Are We Talking about the Same NY Budget Here?

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Well, a deadline is met again and New York State budget preparers jump up to take credit like a "D" student who has finally learned he needs to do his homework on time.

But has the "D" student turned in something that will make the grade? How is this state budget that sets (another) new record for spending being judged? Well, if you were simply to listen and read the comments and quotes about it… you might get a headache. Or you might think there is a strong bout of collective bi-polar disorder out there:

—"It’s an accountable, responsible, responsive budget." said State Sen. Majority Leader Joe Bruno to Karen DeWitt on 3/30/06.

—"The budget approved by the Legislature will be politically popular, but it is fiscally irresponsible." Press release from Tom Suozzi’s campaign. Suozzi is a Democrat running for governor on 3/29/06

As you know by now, this budget has something for everyone. Tax rebate checks for voters (just in time for the fall elections), increases for every conceivable local government. In Rochester, Bob Duffy and Manuel Rivera (the mayor and the city schools superintendent respectively) are beside themselves with excitement over the increase they landed in the budget. And so are others:

—"$11.2 Billion Albany Win for Mike on Ed Spending" – New York Daily News headline on NYC Mayor Mike Bloomberg’s reaction to landing more cash for school aid.

—"Last night at around 9:30 I was literally jumping up and down on my couch in my (Albany) office." – State Sen. Nicholas Spano, R-Yonkers, in a quote to the Journal News on 3/30/06. This was in reaction to more state aid for the city of Yonkers.

Well… some others:

—"In the New York of the real world, we can not afford a government that operates like this." – The New York State Business Council, a letter to Assembly Speaker Sheldon Silver and a press release on 3/29/06.

—"Today the Legislature is passing a tax, spend and borrow plan that will lead to very large out year deficits. Their budget not only dramatically increases spending, but provides no reform of the two areas with the largest spending growth – Medicaid and education." – John Faso, Republican running for governor in a press statement on 3/31/06.

But surely everything is okay for the governor… and those who want to replace George Pataki next year:

—"We are assuming the governor will see the wisdom of our budget."- Assembly Speaker Sheldon Silver to the Jay Gallagher and Cara Matthews of GNS on 3/29/06, talking about Pataki’s willingness to accept this budget plan.

—"The whole thing is like a big, exploding cigar for the next governor. ‘Here’s a Cuban’ … Boom!" – E.J. McMahon, director of the Manhattan Institute’s Empire Center for New York State Policy, in an Associated Press report on 3/29/06.

—"Like everyone else, I am wary about the way spending is being increased at some levels." – said Eliot Spitzer, the Democratic candidate for governor in the same article.

But what did you expect… this was a budget with a surplus. And what else do you do with a surplus. You give it back, right?:

—"One of the things that is very important to me is that the state give back to hardworking taxpayers their money." – state Sen. Thomas W. Libous, R-Binghamton to Binghamton Press and Sun Bulletin on 3/30/06, on the end of year budget surplus.

—"Legislative leaders are passing up a chance to reduce New York state’s excessive debt burden — already one of the highest in the nation — and to achieve structural balance between revenues and spending." Citizens Budget Commission statement on 3/29/06.

—"Even when the state is flush with money, the poor don’t get a cut of the pie." – Mark Dunlea, Associate Director of Hunger Action, a press release on 3/29/06

—"Nobody seems willing or able to stop the politicians in Albany from spending themselves into serious fiscal trouble, not so much for the budget year ahead but for many years after."- Newsday Editorial on 3/26/06

So what do we say about the "D" student who gets his homework in on time? Most of us don’t pat him on the head for simply meeting a deadline. We say "about time." But in this state, we are not yet grappling with what the student has wrought with the latest budget assignment. It’s spending more than before. It’s giving away plenty. But somehow we know that it still has begun to scratch the surface when it comes to Albany’s fiscal situation. And so the reaction sounds slightly inconsistent from report to report. Sometimes within the same report – by the same source.

—"If we didn’t get the state aid increase at that level, I never would have been able to deliver a budget with a 0-percent tax increase." Shawn Hogan, mayor of Steuben County city of Hornell, to the Hornell Evening Tribune on 3/30/06.

—"I think we spend too much money in New York state. I think we need to rein in that spending." – The same Mayor Hogan in the same article.

I don’t blame Hogan. I think we’re all a bit in a bind at what’s being offered by Albany.

At least it’s on time… I guess.

Everybody Wins (So Who is Losing?)

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Rochester vs. Buffalo?

How about Rochester and Buffalo. And Syracuse for that matter.

On the same day that this area’s press reported an increase in state aid for Rochester and called it a team victory led by Mayor Bob Duffy the Buffalo News had a different story. The cities of Rochester and Buffalo, the Buffalo paper reported, had the same lobbying firm working on their behalf in Albany.

So it appears the hard-working, miles-driving Duffy had some help. Now, no one would begrudge him professional lobbying for such an endeavor. He’d be crazy not to do it. It’s part of doing business in Albany.

And the spokespersons for both Duffy and Buffalo Mayor Byron Brown told the News that they were fine with the two cities using the same firm. Of course they were.

Because the win on Friday wasn’t just a win for Rochester (and please remember that the brokered deal in a Senate-Assembly conference committee still needs to be approved as part of a final budget). Everybody got a nice piece of the action.

Just compare what the two cities were going to get under Gov. George Pataki’s proposed budget and what the tentative deal for more state aid to cities gives them.

—Rochester’s recommended funding from Pataki’s budget – $59.6 million. The latest legislative proposal gives the city $71.6 million

—Buffalo’s recommended amount in the governor’s budget – $128.6 million. Friday’s legislative deal gives that city $142.3 million.

Now let’s add in Syracuse for good measure. They moved from $54.2 million under the Pataki budget proposal to $63.2 million under this latest deal brokered by the Senate-Assembly committee. (Here was the Syracuse paper’s story – a more subdued take. Yonkers made out similarly well.

Go figure that calls for more money would be heard by state legislators during an even-numbered (meaning election) year. Shocking. And the conga line for that state cash is starting to file in.

So are these state lawmakers and the governor making the hard choices – finding places to reduce for those they increase? Are you kidding. The governor’s proposed budget back in January was a 4.1% spending increase — and that’s without the additions being plopped in since then, like the increased aid to cities.

You might have thought that New York state was dealing with tough economic times. Or at least Upstate New York. You would have thought this would create a budgetary mindset that identifies the most important services for continued financing and then looks to reduce those deemed less worthy. In other words, creating a priority list. But the state doesn’t go for such things.

Will Bob Duffy? Go back to the story by Brian Sharp in the Democrat and Chronicle and you’ll find something worth clipping. Duffy says that things will change in the city budget. He seeks efficiency. He says cuts are coming. He asks for patience from the public. We should give it.

Because that’s when Duffy’s real work begins, or at least ought to begin. He should make the hard choices…  and that means some will have to lose out. Avoiding them means letting everyone win. And then who loses.

Some Chatter about the Sales Tax Intercept

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So you’ve read plenty here about the Medicaid remedy that could very well be a sales tax nightmare in Monroe County.

Take a listen as the head of the Town Supervisor’s Association in the county explains why the sales tax "intercept" would be tough on their budgets. But also listen as the president, Tracy Logel, talks about how it should get everyone to stampede toward Albany.

And listen for a question… can the sales tax "intercept" be separated from the sales tax sharing?

Use the comments section below for your answer, if you like. But first click over to the audio file and have a listen.

Everybody Wants Some (Part II)…

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So Joe Robach is screaming about Rochester’s fair share.

And Mayor Bob Duffy organizes demonstrations with his "Fair Share Coalition" to show why the city needs more state aid.

Meanwhile Superintendent Manuel Rivera releases a budget that requires much more in Albany money.

And then yesterday the state courts reaffirm a court order to increase state dollars in the billions of dollars to New York City schools. The massive increase in aid to city schools must be done as
part of this budget negotiation, according to the court ruling.

This space asked this just a few weeks ago… and it will ask it again. With everyone sticking their hand out for more… do these people expect that someone else with do with less? Duffy told the Democrat and Chronicle that he never meant for Buffalo or Syracuse or Yonkers to get less in state aid for Rochester to get more. So does the money come from another state budget item?

Or does it mean new taxes… or fees… or an increase in existing taxes and fees?

Why is it that we never hear people in government talk about the idea of making priorities? Cities need it then we’ll take if from (fill in the blank). Schools need it then we’ll raise the (tax/fee/revenue) to cover it. Instead we have a mentality of rushing to the trough. Those who shove their weight around the best gets the snout in deepest.

And, finally, how does all this boosting of state aid and required additional spending jibe with the other big call we hear directed at the state of New York: That it needs to cut the cost of government to be more competitive?

Did Someone Say Appalachia…

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So let me get this straight – when Eliot Spitzer likens Upstate New York’s economy to Appalachia – it’s a slur.

But when Assemblyman Joe Morelle says virtually the same thing a month earlier (as a rebuke to a rosy picture of the Upstate economy painted by an Empire State Development Corporation official) — well, then no one is bothered.

Spitzer’s link of Upstate’s economic woes and Appalachia is a problem.

But when the lead sentence of a 2004 report by an affiliate of the New York State Business Council says "Is Upstate New York going the way of Appalachia?"– well, that’s no biggie. (This item is contained in a report by Albany correspondent Karen DeWitt )

Republican gubernatorial candidate Randy Daniels was among the GOP folks offended by the remarks (or at least his spokesman was). I suppose the man who once was New York State’s alternate to the Appalachian Regional Commission ought to weigh in on this. I guess.

Republicans are making this out to be akin to when 1982 gubernatorial candidate Ed Koch talked about upstaters wearing gingham dresses. Koch, of course, was talking blithely about upstate – characterizing it. And doing it falsely.

Does the same sense of falsehood come through with Spitzer’s comment? Ask Sandy Parker, our Rochester Business Alliance president. I’m sure those who want to see a serious debate about curing Upstate’s economic ills are thrilled about this debate over the applicability of "Appalachia."

Far be it for anyone to suggest that this is the political equivalent of throwing anything against a wall to see if it sticks.

The Lonely Fight?

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Here’s what sharing has gotten us in the Rochester-Monroe County region: An acute awareness.

Because of sharing – specifically the sales tax money – leaders from the county government down to the smallest village will understand the pain of unbridled increases in Medicaid spending. That awareness could lead government leaders here to be a unified voice aimed at Albany

The problem, however, is that few other areas may join in any potential lobbying effort. That’s because the sharing you see in Monroe County doesn’t happen in most other places.

We have chronicled how a state legislative remedy called the sales tax intercept may be the escape hatch Monroe County leaders are looking for. The county is desperately trying to get away from the increases in Medicaid costs – and a provision in the state’s 2005 reform of Medicaid essentially allows the county to trade a big slice of sales tax proceeds for the responsibility of paying into Medicaid. Monroe County wants to do it. Some want it badly.

As we’ve also told you, Monroe County has a unique set of circumstances with sales taxes. It shares far more – far more – of the revenue with the city of Rochester, along with other municipalities and suburban schools within its borders. Predictably the leaders of local governments and school districts are up in arms over the prospect of losing sales tax revenue. As we will report on WXXI’s Need to Know program this Friday,  the president of the town supervisors association says the organization will take a stand opposing this.

But… and here’s the point… the president of that association said the towns should not just dig in their heels, cross their arms and look the other way.

Town Supervisor Association president, and Chili Supervisor Tracy Logel, believes that town and village leaders, the school district board members, all ought to lock their arms with County Executive Maggie Brooks, storm Albany and tell them to radically alter how the state spends on the Medicaid program. Logel ought to know. Before she became Chili’s supervisor, she was a Monroe County Legislator who passed budget after budget. She served as the legislature’s chair of the Human Service Committee, which oversaw Medicaid. She knows the bind the county is in.

This solidarity was something County Legislative President Wayne Zyra hoped for as a byproduct when he proposed the county opt into the "intercept" solution. Everyone screaming at Albany.

It’s amazing what it takes to galvanize a group. Just make sure the circumstance dips into a person’s  wallet. That’s what we have here in Monroe County. (And let me be clear – this still could spin out of control into bickering, rather than solidarity. Especially when it gets to alternatives – which the town supervisors association will admit they lack).

But should Rochester-Monroe County get some kind of lobbying voice – the region may be awfully lonely. Most of the counties who receive sales taxes share little of the money. There won’t be a political tug-of-war when the vast majority of county governments decide whether or not to accept the "intercept." No shared pain… no direct impact. No galvanizing force.

So the conversation on Medicaid spending that may start strong here could wane once it crosses the county line.

It’s a shame, really. It’s a conversation that everyone in New York ought to be having.

This “Intercept” Solution is Real…

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One last word on the sales tax intercept: It’s a real possibility… and you can bet it will mean angst among those who run governments here. (Click here then here for the previous columns)

Just listen to County Executive Maggie Brooks talk like a government leader stuck between that rock and that hard place.

"The intercept – on its own – is divisive. It solves our problem, but at what cost," she said soon after Monroe County’s Legislative President Wayne Zyra introduced legislation to embrace the move.

But then Brooks added this: "The intercept can be part of the solution."

So she’s willing to talk. Brooks won’t do the "intercept" solution alone… but would go forward if it were paired up with something else that would make the other municipalities feel the bite less.

This means negotiation. And that means ruffling feathers. Because such a conversation will get under the skin of town supervisors, suburban school board members and village mayors.

The "intercept" is more divisive in Monroe County than it would be anywhere else in the state. That’s because of the way the sales tax money gets divvied up here. Most counties take a large share… if not all of the share… of the sales tax for localities.

Not Monroe County. Formulas dating back 20 years – including the now famous pact brokered by former County Executive Lucien Morin and former Mayor Tom Ryan – pushes out millions of dollars to government bank accounts large and small. Look at the breakdown using actual numbers from 2004:

**Monroe County – $117.4 million
**Rochester – $117.4 million
**The county’s 19 towns – $77.1 million
**The county’s 10 villages – $8.5 million
**The 24 suburban school districts in the county – $53.9 million.
(Go here for a fuller accounting)

These are big numbers. The kind of dollars that are essential to leaders in Gates and the Greece school district and East Rochester. To enact this "intercept" would mean a reduction in the tens of millions of dollars for local governments.

Brooks doesn’t want to sting the locals. But she can’t take the idea off the table. It’s the only solution that could eliminate the Medicaid burden, one that gets weightier as each year goes by.

Give Wayne Zyra credit for putting this out there now… and not springing the sales tax "intercept" on unsuspecting municipalities at the last minute. Give Brooks some as well for not dismissing it out of hand.

And over the next months (could be six, could be nine, could be twelve)… the political class of Monroe County get to relive the debating.. the politicking… the negotiating around the big dollars raised by taxes on purchases. In the past, those talks have sometimes lead to an amicable solution. And sometimes those talks have gotten ugly.

How will it be this time around?

Distributing the Pain

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Wayne Zyra wants a dialogue on the budgetary pain of Medicaid. It’s a talk about spreading that pain.

He may have to get over the shouting before the talking begins.

On Tuesday, Zyra – the Republican President of the Monroe County Legislature – submitted legislation that would have county government accept a state solution to the high cost of Medicaid – the sales tax intercept.

We’ve gone over the concept – the county gives up making those fat payments to the Medicaid program in exchange for giving up a fat chunk of its annual local sales tax proceeds. The problem – however – those sales taxes go not just to Monroe County’s budget… but to the budgets of the city, the towns, the villages and suburban schools. (An audio Political Notebook gives another stab at explaining this trade-off… have a listen)

The first-blush reactions are predictable. Predictably negative.

Brighton Supervisor Sandy Frankel (in an email to this website): "I don’t believe that residents in Brighton or any other part of Monroe County want to take a step backwards by having the state or county push mandated costs down the ladder."

Pittsford Town Supervisor Bill Carpenter (to WXXI’s Peter Iglinski last week):  This sales tax "intercept" only shifts the burden down to local governments and isn’t a good alternative.

Other initial reactions are more surprising – only because they show political fissures where you wouldn’t usually find them. County Executive Maggie Brooks, a Republican like Zyra, said about the "intercept" idea – that she doesn’t want to go there… that she’s not on board.

Zyra said the county legislature is taking the only option that seems viable. Brooks, he said, has taken a property tax increase off the table. And, he said, just a few years ago, the Rochester delegation to the state legislature called a proposed sales tax increase of a half penny "dead on arrival."

The state approved this sales tax "intercept" as way to give counties relief, he said. "This solution is within our control… and it fits within the framework we’ve been given," he said.

To Maggie Brooks, Zyra simply said: "Unless she’s going to come up with $50 million another way… she may have no choice."

Don’t tell Assemblyman David Gantt that, however. The Democrat said that the county’s sales tax sharing arrangement was also passed as state law. He believes Monroe County’s desire for the "intercept" is trumped by that previous agreement. (There is more of what Gantt said… to WXXI’s Bud Lowell, here)

But Gantt – like Brooks and Frankel and Carpenter – said it’s not fair to push the costs down to local municipalities and school districts.

Zyra expects this reaction. He wants to talk it over. Yes, the county legislature’s Ways and Means Committee will get his proposal for accepting the "intercept." But he doesn’t expect a quick vote. He wants a discussion – a chance to explain this to other governmental leaders. A chance to let the conversation percolate.

"I want to do more," Zyra said. "We need a community-wide discussion on budget issues across the board."

But he will also make this point: The arrangement of paying for Medicaid costs has never been fair. The state has never seen fit to curb the rising price tag (just as an aside – that involves a governor and state Senate majority from Mr. Zyra’s Republican Party as much as it does the Democrats in the Assembly).

And while the county stares down the possibility of big tax increases to meet the Medicaid problem, other local municipalities haven’t faced the same dire circumstances. We’re in it together, is his point. That means all must suffer the pain, rather than one government in the county.

"There’s an imbalance," Zyra said. "A dialogue on this has to happen. If this doesn’t get it going, I don’t know what will."

Oh… it will. Because… not everyone agrees with his assessment.

Is it a Scream at Albany?

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Finally a solution for Medicaid costs that Monroe County can control.

And yet should county leaders try and do it – it might bring down the political house locally.

The solution has a rather militaristic sounding name – the "intercept." And it deals with the state sales tax. It works this way (according to the Empire Center for New York State Policy): counties have a one-time option to trade their Medicaid payments to the state in exchange for the state grabbing more counties sales tax take. In other words, the state would "intercept" part of a county’s sales tax booty to assume paying that county’s Medicaid freight.

The state legislature included this solution as part of Medicaid reforms last year. This was the same set of reforms that capped the growth of Medicaid costs to the counties at 3 percent.

But here is the kicker. The report by the Empire Center (an arm of the Manhattan Institute) says that some counties ought to take the offer. The ones that don’t see a growth in the total local share of sales tax that is greater than 3 percent. The reasoning goes what those counties would give up in sales tax money is less than the increases in Medicaid.

Among the counties listed is Monroe.

This legislation gave a short window for counties to accept the "intercept" – from from mid-April 2007 to the end of September 2007.

But that didn’t stop Republican Monroe County Legislative President Wayne Zyra from announcing last week that the county would consider the "intercept."

And predictably it brought howls from local leaders. After all the local share of Monroe County’s sales tax take goes into the budgets of the city, of the towns and villages, and of suburban schools. So no wonder Republicans who run towns, those who represent suburban schools and Mayor Bob Duffy might get edgy.

Zyra’s response: The Medicaid cost is a community problem. It needs a community solution.

But even County Executive Maggie Brooks acted as if the "intercept" idea was radioactive.

This solution, however, isn’t dead. Even with the strong words by Maggie.

"I don’t like the idea of a solution that leaves other jurisdictions in the lurch," said Republican Majority Leader Bill Smith. "But if it comes down to a matter of survival, we may have to do it."

As I’ve written earlier, the county may have no choice but to tap the sales tax to balance a projected shortfall in the next two years that Brooks has estimated to be more than $102 million.

But I thought it would be a sales tax increase as so many other counties have done. Ah… but wait a minute… isn’t this "intercept" just a way to whet our whistle for a sales tax hike? Wouldn’t the threat of losing sales tax proceeds force many in the community to go in the other direction and support a sales tax increase.

Smith said that this stalking horse theory of mine doesn’t wash. Not that he dismisses a sales tax increase. He just doesn’t think that the state legislative leaders would come together to raise a sales tax for Monroe County. For, as you know, any increase in the sales tax would need Albany’s blessing.

This "intercept" puts matters directly into the county’s hands. They can approve whether to accept it or not, by a simple majority vote. This sits well with county leaders who feel as though they are either ordered by the state to accept costs… or (in the case of a sales tax hike) have to go on bended knee for a favor.

The New York State Legislature approved this measure – and put the "intercept" in the county’s hands.

And, should Monroe County really pull that trigger, then some would see them inflicting a "stuff-rolls-down-hill" kind of pain on the municipalities within the county.

Smith simply says: "Go scream at Albany."

Perhaps this is just a way to wake up the slumbering lobbying muscle of others in the county to get on the state for real Medicaid reductions.

Or maybe it’s a way to settle us in for a sales tax hike.

Or perhaps we will really see an "intercept" – and then an inter-county political skirmish that we haven’t seen here in sometime.

Everybody Wants Some…

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Who living in or around Rochester would argue with the city getting its fair share of state aid?

Just look at that show they put on at City Hall on Thursday. All those representatives from business to government to the non-profit arena. How could Mayor Bob Duffy not crow?

All those numbers and charts telling you how Rochester gets rooked when you compare the state money it gets to places like Syracuse and Buffalo. It’s a convincing case, right?

Now let’s see what you think about this story out of Long Island… the other end of this fair state.

Tom Suozzi, the Nassau County Executive (and gubernatorial candidate), says that school districts there have 7.5% of New York’s total school population. But they only get about 4% of the state’s school aid. It’s not fair, he says. He and others participating in a letter-writing campaign, want about $600 million more for those schools.

Just a fair share.

And speaking of "fair shares" – there is still the court decision looming out there that says New York City schools deserve billions more in state aid. It’s a ruling that has put some advocates in mind to take political action on legislation that would get more money to all distressed schools. And opinion-makers say – of course this should be done.

So what’s the point of all this?

Everybody has a case to make for more state aid. And individually they stand up very well. For those three cases noted above, I’m sure there are plenty more around the state. And with all these "fair share claims" being made – just where are the corresponding reductions to pay for them?

What’s that you say?

There likely won’t be reductions?

So then how will New York State really… really… get a handle on rising state expenses?

Just wondering. You have any answers?