Senator Charles J. Fuschillo, Jr. announced last week that the New York State Senate has unveiled a comprehensive mandate relief proposal designed to help local governments operate more efficiently and preserve more of their local resources to address budget pressures facing localities statewide, while limiting the need for spending reductions and tax increases.

"For years, the Senate has recognized that burdens on local governments are burdens for taxpayers, and as a state we must do all we can to give municipalities the ability and flexibility to address their fiscal needs in a responsible way," Fuschillo said. "This package of budget and legislative proposals represents real relief from frivolous lawsuits, increased pension costs, growing Medicaid expenses and from a broad range of other mandates that are costing local governments and taxpayers billions of dollars."

According to Fuschillo, The Senate's Municipal Liability reform package would save local governments across New York State a billion dollars by enacting common sense reforms to limit judicial awards which have spiraled out of control in recent years. From 1988 to 1996, annual tort case filings in New York State grew by almost 60 percent, from 53,104 to 84,089. Last year, the City of New York paid more than $550 million in settlements and judgments in lawsuits claiming the city negligently caused injuries. According to the Public Policy Institute, in 1996, the "tort tax" cost every taxpayer in New York $800.

"Every sector of New York's economy is affected by the threat of virtually open-ended liability created by the state's current tort laws and unfortunately municipalities throughout our state face the brunt of this out of control system," said Fuschillo. "The costs are huge because, all too often, our civil justice system assigns blame and assesses damages on an irrational and unpredictable basis. Just about everybody loses in the ongoing game of lawsuit lottery. Consumers lose when liability costs drive up prices while reducing the availability of goods and services; workers lose when jobs are lost to foreign competitors with less product liability exposure; those with limited income lose when the threat of lawsuits makes it difficult for non-profit groups to deliver services; and taxpayers lose when local governments are seen as the deepest 'deep pocket' of all."

The Senate's municipal liability reform package includes provisions that would have direct savings for localities including repealing joint and several liability, placing $250,000 cap on non-economic damages and extending Court of Claims jurisdiction to localities. Additional portions of the package would help localities save money by reducing the overall test of New York's tort system. These proposals have generated a groundswell of support in New York and across the nation.

Fuschillo's proposal to restructure the pension system would benefit taxpayers and provide a billion dollars in relief to local governments, while also ensuring that the pension fund is sound and that benefits are protected for New York's retired workers.

"By giving counties the ability to issue debt, which they currently do not have, this measure will help them to better absorb the costs of retirement and benefit enhancements and assist them in their efforts to stabilize local taxes," said Fuschillo.

The plan, initially introduced last session and reflected in Governor Pataki's recent pension proposal, would help localities face unaffordable increases in pension costs by allowing for the five year amortization of any increase in contributions exceeding 25 percent. Additionally, the plan would allow counties to issue debt for local contributions for the Early Retirement and Incentive Program enacted in 2002. The unprecedented $30 billion decline in the performance of New York's pension fund following the September 11th attacks and the lingering national recession have led to a tremendous increase in the pension related costs to local governments.

Initially passed by the Senate last December, the Senate Medicaid reform package would eliminate the requirement that counties repay the state a total of nearly $172 million that was previously advanced to counties over the past several years. Since 1992, the state advanced funds to assist counties in addressing the cash flow impact on local government associated with the conversion of certain mental health services to Medicaid, specifically rehabilitation services provided to residents of certified community residences.

According to Fuschillo, the total Medicaid cost for this year is expected to approach $40 billion in New York State, and waste and fraud within the system inflates the bottom line and costs localities and taxpayers. The Senate is proposing measures to crack down on fraud and abuse within the Medicaid system by increasing independent investigations to prevent these losses and save localities money.

The Senate has introduced numerous proposals to reduce the costs of local government construction projects, Wicks Law in particular. Wicks Law mandates that school districts and municipalities use multiple "prime" construction contracts for public works projects costing $50,000 or more. Under the law, school districts have the ultimate responsibility of coordinating the work of the other primes. This puts the school district in the position of managing the actual construction, coordinating the work of all the primes, and resolving disputes.

Numerous studies have point out that the Wicks Law is costly and cumbersome. Increased construction costs ultimately result in less funding being available for instructional programs that directly benefit students. In addition, its provisions tend to extend construction projects, and construction delays potentially have a negative impact on teaching and learning.

"The State Senate has been a consistent supporter of reducing the burdens on local taxpayers, and one of the major reforms that can be done is reforming the Wicks Law on municipal construction projects," said Fuschillo. "Students show that Wicks Law adds 15-30 percent to the cost of construction projects, and these additional costs are placed on local taxpayers. That is just plain wrong and by reforming this law, we can allow municipalities and school districts to save millions of dollars and pass those savings on to taxpayers."

The Senate proposes a phased-in increase in the Wicks Law threshold. The current limit for the plumbing, electrical and HVAC components of public construction projects is $50,000. Some estimates project this adds 20-30 percent onto the final cost, which is passed on to local taxpayers.

The mandate relief package, much of which has been endorsed by the Governor's Task Force on Local Government Reform, would save local governments and taxpayers tens of millions of dollars by eliminating dozens of expensive state mandates. The package includes five major components aimed at reducing local fiscal burdens, providing localities with greater administrative flexibility, reducing the burden of state regulations, eliminating unnecessary state reporting and approval requirements and encouraging local consolidation and cooperation.

"The need for comprehensive mandate relief has never been more apparent," Fuschillo said. "If we are unable to provide the level of financial resources to our local governments that we would like, the least we can do is help them do more with less. Local governments have no place to go but to the local taxpayer and higher property taxes are not the answer to the State's fiscal problems. Mandate relief is a part of the solution." According to Fuschillo, some specific elements of the package include: authorizing credit card payments of taxes, fees and civil penalties to municipalities, removing State Comptroller approval from many purely local decisions, permitting a person to serve in more than one volunteer fire department, prohibiting duplicative requests from state agencies, eliminating onerous accounting requirements, requiring non-indigent prisoners to pay the cost of food and medical care, easing service mergers and sharing property taxes for local governments, and authorizing local governments to accept bids electronically, allowing localities to charge fees for police services at special events, permitting the State to purchase lands in the forest preserve for fair market value rather than the amount of back taxes, exempting municipalities from DEC regulatory fees, and others.

A Constitutional amendment proposed by the Senate plan would prohibit the state from imposing unfunded mandates by local governments and school districts. Also, compliance with new state mandates, once determined to be unfunded, would be voluntary for localities. Under the amendment, any associated increased in cost must be offset by state funding to carry out the new mandate.