ALBANY – Gov. Pataki proposed a record $83.6 billion state budget yesterday, raising school aid, cutting taxes – and unexpectedly costing New York City $114 million.
The city’s surprise loss of revenue would result from Pataki’s plan to eliminate the 24-year-old Stock Transfer Incentive Fund, which has provided more than $100 million annually since 1977, when it was created to help the city escape bankruptcy.
“Once again, we’re being penalized for our good fiscal management,” snapped Mayor Giuliani’s Albany lobbyist, Anthony Piscatelli, who compared the loss of the fund to the state’s unexpected repeal of the city’s commuter tax two years ago.
Giuliani said, “We’re going to fight that . . . It’s clearly the way they’re trying to fund the additional money for education.”
But Pataki insisted his budget would have “a net positive impact” on the city of some $227 million when all his spending increases were tallied.
Pataki spokesman Joseph Conway also contended the fund was no longer needed because “with a nearly $2 billion surplus, New York City’s fiscal crisis is obviously over.”
Pataki’s budget for the fiscal year beginning April 1 – which raises spending by 5.3 percent – would cut state taxes by a total of $530 million, $230 million of which would be in the previously announced Co-STAR program to reduce county property taxes.
The remaining $300 million would be earmarked for job-creating tax cuts in targeted upstate areas.
The budget also would place a whopping $1.4 billion – the state’s end-of-the-year surplus – in a “rainy day” reserve fund to help insulate against an economic downturn.
The new budget would raise state aid to local school districts by $382 million to $14.1 billion.
Just over $146 million, or 38.2 percent, of the increase would be earmarked for city schools.
Pataki, in a strongly upbeat assessment of the state’s fiscal condition, said his administration deserved credit for dramatic improvements in New York’s financial condition.
“Over the course of the past six years, New York has made a steady climb toward a state of economic strength and prosperity,” Pataki said.
“We believe that a limited government which taxes less provides far greater opportunities than a big government that taxes more.
“We believe that when spending exceeds what is absolutely necessary to sustain that limited government, it diminishes the freedom of our people by limiting the financial decisions they can make.”
Pataki, however, also took credit for record levels of spending – for education, health care and environmental protection – in other parts of his budget.
Democratic and Republican lawmakers quickly declared Pataki’s education aid increase far too low.
Assembly Speaker Sheldon Silver (D-Manhattan) said Pataki was actually cutting state school aid by $1 billion, contending that existing funding formulas would generate some $1.5 billion in new school spending.
“I am, once again, dismayed and disappointed with the governor’s proposed cuts to education,” Silver said.
“As we set new standards and goals for our children, the governor continues to undercut these efforts.”
State Comptroller Carl McCall, a Democrat interested in challenging Pataki next year, sharply attacked the governor’s spending proposal.
“After six years and seven budgets, all he’s given us is half solution and delaying tactics,” McCall said.
Change-NY, a conservative-oriented anti-tax group, dubbed Pataki’s plan “a good news, bad news budget.”
“While the governor prudently continues to build up a surplus and avoids one-shot fiscal gimmicks, today’s state budget irresponsibly increases spending beyond inflation, fails to include broad-based income tax cuts, and does little to overhaul New York’s failing inner-city schools,” said Thomas Carroll, the group’s president.
The budget also would slice $130 million in state Medicaid spending for nursing homes and home health-care agencies, triggering a total loss of $350 million in federal, state and local aid.
“The state Legislature cannot take these Medicaid cuts seriously, especially with the crisis shortage of health-care workers at all levels,” warned Healthcare Association President Daniel Sisto.