Gov. David Paterson unveils dire New York State budget that includes new taxes, layoffs and cuts
By KENNETH LOVETT and GLENN BLAIN
DAILY NEWS ALBANY BUREAU
Updated Tuesday, December 16th 2008, 10:21 PM
MTA panel OKs doomsday rate hikes
Governor set to aim budget ax at city schools
Budget cuts could halt push to reduce class size
Gov. Paterson's proposed $121 billion budget hits New Yorkers in their iPods - and nickels-and-dimes them in lots of other places, too.
Trying to close a $15.4 billion budget gap, Paterson called for 88 new fees and a host of other taxes, including an "iPod tax" that taxes the sale of downloaded music and other "digitally delivered entertainment services."
"We're going to have to take some extreme measures," Paterson said Tuesday after unveiling the slash-and-burn budget.
The proposal, which needs legislative approval, did not include broad-based income tax increases, but relied on smaller ones to raise $4.1 billion from cash-strapped New Yorkers.
Movie tickets, taxi rides, soda, beer, wine, cigars and massages would be taxed under Paterson's proposal. It also extends sales taxes to cable and satellite TV services and removes the tax exemption for clothes costing less than $110.
"The governor is nickel-and-diming working class families," said Ron Deutsch, executive director of New Yorkers for Fiscal Fairness, an advocacy group.
State Conservative Party Chairman Michael Long warned that reinstating the sales tax on clothing and shoes will drive people to New Jersey, where they will also gas up their cars and pick up their wine, spirits and soda because the prices are less due to lower taxes. "You're sending notice to the people of New York that we really don't want you here," Long said. "The governor proposed flat spending, but why not actually cut the budget before raising taxes and fees?"
Paterson's 2009-10 budget proposal represents only a 1% increase in total spending from this year's budget - the smallest increase in a dozen years. It also calls for:
A 3.3%, or $698 million, reduction in school aid.
$3.5 billion in health care savings, including reductions in payments to hospitals and nursing homes.
Video slot machines at Belmont Park, more multistate lottery games and expanded hours for the state's Quick Draw lottery game.
Layoffs for 521 state workers and the elimination of seven state agencies.
"This is where we are," Paterson told reporters. "Maybe we should have thought about this when we were depending on what we thought was inexhaustive collections of taxes from Wall Street - and now those taxes have fallen off a cliff."
Paterson aides say the budget represents a net gain for New York City, but Mayor Bloomberg wasn't buying it. He said it could cost the city more than $1 billion, including a $600 million reduction in school aid.
"I don't know that 100% of it is going to go the classroom, but a large percentage of any reduction we get from the state will go to the classroom," Bloomberg said. "That will mean larger class sizes and fewer services."
Education and health care advocates also blasted Paterson's budget and urged state lawmakers to increase income taxes on wealthy New Yorkers to offset the cuts.
"We will be fighting this tooth and nail. We think it is irresponsible to make this level of cuts and not ask the wealthiest New Yorkers to help ease the pain," said Billy Easton, executive director of the Alliance for Quality Education.
Assembly Speaker Sheldon Silver, who supports a so-called millionaire tax, has said he'd "rather have a broad-based tax than nickel-and-dime" people.
Still, Silver (D-Manhattan) Tuesday indicated major cuts are in store. "Everything the governor has proposed is on the table," he said.
Republican lawmakers expressed concern with the tax and fee increases.
"Instead of raising taxes, we need to be reducing them," said Assembly Minority Leader James Tedisco (R-Schenectady).
Paterson did not rule out income tax increases but said spending reductions are the priority. He also defended the fee and sales tax increases, saying they would be less harmful to the state's economy.
"If you start taxing at times when [revenues are] receding, you'll drive job creators out of the state," Paterson said.