New York, NY – Deputy
Majority Leader and State Senator Jeff Klein (D-Westchester/Bronx) joined with
Senators Andrea Stewart-Cousins (D-Yonkers), Suzi Oppenheimer (D-Mamaroneck),
Ruth Hassell-Thompson (D-Mt. Vernon/Bronx), and outraged homeowners to unveil
his proposal to provide real relief to middle class homeowners who are
struggling under the crippling burden of property taxes.
“Thousands of New Yorkers are looking to us, a public
servants, to develop a solution that helps them continue to enjoy the dream of
homeownership, be able to provide for their families and offer their children a
quality education. It is our responsibility to provide real and immediate
relief for New Yorkers. My plan provides targeted and progressive tax relief
and puts money back in the pockets of those who need it most," said Klein.
Residents of Westchester
counties lead the state paying an average of $7,908 and $7,726 in property
taxes respectively. Suffolk
isn’t far behind ranking 5th with $6,502. School property taxes have grown at
an average rate of 7% per year since 2001-02 (42% statewide since 2000), which
is twice the rate of inflation and twice the growth of average salaries.
This steep rise in taxes has occurred despite the relief provided through
the School Property Tax Relief (STAR
Program enacted in 1997.
"It is unrealistic to expect that our constituents will
be able to get by on good intentions, and the fundamental inequities of the
current property tax burden must be addressed," said Senator Andrea
Stewart-Cousins. "We need relief which does not jeopardize the
ability of our school districts to provide the education that all of our
"I am proud to stand with my fellow Senators in support
of the Circuit Breaker Tax Credit which will provide real relief and continue
the quality education that Westchester
come to expect, " said State Senator Suzi Oppenheimer.New York State
collects $41 billion in property taxes (including NYC), $26.3 billion of which
is collected by school districts.
Klein’s bill has three components:
1. Restoration of the STAR
2. Circuit breaker tax credit
3. Mandate relief for local
The Middle Class STAR
rebate program and New York City Enhanced PIT credit would be restored
immediately for 2009 at the same level of benefits paid in 2008. However,
starting in 2010, rebate checks issued to homeowners under this program will
subtract out the amount of any circuit breaker tax credit already claimed in
the same taxable year. This will avoid duplication of benefits while
insuring that homeowners receive the maximum amount available to them under
The Circuit Breaker Tax Credit would provide targeted tax
relief, beginning in 2010, to households earning up to $250,000 per year and
paying more than a threshold percentage of their income on local school taxes.
The precise threshold of 6, 7 or 8% would be based on rising household income
categories, with the lowest income households (earning up to $90,000 per year
upstate or $120,000 per year downstate) qualifying if school taxes consume more
than 6% of their income. For instance, under Klein’s proposal, a homeowner
making $40,000/year and paying $8,000 in school taxes (or 20% of their income)
would receive roughly $3,920 in tax credits. That’s 70% of the overage ($5,600)
from the circuit breaker point of 6% (of income).
To further reduce the growth in school spending without
depriving districts of the funding necessary to provide quality education
services, Klein’s legislation also provides meaningful state mandate relief.
In addition to rolling back many existing paperwork and reporting mandates that
contribute to escalating school district costs, the bill imposes strict limits
on the imposition of any new state-initiated mandates. Legislative and
regulatory mandates not required by federal law or initiated by local request
would be required to contain detailed costs estimates and a proposed source of
funding if their implementation would cost any district more than $10,000 or
more than $1,000,000 statewide. As an added protection, new state mandates
would not be able to take effect in the middle of a school year, but would have
to wait until they are funded in the next state budget.
District cost containment is also encouraged by an expansion
in the powers of boards of cooperative educational services to offer shared
services to reduce costs to their component districts. Local BOCES would
be empowered to offer added cost savings by forming health insurance trusts
with component school districts to purchase and administer employees’ health insurance
and workers compensation insurance. They would also be able to generate
additional savings by offering shared educational and administrative services
to the Big 4 districts of Buffalo
for the first time.
The cost to restore the STAR
rebate program is roughly $1.5 billion and Klein offered a number of
suggestions on how to generate revenue:
$600 million from the Rainy Day Fund ($175 million) and Tax
Stabilization Reserve Fund ($1.031 billion)
· The Tax Stabilization
Reserve Fund can be used for “unplanned budget gaps” while the Rainy Day Fund
is triggered after five months of economic decline (as measured by a formula
developed by the Division of Budget). According to a 2001 publication by the
Center on Budget and Policy Priorities, prudent use of reserves doesn’t impact
the state’s credit rating. Similarly, using the reserves means “taking money
out of savings in order to increase consumption, which in the short run has a
positive impact on the economy…using rainy day funds allows states to minimize
the damaging effects of spending cuts and tax increases.”
$500 million through Cigarette Tax Revenue Sharing (Klein
Bill – S1906)
Authorizes the governor and the tax commissioner to enter
into negotiations with tribal entities for the purpose of collecting cigarette
taxes on reservation sales to non-tribal customers and authorizes the payment
of one-half of the amount collected to be paid to participating tribes.
to a 2009 NY Association of Convenience Stores report, there is about $1
billion in cigarette sales between Native American tribes and non-tribal
customers that is untaxed.
· 70.63% of
tax collection goes to HCRA (Health Care Reform Act). However, providing
money to HCRA would free up other monies to be used elsewhere in the budget,
$184 million from new Video Lottery Terminal (VLT) games
(Klein Bill – S706)
$375 million Up Front Payment for VLTs at Belmont Race
Track (C. Johnson Bill- S2827)
that the State’s Lottery program can offer electronic table games and
random-number generator games like roulette and blackjack, in addition to
increased revenues from Concord or Aqueduct (2010).
with more than 1,750 video lottery terminals will be allowed to stay open 140
hours a week while those with less than 1,750 video lottery terminals will be
permitted to allow gambling 128 hours a week. Individual racinos will be
able to determine daily hours, subject to approval by the Lottery Director
no racino is allowed to stay open past 2am.
$27.5 million to the State from Rebate Parity for Generic
· Under federal
law, drug manufacturers (both generic and brand name drug manufacturers) must
provide rebates to the state government to participate in Medicaid.
· Brands are
required by federal law to provide a minimum 15.1 percent of the Average
Manufacturer Price (AMP) while generics are only required to provide a
federally mandated flat 11 percent.
· The state
has the jurisdiction to add supplemental rebates owed to the state above the
base amount mandated by the federal government.
o Brands currently pay a supplemental amount in
NYS (the best price offered by the brand name drug manufacturer to any private
consumer and any price increase that exceeds the Consumer Price Index) beyond
the federally required minimum base of 15 percent, which is split between
federal and state governments.
o Generics do not have a supplemental amount
they must pay NYS
generic companies don't incur drug development research costs that brand name
ones do, rebates should be more equal to brand-name drug manufacturers.
costs by generics drug manufacturers to consumers would be limited because
insured pay co-payments, not retail price of drugs.
$400 million from the Tax Amnesty Program
but not collected, known as the “tax gap”;
estimates indicate $4.2 billion in outstanding tax warrants are active and
comprehensive tax amnesty program which would waive penalties and reduce
applicable rates of interest in exchange for full payment of unpaid liabilities
from eligible taxpayers could generate substantial revenues of more than $400
million assuming less than 10% collection rate;
· The last
tax amnesty offered in NYS in 2002 granted amnesty to over 285,000 taxpayers,
totaling over $525 million in gross revenues from an estimated tax gap of
addition to the tax amnesty program, proposals will be put in place to restrict
taxpayers who have outstanding state tax liabilities from re-registering their
vehicles through the state Department of Motor Vehicles and a list of all
taxpayers and the amount of their outstanding tax liability will be made
publicly available on a state maintained website.
$7.869 billion from the Federal Stimulus Fund
stimulus money to NYS was $24.636 billion.
· A combined
$7.2 billion was spent/appropriated in the ’08-’09 and ’09-’10 budgets.
· $17.436 billion
is not appropriated/spent. Much of it has specific purposes or strings
there is $7.869 billion for State Fiscal Relief, including FMAP increases,
education restoration, and education incentive grants. FMAP money can be
used for purposes other than Medicaid while federal stimulus money for
education can replace other general fund money used for education, thereby
freeing up money for property tax relief.
$104.25 million + by Replacing High-Priced Consultants with
State Labor (based on PEF projections for FY09-10)
to the Public Employees Federation, the state can save hundreds of millions
spent on costly consultants who are being overpaid to do the jobs state workers
can do at a much lower cost (even after accounting for health care and pension
the state spends almost $3 billion annually for consultant services.
· The Public
Employees Federation, relying on Spitzer administration data, has estimated
that taking a number of other steps, such as requiring the state Division of
the Budget to examine each consultant contract to determine whether state
employees could do the work at a lower cost, would save at least $250 million
over the next two years, eventually increasing the savings up to $750 million
· The Fiscal
Policy Institute has estimated that curtailing consultants for computer
programming and other professional services would save $500 million over the
next 3 years, and $500 million per year thereafter.
· Last year,
the Office of General Services, which manages state facilities, hired more than
309 full time equivalents as consultants; the companies these consultants work
for billed the state an average annual salary of $142,405 per consultant,
almost $50,000 more per employee than it would have cost state employees to do
the same work.
Assembly proposal released in March 2009 by Speaker Silver would require that
all state agencies that spend at least $15 million per year on outside
information technology contractors would be required to reduce that amount by
50 percent-a savings of over $250 million over the next three years. The
provision would require that state employees carry out much of the work
currently performed by private technology consultants. All consulting services
contracts would have to include a specific plan for training agency employees
to eventually take over such responsibilities. Additionally, the proposal
requires that the use and cost of private technology consultants be disclosed
in the annual Executive Budget proposal.
save up to $500 million a year by stopping sweetheart deals with high-priced
consultants,” said Frank Mauro, executive director of the Fiscal Policy
Institute. “In most cases in which New York State contracts out for the
performance of professional services, state taxpayers do not get the benefit of
reduced costs nor does the state get higher quality of work.” –
June 13, 2005
· “We know
that more often than not, privatization is more costly to the taxpayers of New
better job and [they] do it for less.
lot more respect from the leadership in this state” – Sheldon Silver -
June 13, 2005
The circuit breaker would cost $2.5 billion and would be
addressed in the 2010 budget cycle.