

The agreement would also include a tax credit for employers who hire teenaged workers.

"We reached a consensus on the minimum wage that I think is fair," said Senate Republican Leader Dean Skelos, R-Nassau County.

There will be about $650 million in tax breaks for businesses and middle-class tax relief, though most wouldn't take effect until the 2014-15 fiscal year. The $350 rebate checks would go to families with an annual income of $40,000 to $300,000 and at least one child below the age of 18.

"I think that $350 check is going to go a long way toward helping the middle class," said Sen. Jeff Klein, D-Bronx, who heads the Independent Democratic Conference.

Cuomo defended keeping higher taxes on the wealthy, saying the rates are still lower than they were in 2009.

An energy tax on businesses and consumers will be phased out over the next three years, the state officials said. But the tax -- known as the 18-a assessment -- had been set to expire after the coming fiscal year.

Business groups had been pushing against changes to the minimum wage and had called on lawmakers to reject an extension of the energy surcharge, saying it would have an adverse impact on the state's employers in an uneasy economy.

"Any anti-business measures that are advanced in this year's budget -- including a minimum wage increase or an extension of the 18-a surcharge -- will adversely impact the ongoing efforts to strengthen the upstate economy," Brian Sampson, executive director of business group Unshackle Upstate, said Wednesday afternoon. "What we need are cuts in the current level of taxation, not lower rates on items that are scheduled to sunset."

Lawmakers and Cuomo agreed to increase school aid to about $1 billion over the current fiscal year, which ends March 31. Cuomo proposed an increase of about $900 million, for a total of about $21 billion.

The sides also agreed to Cuomo's proposal to allow for pension smoothing for local governments and schools. The proposal would allow for them to pay a flat rate for growing pension costs over the next 25 years.

Budget director Robert Megna said the agreement includes some changes to the actuarial estimates for the program to ensure the state's pension funds remain solvent.

Some issues remained unresolved, even as overall budget deal was announced. For example, Assembly Speaker Sheldon Silver, D-Manhattan, said they were still negotiating how to spend millions of dollars in economic development incentives.

Earlier Wednesday, Cuomo acknowledged he and lawmakers were discussing changes to the state's new gun laws, which were adopted Jan. 15.

In particular, Cuomo said they were considering changing a soon-to-take-effect provision that would prohibit the sale of magazines that can hold more than seven bullets. Cuomo insisted the change wouldn't be a "rollback" of the controversial law he ushered through the Legislature, but rather a tweak to make the law consistent.

Cuomo said negotiations over that issue -- as well as several others that had crept into budget negotiations in recent days but weren't part of the agreement -- would continue.

"Nothing is dropped. We're going to still work on other issues," Cuomo said. "We might have an agreement on other issues. We want to get the budget itself underway."

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