Questions Remain on State Budget Deal

6:28 PM, Mar 21, 2013   |    comments
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By Joseph Spector
Albany Bureau Chief

ALBANY, NY-- A budget deal reached late Wednesday between Gov. Andrew Cuomo and legislative leaders leaves unanswered questions as to what programs will be funded or cut, and how the state will pay for its new initiatives.

The tentative agreement hastily announced by the sides has yet to be fully detailed, and they admitted that some specifics would be determined in the coming days.

Budget bills could be printed as early as Thursday and will likely be voted on Sunday by the 213-member Legislature - a rare weekend session day at the Capitol. The state's fiscal year starts April 1.
If approved Sunday, it would be the earliest budget deal since 1976 and the first time the state had three consecutive, on-time budgets since 1984, Cuomo said.

"This budget agreement puts New York on track to have the third consecutive on-time, balanced, budget that holds increases in spending under 2 percent, while investing in our economy to create jobs and cutting taxes for middle class families and small businesses," Cuomo said in a statement Thursday.

The $136 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. But it's unclear how it would affect waiters and others who largely work on tips.

Non-financial issues -- such as changes to the state's new gun-control law and reducing marijuana-possessions penalties -- were not included in the final budget deal after being discussed for several days in closed-door negotiations.

So those issues will likely be decided before the legislative session ends in June. But some pieces of the gun law passed Jan. 15 take effect April 15, and the sides were hoping to make some changes before the effective date.

One of the expected changes is to allow manufacturers to sell magazines with 10 bullets, but only to allow gun owners to put in seven bullets unless it's for a sanctioned competition.

The law lowered the limit from 10 bullets to seven bullets, but seven-bullet magazines are not sold-so lawmakers said the change is needed. They are also expected to exempt police and film productions from an assault-weapons ban.

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.

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.

There will be nearly $800 million in tax breaks for businesses over three years, though most wouldn't take effect until the 2014-15 fiscal year - an election year for Cuomo and lawmakers.

A $350 rebate check would go to families with an annual income of $40,000 to $300,000 starting in 2014 and with at least one child below the age of 18. It will come to about $1.1 billion over three years, Cuomo said in a statement Thursday.

But all of the tax breaks - and how they will be paid for - have yet to be detailed.

An energy tax on businesses and consumers will be phased out over the next three years, state officials said. The tax -- known as the 18-a assessment -- had been set to expire after the coming fiscal year, and the details of how the phase out will occur hasn't been made clear.

Business groups have opposed the minimum-wage increase and the extension of the energy surcharge.

"The announced conceptual agreement on the state budget sends a difficult and regressive message to small business owners across New York," said Mike Durant, state director for the National Federation of Small Business.

The budget includes an increase in 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 in education aid.

Cuomo has yet to detail how the additional money will be spent and which districts will get a boost.

Cuomo proposed $75 million in his budget for competitive school grants, including $25 million for expanding pre-K and $20 million for lengthening the school day or year. The budget includes those proposals and has $11 million to reward high-performing teachers and $4 million for early college high school programs.

Lawmakers sought to return most of that money back into the general school aid formula. Education groups applauded the funding for a full-day, pre-kindergarten program statewide.

"Pre-Kindergarten is hands-down the most cost effective education reform available," said Bill Easton, executive director of the Alliance for Quality Education.

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.

The governor's office said in a news release Thursday that Comptroller Thomas DiNapoli has agreed to the proposal. He had been skeptical of it, and DiNapoli's office had no immediate comment. The state Teacher's Retirement System has yet to sign off on the agreement.

Also, Assembly Speaker Sheldon Silver, D-Manhattan, said they were still negotiating how to spend millions of dollars in economic development incentives.

Cuomo proposed a $3 billion pot that would be doled out through his regional development councils, but lawmakers have indicated they want more control over how the money is spent.

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