The city-state commuter-tax war claimed its first casualty – more than $430 million in proposed tax cuts that are being killed to plug a huge budget hole, City Council officials said yesterday.
The dead tax-cut proposals – which would have saved city residents millions a year in sales tax on books and clothes – were the first signs of how council officials and City Hall are looking to reconfigure a budget that’s been thrown into chaos by Albany’s repeal of the commuter tax.
Other casualties include the plans to eliminate the controversial $15-a-year tax on car owners and cut fees for first-time home buyers.
The real-estate cut alone would have saved people about $3,000 on a house worth $150,000, said Councilman Herb Berman (D-Brooklyn), chairman of the council’s Finance Committee.
The loss of the commuter tax, which brings in up to $360 million a year for city coffers, ”is gonna hurt,” Berman said, ”because it results in an immediate loss of revenue that otherwise would have been available to implement either a tax-reduction package or service restorations.”
City Hall officials didn’t argue with scrapping the tax-cut plans – about half were Mayor Giuliani’s, and half were the council’s – and said budget negotiations are still on track to be fairly smooth.
”We’re still in negotiations with the City Council,” Deputy Mayor Joseph Lhota said. ”We think we’re on the road to amicable” budget talks.
Council officials huddled behind closed doors at City Hall throughout the day to get the new budget hammered out by their June 5 deadline.
Mayor Giuliani had originally outlined a $405 million tax-cut package in his budget plan, and the council had originally proposed about $600 million in cuts before the commuter-tax chaos started in Albany last week.
Giuliani, who’s eyeing a run for the U.S. Senate, said the budget will include $400 million to be held in reserve while the city takes the commuter-tax battle to court.
The council is still talking about getting rid of the sales tax on clothing under $110, reducing the tax for co-op and condominium owners, and providing a child-care credit and earned-income tax credit for working poor families.
The bill killing the commuter tax isn’t a law yet, since Assembly Speaker Sheldon Silver (D-Manhattan) hasn’t given the bill to Gov. Pataki to sign. Until yesterday, the possibilities for how the city would redo the budget ranged anywhere from layoffs to service cuts.
Meanwhile, Council Speaker Peter Vallone backed away from earlier statements that he and Berman wouldn’t rule out trimming the number of municipal workers.
”There’s no reason to believe … that we are anticipating any layoffs,” Vallone said.
But Giuliani said layoffs are ”certainly something that’s on the table.”