Legislature passes most of budget; Paterson threatens veto

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June 28, 2010

Paterson says Legislature is $400 million over target

By MICHAEL GORMLEY Associated Press Mon Jun 28, 2010, 08:17 PM EDT

ALBANY — New York's Senate and Assembly on Monday passed the biggest bills needed to finish the state budget that was due April 1, but Gov. David Paterson's threat of vetoes means the long fight will likely have at least one more round.

Approval of two budget bills was uncertain in the Senate when three members of the Democratic majority indicated they might withhold their votes to protest cuts to programs important to their districts, but in the end all 32 Democrats held together.

The Legislature will take up the revenue bill and two bills paying for the judiciary and Legislature's expenses which usually pass without resistance. A more controversial change in a school aid bill to direct more money to property tax relief is expected Tuesday or Wednesday.

The Legislature's plan would impose a smaller cut in aid to public schools than first proposed, eliminate a sales tax exemption on clothing and increase the tax credit for movie and TV productions that film scenes in New York.

The Legislature's plan, estimated at $136 billion, also includes policy provisions that could affect New Yorkers for years. It includes counting prisoners as residents of their last address, most of which are in New York City. That could cost traditionally Republican upstate areas where prisons are located a state Senate seat in next year's realignment of election districts.

It also would give gay couples who are legally married in other states the ability to file as married couples for tax purposes in New York, where gay marriage is illegal. The tax issue, however, faced objection from Sen. Ruben Diaz, a Bronx Democrat and minister, who may be able to block the measure because Democrats need all of their 32 members to pass budget bills. Diaz said the issue will resolved by Thursday.

Lawmakers rejected Paterson's proposals to cap in the growth of some of the nation's highest property taxes; give greater autonomy to the public universities and allow them to set their own tuition increases; and create a contingency fund if $1 billion promised from Washington but now threatened creates another big midyear deficit.

Paterson has promised vetoes of the Legislature's budget that he claims spends $400 million more than his without enough money to pay for it. Lawmakers earlier Monday refused to accept Paterson's latest and final emergency spending bill that contained his spending and policy goals.

As the Senate debated the measure, Senate Finance Committee Chairman Carl Kruger, a Brooklyn Democrat, acknowledged no total had been calculated for it. Republican Sen. John DeFranciso of Onondaga County shot back that the Democrats then can't know if their budget is balanced and said it appears to increase spending 6 percent over Paterson's proposal in January.

"The fact that members of the Legislature are even considering voting on budget proposals that include increased state spending and additional taxes and fees is a demonstration of their blatant disregard for New York's taxpayers," stated the bipartisan business group Unshackle Upstate.

But the Legislature is also credited with avoiding what could be annual tuition increases of up to 8 percent at the State University of New York and City University of New York. It was part of Paterson's plan to allow the public universities to set tuition without Albany's approval.

"Letting certain public colleges and universities charge higher rates of tuition lays the groundwork for a tiered system that could price poor students out of more expensive institutions and drive middle-income students even deeper into student loan debt," said Fran Clark of the New York Public Interest Research Group.

The Legislature's plan includes amendments to Paterson's budget proposal from January. The two plans are about $400 million apart and Democrats said it would increase spending by less than 1 percent over the latest fiscal year, but differ greatly in key areas such as education and property tax relief.

"No one would buy a car without knowing how much it costs," said Republican Sen. Michael Ranzenhofer of Erie County said. "It's just astounding."

The Legislature's plan would increase the Hollywood film tax credit to $420 million a year — from $350 million — that mostly drives productions and tax revenues to New York City. The Legislature also wants to the richest New Yorkers to pay more in taxes and receive reduced tax deductions for charitable donations. It comes a year after the income tax was raised for the wealthiest New Yorkers — a change that led many to move to other states, resulting in far less revenue than anticipated.

The Senate's Democratic majority pushed for a last-minute change in the school aid bill that would require wealthy and average needs schools to devote their share of the restored funding to property tax relief to lower tax bills.

But there may be little aid left to do that. Forty percent of the $600 million to restore Paterson's proposed 5 percent cut in school aid — worth $1.4 million — would go to New York City, in line with its enrollment. More than half the remainder would be directed to so-called high-needs schools to restore teacher jobs and other instructional cuts. The remainder would be shared by the majority of the state's 700 school districts for tax relief.

Senate Democratic leader John Sampson said he'll have the 32 votes needed for all budget bills, but Republican senators could block any override attempt of Paterson's expected vetoes.

Republican Assemblyman James Tedisco of Schenectady County said each Democratic budget proposals — the governor's and the Legislature's — tax and spend too much as the state is trying to pull out of the recession.

"If they had a third foot they'd shoot that, too," he said.