With the nation still mired in a recession, for residents of Long Island, things are about to get even more difficult as a result of a state budget for the 2009-2010 fiscal year that increases taxes and fees while eliminating the STAR rebate check. Democrats passed the budget in the Senate and the Assembly with Democratic Governor David Paterson. State Republican leaders are now pointing the fingers at Democrats for putting citizens in an even bigger financial hole, but Democrats are pointing back, saying the Republicans helped create the financial hole the state found itself in.
While both Republicans and Democrats have to share some of the blame for the state's difficulties, it is ultimately the residents of New York who will have to pay to close the state's budget deficit.
Besides the massive hikes to MTA services such as the Long Island Rail Road, bridges and tunnels and the New York City subway system, citizens will find themselves paying increases in fees for vehicle registrations and driver's license renewals as well as increases in taxes and surcharges on beer, wine and cigars, auto insurance and auto rentals as well as increases to what residents pay for natural gas and electric. In addition, Long Island homeowners who had been counting on the STAR rebate check to come each year in the mail, need not check their mailboxes as that program has been eliminated for a savings of approximately $1.4 billion.
At a joint press conference held near Belmont Park in Elmont by Republican state leaders recently, Senate Majority Leader Dean Skelos, Assemblyman Tom Alfano and Assemblyman Bob Barra, it was stated that a family of four on Long Island would pay an additional $2,400 in taxes per year.
"When families are already finding it difficult to make ends meet, the fact that the 'three men in a room' would introduce such a bloated budget is inexcusable. We face hard economic times that are forcing families to cut back on spending and tighten their belts. People are struggling and the only notable achievement that came out of this budget in the Assembly is that it was passed on time," said Republican Assemblyman Tom McKevitt, who represents the 17th Assembly District.
While Democrats who passed the budget certainly didn't do so jumping for joy, they defended their decision by stating difficult decisions were needed during difficult times.
"After years of spending beyond the rate of inflation established by the executive branch and legislative branch, after years of borrowing to pay for current debt, not withstanding the fact that Wall Street generated the income and the [financial] meltdown from last year, [these factors] created a $17.7 billion budget deficit," said Democratic Senator Craig Johnson, who is part of the senate majority, in an interview with Anton Newspapers. "How do we generate revenues and reduce expenditures to fix and fill a $17.7 billion budget deficit because the credit card that New York State government ran out came due?"
Johnson said that while the state budget does increase taxes and fees, it also contains ways to reduce expenses including a layoff of 9,000 state workers. "It's not just an increase in taxes," he said, calling the current economic crisis the worst the state has faced since the Great Depression. "We did it through a smattering of things - through an increase in fees and an increase in taxes, there's no doubt about it, and a reduction in expenses, plus [federal] stimulus money."
Republican state leaders, however, counter that the budget still increases spending by $10 billion. Johnson said the increase represents $7.7 billion in stimulus funds from the federal government that went towards restoring state aid for school districts and restoring healthcare cuts that were part of the governor's executive budget proposal. According to Johnson, another $1.5 billion was used for debt service.
Johnson, who represents the 7th Senate District, said the spending in the General Fund portion of the budget was reduced by $21 million. "The overall budget increase of [$10 billion] is not inaccurate, but it's not telling the whole story," he said.
A spokesman for Skelos, a Republican who represents the 9th Senate District, said that the bottom line is the budget still increases spending even without the stimulus money factored in. "What they are doing is dangerous. They are taking many programs that would come out of the General Fund in the past and they're paying it with stimulus money. Those are one-shot deals so eventually when the stimulus money disappears next year, there are going to be all these programs out there that are going to be unfunded. We're going to have a huge deficit in the future. But they're also expanding programs that you just can't do right now," said Skelos at the press conference near Belmont Park.
The effects of the state budget for the 2009-2010 fiscal year are yet to be seen. But if you subscribe to the theory that consumer spending will help the region out of the recession, then the state budget may not necessarily be a good thing. With more money going from consumers' pockets to the state budget, there may be less money to spend. Nassau County is struggling with filing its budget gap because of a decrease in sales tax revenue. That revenue could continue to sink.
Skelos and other Republican leaders also believe the increases in income tax on state residents making over $300,000 will also hurt businesses.
"I think people are going to spend money. The fact is that it was a $17.7 billion budget deficit. We spread it out as how to address the issue," Johnson said.
The STAR rebate check, which some may have counted on to pay their property tax bills while others may have spent on consumer goods and services, was a casualty of the budget, but Democratic leaders believe its cut exemplified the tough decision that needed to be made. "The unfortunate consequence was that, in evaluating a $17.7 billion budget deficit, there were decisions that had to be made," Johnson said.
Johnson acknowledged that the budget hurts everybody. "The number of people who called me and thanked me for passing the budget I can probably count on my fingers and toes," he said.
Johnson believes that Long Islanders are badly in need of property tax relief and changes in the school state aid formula could be a key in providing it. "Our property taxes are high and they haven't been solved for years. We need to address this issue. Every year, we seem to have this fight about school aid coming in because our school aid is just so screwed up," he said.
Now more than ever, state residents need their elected officials to come up with real solutions in a bi-partisan fashion. The state budget process, many would argue, did anything but that.