Spending Priorities• Provide for the children of the State.• Reward the workers of the State.• Encourage the responsible businessmen and

women of the State.• And make New York safer: improve every

school in the State, make college more affordable, reinvest in critical infrastructure, provide access to health care, and improve our business climate.

The Wealthiest New Yorkers

Executive Budget Senate Democrats

Working and Middle Class New Yorkers

Senate Democrats:Giving Equal Weight to New York’s Working and

Middle Classes, to Children, and to Seniors

The Empire State

The budget of the Senate Democrats raises money differently and spends it differently. It is a document which rejects the notion that the

"Empire State" should be an empire for one man or one party. It is a plan inspired by leadership that balances the needs of all New Yorkers and

will ultimately provide for better outcomes.

Five Budget Packages

I. Providing a 21st Century Education

II. Investing in our Infrastructure

III. A Safe and Healthy New York

IV. Help New York Work

V. Revenue Equity

I. Providing a 21st Century Education1. $20 billion School and Library Capital Construction

Implementing a solution to the CFE decision requires that the State reduce class sizes, make technology investments in schools, and provide a safe learning environment. Each of these goals require capital investment. All school districts in New York would qualify for participation, though funding is targeted at districts with the highest needs. As this is capital spending, no debt service payments will come due until the 2005-06 State fiscal year.

2. Free Community College TuitionDemonstrating our commitment to education, we promote this initiative that expands our guarantee of education from the current 13 years (K-12) to 15 years. In addition, we would make free all programs that train and retrain members of the State's workforce as well as those seeking first-time entry into it. After completing any program, students would receive a tax credit over five years that totals their tuition cost (net of any TAP award they may have received).

3. Keep Past Promises ($100 million)In 1997, concurrent with the adoption of STAR (the School Tax Relief program), the Legislature added a number of new school aid programs (Universal Pre-K, Extended School Day, Reducing Class Size and Full Day Kindergarten being the most notable). Though STAR has continued to grow, the school aid programs have never been fully funded. We are adding $100 million in the 2004-05 school year to begin to fulfill promises made seven years ago.

4. CFE Operating Aid ($1 billion)As a down payment on funding operating costs associated with the CFE court decision, we provide $1 billion for the coming school year. This program would grow to several billion dollars within five years. This is in addition to providing $20 billion in new capital funds, keeping our prior commitments, and restoring all of the Governor's proposed cuts to education.

5. Restore Governor's Education Cuts ($428.9 million) The Governor proposed cuts to a number of education and higher education programs. Cuts were made in the school aid formulas, grant programs, vocational education, cultural education, the higher education access programs, programs for teachers, and TAP. Our proposal restores every dollar for every one of these programs.

6. Public Higher Education ($55 million) Our proposal restores all of the Governor's cuts to SUNY and CUNY, and adds operating funds particularly for additional full-time faculty. In keeping with our theme that we need to spend the State's money more wisely, we show that we value faculty more than high-paid administrators by reprogramming $3 million from administrative costs to finance more full-time faculty at the State University.

We amend the Higher Education Facilities Capital Matching Grants Program by dividing the amount ($350 million) into three identical shares: $117 million each for CUNY, SUNY, and the private colleges. Rather than require a three-to-one match for all projects, we would require the three-to-one match for private colleges only, and CUNY and SUNY would be required to provide a one-to-one match.

II. Investing in our Infrastructure1. Housing Capital Program ($250 million)

We propose the first major housing initiative since the 1955 Mitchell-Lama program. New York is facing an acute shortage of workforce housing and affordable housing throughout the State. We would allocate $187.5 million (75%) to counties within the Metropolitan Transportation Commuter District and $62.5 million (25%) to the rest of the State. The total amount will be divided into thirds: $83.3 million for public housing, $83.3 million for low-income housing, and $83.3 million for affordable middle-class housing. Funds may be used for new construction and rehabilitation. The Division of Housing and Community Renewal will administer the program; the standard allocation procedure will be used to distribute the actual housing once built or rehabbed.

2. Mitchell Lama Housing Project Repair Fund ($5 million)This program, created in 1980, provides a mechanism for construction-related deficiencies in facilities owned by limited-profit housing companies to be corrected or repaired. No new funding has been provided since 1999.

3. Transit aid for NYC Transit Authority ($35 million)The New York City Transit Authority has 81% of statewide ridership, but receives only 63.1% of statewide transit assistance. An additional $35 million will take a small step toward rectifying this inequity.

4. Neighborhood Preservation Program / Rural Preservation Program ($8 million)This restores the Governor's proposed cuts, to bring the programs back to level funding with 2003-04: $10.4 million for NPP and $4.7 million for RPP.

5. Consolidated Highway Improvement Program (CHIPS) ($35 million)We are recommending a $35 million restoration.

6. Restore Cuts to Highways & Bridges ($137 million)We fully restore all highway and bridge projects that were enacted in the 2003-04 State budget and cut by the Governor in his Executive Budget for 2004-05.

III. A Safe and Healthy New York1. Deny Executive's Medicaid cuts ($287 million)

We adamantly oppose any cuts to services or limits on access to health care. Our Medicaid report says it all: Public health insurance is to keep people healthy, not to be a source of budget savings for the State. Note: We are not buying back the Governor's tax increases on health care providers this year, because our priorities are focused on getting New Yorkers jobs, education, and health care. As we begin to see a return on our investments in human capital, our economy will quickly be strong enough to eliminate these assessments.

2. Local cap on Medicaid expenses ($400 million)As our Medicaid report proposes, we will cap local Medicaid expenses at the 2003-04 level of $6.6 billion. The 2004-05 estimate of the local share is $7 billion; the difference of $400 million will be financed by the State.

3. Preferred Drug List & Bulk Purchasing ($218 million in savings)Prescription drug savings of $118 million will accrue to New York through adoption of the Preferred Drug List developed by the state of Oregon. This Preferred Drug List has been vetted independently by a standing scientific committee and has been accepted by physicians, patients, and advocates. Bulk purchasing of prescription drugs will save $100 million. Vermont and Michigan are jointly running a successful program which South Carolina will join shortly pending federal approval.

4. Restore cuts to community health programs & AIDS Institute ($26.9 million)We restore a total of $18.9 million for community health programs such as immunizations for children, adult home quality incentives (the QUIP program), and reproductive medical services (Planned Parenthood).

We also restore $8 million for local AIDS programs including $2.1 million for organizations which serve communities of color. New HIV infections in minority communities throughout the state are at epidemic proportions.

5. Prevent closure of necessary health facilities ($3.3 million)The Executive Budget cuts funding by $3.3 million from the Office of Mental Health and allows the scheduled closure of Middletown Psychiatric Center to go forward. Our proposal, in being consistent with our pledge to prevent the closure of all necessary health facilities, restores the $3.3 million necessary to keep Middletown P.C. open beyond the scheduled April 1, 2005 closure.

IV. Help New York Work1. Day Care Initiative ($100 million)

The Office of Children & Family Services reports that 650,000 children qualify for subsidized day care. Unfortunately, only 183,400 slots are currently available. At $4,600 per subsidy, our proposal would fund another 20,000 slots along with a number of demonstration programs targeted at making high-quality day care more affordable for the middle class. The additional 20,000 subsidized day care slots would greatly assist working New Yorkers and help to reduce the existing waiting list. Fiscal-year impact in 2004-05 is $75 million.

2. Library Initiative ($20 million)

Libraries have become much more than book depositories. They have grown to be safe havens for children after school, workforce training centers, and tools for business development. New Yorkers gather at libraries to learn how to read, write a resume, establish a business, fill in their tax forms, and access the Internet. First-year funding of $20 million, growing to $100 million, would enable our libraries to keep pace with the demands placed on them and the needs of the New Yorkers.

3. Restore funding for Local Tourism Matching Grants ($1 million)

This proposal restores a $1 million cut proposed by the Governor, to provide full funding of $5.8 million. All regions of the State would benefit from this restoration, as would all of the State's residents from increased tourism revenue. Employment in this industry has begun to increase; to withdraw support from tourism promotion now would be foolish.

V. Revenue Equity - Part 1

Deny the scheduled income tax cut for the wealthy ($100 million)The Executive Budget allows the scheduled tax decrease for wealthy New Yorkers to take effect. The rate dropped on January 1, 2004, from 7.5% to 7.375% for taxpayers with taxable income between $150,000 and $500,000. We would postpone this tax cut to more stable fiscal times.

Deny the sales tax increase on working and middle-class New Yorkers (-$400 million)The sales tax on clothing was scheduled to be eliminated June 1, 2004. The Executive Budget permanently repeals that elimination, replacing it with four sales-tax-free weeks. We would deny this tax increase, as it is overwhelmingly shouldered by everyone but wealthy New Yorkers (poor people & tourists will pay it; wealthy New Yorkers will continue to shop elsewhere).

Increase the Property Tax Circuit Breaker (-$250 million)Currently, if household gross income is under $18,000, the maximum credit is $375 for taxpayers over 65 and $75 for those under 65. Renters whose monthly rent payment is over $450 are excluded from this credit. These amounts have not been changed in a very long time. Our proposal would be to greatly expand all aspects of this credit: income limits, credit amount, and the elimination of the rent cap.

V. Revenue Equity - Part 2Establish the Small Business Protection Act (-$250 million)Institute a progressive rate structure on Article 9-A taxpayers. The current structure levies a 7.5% tax on all taxpayers with incomes over $200,000; it levies a 6.85% tax on all taxpayers with incomes below $200,000. Our proposal would create a new structure with rates ranging from 4% to 7.5%. No business will pay a higher tax under our proposal; new businesses and small businesses will pay less under our proposal than under current law.

Decouple the Investment Tax Credit and the Employment Incentive Credit (Indeterminate Fiscal Impact)The current tax law rewards businesses for employment growth only if those businesses have invested in qualified capital, machinery, and equipment. Businesses simply increasing employment get no tax incentives. Our proposal decouples the two tax credits; businesses investing in machinery and equipment receive the ITC and businesses investing in people receive the EIC.

Enact Combined Reporting ($450 million)Enacting combined reporting will resolve the "Geoffrey the Giraffe" problem, whereby companies create sham subsidiaries to which they can siphon off profits tax-free. Sixteen states require combined reporting.

Close Corporate Loopholes ($310 million)(1) Enact the throwback rule to tax "nowhere income." New York does not require companies headquartered in New York to add back profits from sales in other states. Most states do (28 of the 45 with corporate income taxes).

(2) A 1992 U.S. Supreme Court established a federal definition of "business income" that half the states adopted as their own state definition of business income. New York did not, and, as a result of using a narrower definition, does not reach all the corporate income it ought to tax.

V. Revenue Equity - Part 3Empire Zone Reform ($75 million)We propose a complete overhaul of the Empire Zone Program, with a special emphasis on monitoring and stamping out abuse. Specifically, we would:

1. Institute an Empire Zones Control Board to monitor compliance and program effectiveness.

2. Limit all zones to no more than three noncontiguous areas, and allow boundary revisions only once every four years.

3. Require greater cooperation among the Departments of Tax & Finance, Economic Development, and Labor to ensure accurate data collection and that certified businesses are in compliance with all existing regulatory requirements.

4. Modify the tax benefit to tie the size of the credit with the rate of job growth rather than the absolute increase in jobs: the current benefits reward large companies more than small companies for the same percentage increase in employment.

Bottle Bill Expansion ($168.4 million)This proposal would increase the deposit from five cents to 10 cents, and it would expand the types of bottles on which deposits would be made. Unclaimed deposits, currently retained by bottlers and distributors, would be turned over to the State.

Rationalize Air Pollution Fees ($8.5 million)Under current law, industrial polluters are assessed a $45 per-ton fee for the first 6,000 tons of each regulated air contaminant they emit. Any ton after 6,000 is free. New York State has 14 facilities which emit more than 6,000 tons of Sulfur Dioxide (SO2) alone, primarily old, coal-burning power plants or cement factories. These facilities produce 82% of all SO2 emissions in the State, and one facility produced over 57,000 tons in 2003, but paid fees on 10% of its total emissions.

Deny Governor's Forest Property Tax Reimbursement ($3.3 million)The Executive proposes to reimburse municipalities for property tax credits which are available to private landowners who properly manage their forest land. We would deny this assistance program.

1Education

2Health Care

3Day Care

4Libraries

5College Tuition

6Housing

7Property Tax

Relief

8Infrastructure

9Revenue Equity

R

Senate Democrats 1 1 1 1 1 1 1 1 1 9

Executive Budget 0 0 0 0 0 0 0 0 0 0

New York StateBudget Scoreboard