Gov. Eliot Spitzer’s proposed state budget contains something for everyone.
Something to dislike, that is.
So, if you don’t like the way things have been done recently in Albany, maybe you’ll like this budget. It reminds me of my days as a newspaper reporter, when we would say that if you angered all your sources equally, you’d probably done a pretty good job on the article.
The health-care industry disagrees with the $1.3 billion Spitzer proposed in spending cuts. Businesses don’t like the $450 million in closing tax loopholes that will mean paying more to the state. Fiscal conservatives are sure to dislike the 6 percent overall spending increase the budget calls for – especially since they know the Legislature will fight hard to spend even more.
Even public education, which was treated generously in the budget proposal with a $1.4 billion increase, can find things to dislike, such as an increase in the number of charter schools from 100 to 250 and a $25 million tax deduction for parents paying private or public school tuition.
The taxpayer, however, might find some things to like. First, except for the closing of tax loopholes mainly affecting business, the budget does not raise broad-based taxes. There’s no hike in the income tax or the sales tax.
Second, Spitzer followed through on a campaign promise by proposing a major expansion in the School Tax Relief (STAR) program that’s proven popular with property taxpayers. The program reduces the amount homeowners pay in school taxes by exempting part of the value of a home, and the state makes up the difference to school districts. The governor wants to add $1.5 billion this year to this $3 billion program, and under his plan the state would for the first time take income into account, steering far more of the benefit to middle-income taxpayers.
The largest remaining flaw with STAR, however, is it does nothing to directly lower school taxes. In fact, some analysts have said STAR actually drives taxes higher by temporarily easing the pain: taxpayers don’t see the big tax increases at first because of the new exemptions, but eventually the increases outgrow the value of the exemptions.
Taxpayers might also appreciate Spitzer’s aggressive effort to rein in health-care spending. His budget would slow the rate of growth in the Medicaid program from an average of about 8 percent in recent years to 1.7 percent. He’s made it clear he wants to force major changes in the health-care system, and in the first of several policy speeches leading up to his budget proposal, he criticized the system and the state for allowing health care to become more about taking care of institutions (hospitals, nursing homes, labor unions) than patients.
The governor said he’s going to ferret out waste in the system, and he gave us an example by pointing to graduate medical education. The state has spent more than $8 billion over the last five years on graduate medical education – $77,000 per graduate resident in 2005 – much more than other states. The money has been distributed under a formula that Spitzer said doesn’t work the way it should and in fact sent money to educate residents and doctors who don’t even exist.
On education, however, Spitzer was more accepting of the status quo. While the governor said his new “foundation” school-aid formula will drive more money to the districts that need it most, every school district will see a state aid increase of at least 3 percent. That means even the wealthiest districts that spend many thousands of dollars a year on each student will get more of our state taxpayer dollars.
Even for the taxpayer, the Spitzer budget is mixed. But here’s something else to like: Spitzer began his budget presentation with straight talk about the state’s problems. Gone were the days of glossing them over and boasting of the state’s accomplishments. Spitzer acknowledged that we’re the highest-taxed residents in the nation, that too often we don’t get enough for what we pay, and that the economy is in serious trouble, particularly Upstate.
“We are paying a premium and getting less back,” Spitzer said, adding that his budget is a departure from the status quo: “We are saying ‘no’ to the folks who have gotten too used to hearing ‘yes.’”
For folks in New York struggling to pay their taxes, those are sweet words.
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February 5th, 2007 at 5:30 pm
The ‘adjustments’ to the STAR program do not steer ” far more of the benefit to middle-income taxpayers.”
In Westchester County, and the other counties surrounding NYC, the cost of living, as well as income is much higher.
This is self evident, in that everyone in NYS does not live here. A $170,000 house in Syracuse costs $600,000. here. Same house, similar neighborhood, different region. If you check any of the ‘executive management relocation’ websites, you will find that it is 40% cheaper to live in most of NYS than it is in the non-NYC downstate area.
In other words, middle income in Wellsville of $60,000 is comperable to middle income in New Rochelle of $100,000.
That said, any income-driven change to the STAR program which does not adjust for the regional-cost-of-living (RCOLA) is simply a rip off of downstate middle-income taxpayers, and another handout to upstate New Yorkers.
February 6th, 2007 at 9:12 am
Haha! As a former reporter, I can relate to your rule of sources. That’s when you know you’re hitting a nerve.
Spitzer is sure hitting a nerve, and I think it’s a good thing on balance. It’s funny to me that he’s sounding more like a conservative than a New York liberal. He wants funding tied to school performance and credits for parents who send kids to private schools. Sound familiar?
My current rule of thumb is that anything that makes NYSUT mad is good for the state. I’ll be interested to see if Spitzer can keep this up in the face of opposition.
February 12th, 2007 at 9:08 pm
I think your observation and support of Spitzer’s shortsighted views of Healthcare and Graduate Medical Education is wrong. Is there some waste in the system and is the state paying for phantom residents that don’t exist…don’t count on it and if there is, it’s minor. The benefits that NY gets from those graduates are significant. Upstate NY, especially Rochester and Buffalo, is approaching a physician crisis. Many specialty positions are unfilled,recruitment of primary doctors is difficult. Rochester lost nearly 20% of it’s doctors in the last decade. The rate of physician retirements in the next decade is substantial. Fortunately for Rochester, some 40% of doctors who are residents at the city hospital Medical Education Programs stay in Rochester. The GME programs are the primary source of Doctors for the Rochester area. Virtually no doctors, unless they have a Rochester connection, move to Rochester. They can go to any other part of the country and work less, have a higher income, get hassled less by a HMO and be in a better climate. The hospitals in Rochester spend large amounts of their resources to recruit and employ doctors because otherwise none would stay. At the same time the hospitals in Rochester, some of the most efficient and highest quality in the State and nation, routinely operate above 100% occupancy with aging infrastructures because they don’t generate sufficient resouces to do so. Like doctors,they also are paid well below what other hospitals across the country are paid. Over the last 10 years 2 hospitals in Rochester have closed. Elliot Spitzer needs to methodically plan his reform for HealthCare as well as other aspects of the state and approach it rationally. Actually, the Berger Commission did that, looks like Spitzer forgot it. The way he’s doing it will turn people off quickly when they realize he’s just another guy with a prosecutor mentality that believes everyone is a criminal and out to do the wrong thing. Rochester healthcare has real problems today yet THEY take care of patients and do it exceptionally well. You don’t want to be in a Rochester Hospital or Nursing Home 5 years from now if Spitzer does what he’s threatening to do. And you certainly hope you don’t need a doctor.
February 15th, 2007 at 9:15 pm
The healthcare proposal is going to anger a lot of people in the state. We have a hard enough time keeping medical professionals in Rochester. What will this do to the elderly in the community ? What does this say about Rochester’s health care ? Rochester’s health care used to be top rated a dozen years ago. How do we keep good physicians, lower costs and keep the community happy and healthy ?
February 15th, 2007 at 9:21 pm
So, if the STAR taxes are reduced to tax payers at the school district level, won’t the taxes be made up at the state level, IE: reduction in local property taxes = increase in state taxes ?