January 25, 2008
NYSAC 2008 Legislative Conference
Join close to 1,000 county colleagues in Albany next week as we gather at NYSAC’s 2008 Legislative Conference. Governor Eliot Spitzer, Senate Majority Leader Joseph Bruno, Senate Democratic Leader Malcolm Smith, Assembly Speaker Sheldon Silver, Assembly Republican Leader Jim Tedisco, Attorney General Andrew Cuomo and Comptroller Tom DiNapoli will all speak at the conference.
The line-up of workshops will provide valuable insight into the issues and challenges facing today’s county leaders. For more information and to register, visit our Website at www.nysac.org.
Proposed Budget Includes Pre-K Cap and Comes with Cost Shifts to Counties
Governor Spitzer’s Executive Budget for State Fiscal Year 2008-09 offers counties cost shifts and other state aid reductions that the State claims are offset by a proposed “cap” on the county share of the Preschool Special Education Program. Overall, the proposed budget increases state spending by 5.1 percent to $124.3 billion, including an increase of $1.46 billion in school aid, an almost $1 billion reduction in health care spending growth and a delay in planned increases in State property tax rebates.
NYSAC has made the removal of counties from the fiscal and programmatic responsibility of the Preschool Special Education Program its legislative priority for 2008 because the current program creates a significant financial impact on local property taxpayers, yet state policy limits a county’s administrative ability and restricts fiscal oversight. In response to NYSAC’s request, the Governor has proposed to limit the annual growth in Pre-K costs for counties, outside the City of New York. Beginning July 1, 2008, the Pre-K “cap” would limit growth in county costs to 4 percent in the first year, 3.5 percent in the second year and 3 percent in the third year and annually thereafter. The Governor estimates that this proposal would reduce the growth of county payments by $12 million in 2008, $31 million in 2009 and growing to $90 million when fully phased-in.
However, despite this positive development, major cost shifts to counties are highlighted by two significant changes in state policy that will require counties and the City of New York to pay an increased share of welfare benefits and the full cost of local youth detention facilities. In total, these cost shifts will provide an estimated $76 million in State budget savings in the first year. These changes, coupled with other cuts in state aid, and mounting losses for county operated nursing facilities, add to the overall negative impact on counties from the proposed State budget.
The following are highlights of the 2008-09 Executive Budget impacting counties by major program area.
Preschool Special Education
Contact: Jessica Morelli
The 2008-09 Executive Budget proposes to limit the growth in expenses for the Preschool Special Education Program for counties, excluding New York City, effective July 1, 2008.
Specifically, the plan would:
- Establish a base year from the total approved county costs for services provided in the 2006-07 school year or the average of the projected total approved claims of the county subject to state reimbursement in the 2005-06 and 2006-07 school year depending upon which is higher;
- Apply an inflationary trend factor of 4 percent in the first year, 3.5 percent in the second year and 3 percent in the third year and every year thereafter;
- Increase State reimbursement to counties from 59.5 percent to 100 percent once the county’s approved claims on an annual basis exceeds the capped amount;
- Require school districts to now be liable for what was the State’s share of evaluations and Committee on Preschool Special Education (CPSE) administration. Counties will continue to pay 40.5 percent of the cost of evaluations and 40.5 percent of the cost of the CPSE administration. However, school districts would now reimburse the county 59.5% for these expenses.
The State Education Department is granted the ability to do regional Related Services Only (RSO) rates, beginning July 1, 2008. Counties will continue to pay providers for RSO, however, costs will fall under the CAP. These regional RSO rates are subject to approval by the Director of the Division of the Budget. Examples include physical therapy, occupational therapy, speech therapy, nursing, 1:1 aides, etc.
In total, the Governor estimates that this proposal would reduce the growth of county expenses by $12 million in calendar year 2008 and $31 million in calendar year 2009.
Medicaid
Contact: Ken Crannell
Of particular interest to counties, the Executive Budget fully implements the local Medicaid Cap, which limits local Medicaid payments in 2008 to $6.7 billion, an increase of $185 million or approximately 3 percent over 2007. While this program does not save counties money, it continues to provide cost avoidance for counties.
Keeping with the current formula, all Medicaid administrative expenses incurred at the local level will be fully reimbursed under the Executive Budget, including expenses associated with State initiatives to expand health care coverage.
While the Medicaid Cap limits a county’s financial liability toward the Medicaid program, counties that operate public nursing facilities will be negatively impacted from many of the specific proposals recommended by the Governor.
These proposals include:
- A reduction in nursing home “rebasing” transition payments authorized in 2006-07 but not yet implemented because the State has not received Federal approval for $85 million in State share savings;
- A reduction of the nursing home inflationary trend factor by 25 percent beginning April 1, 2008;
- Restructuring of the financially disadvantaged facility funding to make public nursing facilities ineligible for the funding; and
- The assumption of $10 million in savings from implementation of the Berger Commission recommendations.
Compounding the impact to county operated nursing facilities are the negative impacts of federal limits on the Medicaid reimbursement available to county nursing facilities. Under current rules, a state can make Medicaid payments to eligible public facilities up to what Medicare pays for the same service. According to the DOH, their current calculations indicate that county nursing facilities have reached their federal maximum of allowed Medicaid reimbursement, thus, preventing the county homes from benefiting from nursing home “rebasing” and eliminating the potential for an Intergovernmental Transfer payment.
Lastly, the Executive Budget preserves the NYSAC supported public nursing facility State grants that provide fiscal relief to public nursing facilities. Under this plan, public nursing homes will receive $35 million in 2008-09 and $100 million in 2009-10 and years thereafter. In calendar year 2009, the public facilities should receive approximately $84 million based on their ratio of Medicaid patient days, paid on a quarterly basis.
Public Health
Contact: Jessica Morelli
The Executive Budget eliminates the Early Intervention Cost of Living Adjustment (COLA), retroactive to the first year. The State estimates a savings of $32.7 million in the first year and $16.7 million per year thereafter; $29 million county savings in the first year. NYSAC has long advocated for this policy.
The budget includes no changes in General Public Health Works (Article 6) funding.
The Executive Budget proposal expands the “Public Health Leaders for Tomorrow” initiative, which offers funding for local public health leaders to obtain ongoing education in recognition of identified workforce needs. It also provides state funding for local preparedness infrastructure to maintain their capacity to respond to public health emergencies. These funds are needed to address the continued erosion of federal dollars for emergency public health response. There is also increased funding for lead prevention efforts, with a focus on primary prevention.
The proposal includes new chronic disease funding, including appropriations for healthy eating coalitions as well as the Healthy Schools Act, which expands access to nutritious meals for school-age children. The governor also proposes Medicaid reimbursement for asthma and diabetes educators and social workers for school-based clinics.
The Governor’s Budget also includes $20 million in additional funds for essential local public health services, which include disease control, family health and environmental health services.
The Governor did not include a proposal to address Early Intervention Third Party Health Insurance in the Executive Budget.
Welfare\Child Welfare
Contact: Ken Crannell or Jessica Morelli
Since 1935, counties and New York State have equally shared in the cost of public assistance at a 50 percent state, 50 percent local split. However, the Executive Budget proposes to break this historic state/local fiscal partnership by shifting a portion of the State’s cost for the Family Assistance and the Safety Net program. The proposal requires counties to now pay 2 percent more, while the State share would decrease by 2 percent. This proposal is projected to generate up to $40.5 million in General Fund Annual Savings, and is based on an immediate effective date of April 1, 2008.
Additionally, the budget implements a local share for the cost of carving out two parent families from the federal work participation rates by removing the local district hold-harmless provision.
In yet another unprecedented break in the state/local partnership, the Executive Budget proposes that, effective April 1, 2008, counties will assume the full cost of youth placed by the Family Court in secure and non-secure detention facilities. Currently, the State reimburses counties 50 percent for secure and non-secure detention costs. The State’s estimated savings for this initiative is $35.4 million.
The policy rationale behind this cost-shift is the State’s recommendation that counties find alternative, diversion programs for these youth, such as community-based solutions. However, the irony of this initiative is twofold:
- The State is currently closing many of their state-owned and operated secure detention facilities, which will result in immediate State savings; and
- There is no possibility of diversion or other community-based alternatives for a youth who has been placed in a secure detention facility.
The budget maintains the Local Admin Fund (LAF) at $310.6 million. This money is used for cash assistance and Food Stamps eligibility determination, employment and fraud control activities, encouraging local districts to invest in continued program integrity and case management.
An additional $11.4 million is included in the Executive Budget for the “Work Incentive Fund,” designed as “bonus money” to allow counties that meet the 50 percent work participation rate to be reimbursed. However, counties will no longer be allowed to apply the caseload reduction credit for purposes of qualifying for this award.
The amount of child support collections passed through to custodial parents receiving public assistance will increase from a maximum of $50 to $100 per month. This proposal takes advantage of the federal Deficit Reduction Act statute that allows federal participation in the pass-through. This affects approximately 27,000 families, who will be eligible for an estimated $12 million in additional child support payments annually. The effective date is October 2008 (in order to coincide with federal law); the impact for SFY 2008-09 is $6 million gross, $900,000 state share and $900,000 county share.
The Executive Budget includes $17 million for the first year cost of modernizing the outdated CONNECTIONS system, which manages local child welfare information.
The budget continues 65 percent state reimbursement for open-ended child protective/preventive service.
The Foster Care Block Grant is reduced by $2 million to reflect increased Title IV-E revenues expected to result from expanded State access to the Tax Department’s Wage Reporting System (WRS).
The Flexible Fund for Family Services (FFFS) is continued at $1.01 billion. There is only one program carved-out of the FFFS, Non-Residential Domestic Violence Services at $3 million. Under the Governor’s proposal, counties will receive a single allocation and will have maximum flexibility in determining local needs by targeting funds to their highest priorities.
In addition, several programs previously funded through TANF will now be funded from the state General Fund, including:
- $28.2 million for the Advantage After-School program;
- $21.6 million for the Home Visiting Program;
- $20.5 million for Prevention Services Contracts, of which $2.6 million is for post-adoption services;
- $1.15 million for Caretaker Relative Support services; and
- $7.32 million for the Adolescent pregnancy prevention and Services program (APPS). Article VII legislation transfers APPS to the Department of Health to consolidate Pregnancy Prevention Programs.
Transportation
Contact: Pete Savage
The budget reduces the Consolidated Highway Improvement Program (CHIPs) funding by $9 million dollars, from $312 million to $303 million.
The budget proposal also includes the creation of a $60 million dollar grant program to repair and maintain both State and local bridges. Grants can be used to fund up to 80 percent of a projects total cost. NYSAC is still reviewing how this funding will be distributed.
The proposed budget also makes permanent the single audit process for State transportation assistance to municipalities and public authorities.
Higher Education
Contact: Jeff Osinski
- The budget proposes the capitalization of a $4 Billion Higher Education Endowment Fund through partial privatization of the New York State Lottery. The budget would establish two funds under the auspices of the State Comptroller, one for K thru 12 education and one for the Higher Education Endowment. The proposal would maintain the relative share of lottery resources for K thru 12 education while creating the new endowment from increased revenue, anticipated through new lottery games targeted at higher income individuals. The endowment would provide annual funding of $200 million to Higher Education programs of excellence in applied research, to increase full-time faculty, workforce development, financial aid and other investments in high technology programs.
- The budget reduces the Full Time Equivalent (FTE) base aid by $50 per FTE from $2,675 to $2,625 for the thirty SUNY and six CUNY Community Colleges, the exact amount the legislature increased base aid by in the 2007-08 budget over the Executive Budget proposal;
- The budget commits $786 million for Community College Capital projects, $526 million for SUNY and $260 million for CUNY, representing the state’s 50 percent share for capital projects;
- The budget provides $2 million in funding from the Environmental Protection Fund to fund solar initiatives at community colleges to teach students installation of alternative energy equipment;
- The budget appropriates $1 million each to SUNY and CUNY to expand nursing programs to address the statewide shortage of nurses. Funds can be used to expand programs at four year institutions and community colleges.
Economic Development
Contact: Jeff Osinski
The budget includes appropriations for the $1 billion Upstate Revitalization Fund announced during the Governor’s State of The Upstate address. The Upstate Revitalization fund will be funded by $612 million in PIT bonds, $130 million from the sale of excess state property and $258 million from the State General Fund. The fund will be allocated among the following initiatives.
- Upstate Regional Blue print fund--$350 million in funding for projects identified through the Empire State Development listening sessions conducted throughout last year. Funding will be provided for the creation of new shovel ready development sites and industrial parks, provide small business loans and to fund programs which link academic research and innovation with job creation.
- City by City initiative (regional significant projects)--$115 million in funding will be provided to regionally significant economic development projects previously announced by the Governor and a second round of funding for projects in small cities.
- Housing Opportunity Fund--$100 million in funding is appropriated for the construction and rehabilitation of new affordable housing units.
- Parks Capital--$80 million is provided to modernize and improve State Parks as an investment in tourism destinations and as a ways of creating sustainable communities.
- Upstate agribusiness--$50 million in funding is appropriated for investments in new and expanded food processing centers, access to markets and development of alternative fuels.
- Railway improvements--$30 million is included for improvements to increase speed and reliability of rail networks between Upstate and New York City.
- State and Local Bridge Preservation--$100 million in funding for state and local bridge maintenance and improvements.
- Investment Opportunity Fund--$100 million is provided for significant projects of job creation particularly in High Technology Growth industries.
- Arts and cultural program--$12 million will fund projects of arts and cultural institutions as tourist destinations and ways of creating sustainable communities.
- Business marketing--$3.5 million is provided for a business marketing campaign for upstate communities including outreach to Canadian and foreign markets.
- Venture capital investments--$3 million will provide for venture capital for new start up companies with growth potential.
- Centers for Excellence--$50 million is provided for existing programs.
Downstate Initiatives
- Housing Opportunity Fund - the budget appropriates $300 million for projects of new construction and rehabilitation of affordable, workforce housing units;
- Downstate revitalization fund - $200 million targeted to distressed downstate communities for the creation of new shovel ready sites, small business loan programs and to fund programs which link academic research and innovation to new business development and job creation;
- Commits funding for capital projects for commuter transportation including Moynihan Station and metro improvements of $500 million in new capital aid and increases MTA subsidies by 5.7 percent, an increase of $138 million; and
- Hudson River Park and Governor’s Island development are appropriated $45 million.
I ♥ NY
The budget appropriates $20 million for the state’s tourism marketing advertising and increase of $4 million over the 2007- 2008 budget and $5.3 million in tourism matching grants for local tourism campaigns.
Empire Zones
Empire State Development (ESD) will reform the program through regulatory and programmatic changes to place greater emphasis on job creation and investment performance goals. Provisions will include elimination of benefits for companies not meeting performance goals.
In addition, the budget proposal eliminates local Empire Zone Administration Funding of $2.3 million.
Industrial Development Agencies and Public Authorities
The budget includes a new assessment on local IDAs in the amount of $5 million, for payment of services provided by the state. These will be fees generated against local IDA bond proceeds. The State currently assesses public authorities similarly and will increase those fees by $10 million to $60 million.
Environment & Energy
The Executive Budget Amends the Environmental Conservation Law (ECL) and the Tax Law to provide additional financial incentives to encourage additional cleanups under the Brownfield Cleanup Program.
The proposal also would amend the New York State “Bottle Bill” to cover additional types of beverage containers, and provide for the payment of unclaimed deposits on beverage containers to the State for deposit into the Environmental Protection Fund (EPF). This is anticipated to provide $25 million in additional revenue, growing to $100 million.
The Executive Budget proposal also extends the Power for Jobs and Energy Cost Savings programs through June of 2009. A revised program will be developed commencing in July of 2009 to target low cost power to companies creating large numbers of jobs, promoting increased energy conservation and new capital investment for contracts of up to seven years.
Public Protection
Contact: Adriano Bongiorno
The Executive Budget includes a number of public safety initiatives that affect counties. Several of these items are intended to reduce operating costs for county jails or provide greater flexibility for the uses for local cellular surcharges, while others increase salaries for district attorneys and implement additional oversight mechanisms of civil defense services for the indigent.
The Governor proposed the expansion of the "cook / chill" food production Center at the Oneida Correctional Facility to allow local jails to take advantage of low cost, nutritional meals for inmates. Under this plan local jails will have the option to purchase bulk quantities of chilled foods that are easily reheated. According to the New York State Division of the Budget this initiative has the potential to save participating local jails $730 per inmate annually.
New York’s counties continue to struggle with high numbers of both Technical Parole Violators (PVs) and New Arrest Parole Violators (NAPVs) housed within their county jails. Often these populations will bring local jails close to maximum facility capacity, causing the New York State Commission of Correction (SCOC) to pressure counties to construct and staff costly new facilities, which are often larger than necessary.
In response to the increasing pressure placed on counties, the Governor has proposed a number of initiatives designed to improve re-entry services and reduce recidivism.
Under the plan, the Edgecombe Correctional Facility will be used to hold technical parole violators for up to 30 days. The facility will have the capacity to hold 100 alleged parole violators, and resources will be provided to expand this program by up to an additional 130 technical parole violators by 2010, with programs tailored to address the specific reasons an offender violated parole.
The budget includes the creation of a new 60-bed re-entry unit at the Orleans Correctional Facility to improve the transition of inmates back to Erie County. Also, parole officers, social workers, employment counselors, community organizations volunteers and others will meet with inmates prior to their release. The Department of Correctional Services plans to replicate this program through the creation of three additional re-entry units in other counties, with an investment of $1 million.
The Division of Criminal Justice Services will support the creation of three additional local re-entry task forces at a cost of $800,000. Onondaga, Dutchess and Niagara counties will join nine other counties that currently use these task forces to prepare and manage their most high risk offenders prior to their release from state prison.
The Division of Parole will receive $2.1 million to hire twenty-nine new officers to focus exclusively on directing parolees to housing, employment and addiction services within their communities in an effort to promote parolee success rates.
The State will provide $3 million to assist local probation departments convert to a single, statewide risk assessment instrument to assess the needs of probationers and make appropriate referrals to services. State reimbursement to local probation departments will remain flat.
The Executive Budget provides $3 million for the creation of an office of Indigent Defense Services to oversee and monitor the provision of the criminal defense services statewide, make recommendations for reform and provide attorney training and administration services. Under this plan the new office will:
- Examine, evaluate and collect information on the existing public defense system in the counties and develop a case management system to facilitate the collection and reporting of such information;
- Analyze the collected data in order to recommend measures to enhance the system, ensure that indigent criminal defendants receive constitutionally effective counsel, develop a plan to improve the delivery of defense services, distribute available state funding pursuant to such a plan and review payment vouchers for assigned counsel and the approval process for their reimbursement; and
- Plan, coordinate and provide free or low-cost training to public defense attorneys.
The proposal also amends section 98-b of the State Finance Law to cap the amount of funding to counties from the Indigent Legal Services Fund under the current distribution formula to $72 million. Any accumulated fund balance in excess of the $72 million cap is expected to be distributed in 2009-10 under a plan designed by the Office of Indigent Defense Services and approved by the Director of the Budget.
Lastly, the plan authorizes the State Comptroller to make necessary adjustments in payments to counties in relation to their ability to meet the Maintenance of Effort requirements or as a result of an audit.
The budget includes a judicial salary increase of 21% retroactive to April 1, 2006, and an additional 2.5% on April 1, 2008. The bill sets the salary of a State Supreme Court Justice at $165,200. Salaries for all other judges, including Housing Court Judges, are established at set percentages of a Supreme Court Justice's salary.
When salaries increase for judges and justices of the Unified Court System, counties are mandated to increase salaries for their District Attorneys as delineated in section 183-a of the Judiciary Law. Historically, when the Governor and the Legislature have authorized pay increases for these judges and justices they have also included supplemental appropriations for counties to help them cover the mandated pay increase this creates.
Included in the Governor’s budget is only partial reimbursement totaling $3 million. Additionally, counties would be responsible for the retroactive difference in district attorney salaries this legislation will create.
The Executive Budget proposes the consolidation of numerous sections of the County Law into a single section authorizing a list of specific counties to levy local wireless surcharges. Currently, each county's authorization to levy a surcharge is provided in a separate section of law.
This consolidation has been a priority for the NYSAC Standing Committee on Public Safety since 2006 and would standardize the permissible uses of revenue from the city and county wireless surcharges. Legislation passed in 2002 permitted 19 counties and New York City to use local surcharge revenues for "costs associated with the design, construction, operation, maintenance, and administration of public safety communications networks." All other counties that were subsequently authorized to levy surcharges are limited to using the resulting revenues only for payment of "eligible wireless 911 service costs."
Also this proposal would permit the second group of counties the same broader, public safety communications related uses as the first group once they have complied with enhanced wireless 911 standards governing the ability to locate wireless 911 callers geographically, loosely referred to as “Phase II” compliance.
The budget also increases local wireless surcharge revenues by clarifying that the surcharge would apply to prepaid wireless communications service. It would specify that the imposition of the tax on prepaid wireless communications service is on the provider, and would establish an alternative method for providers to calculate the surcharge.
The budget assumes the closing of three underutilized prison camps and one medium security facility in early 2009 will save the State a projected $33.5 million in annual operating costs and avoid an additional $30 million in capital costs.
The budget proposal provides for enhanced treatment programs for sex offenders, mandated by the Sex Offender Management and Treatment Act of 2007, through the addition of 242 staff. This initiative is expected to cost $13 million this per year.
Governor Spitzer included a proposal to expand the DNA Databank by requiring samples from all individuals convicted of a crime. The state hopes to expand the DNA Databank by requiring samples from every individual convicted of a penal law crime, with the intention of giving police agencies the tools necessary to detect criminals and exonerate the innocent.
While the Governor’s actions are laudable, sheriff’s and probation departments throughout the state will be partially responsible for these collections. This represents another state mandate thrust upon counties without compensation.
In 2008-09, the State will award $60.7 million in Federal Public Safety Interoperability Coordination (PSIC) grants to local governments as part of the Federal Homeland Security Grant Program. This program will enhance statewide inter-operable communications between state and local public safety agencies.
Revenue
Contact Ken Crannell or Pete Savage
The Executive Budget Proposal includes several revenue proposals to allow counties to update fees, increase fine collections and augment sales tax revenue by collecting sales tax on certain Internet sales. Specifically, these proposals include:
- Allowing for a local option to increase recording fees and per-page recording fee collected by county clerks. The change would authorize counties to increase from $5 per document and $3 per page to $20 per document and $5 per page;
- Increasing the county retention fee for the new $20 Enhanced Drivers License (EDL) fee from 12.7 percent to 30 percent. This adjustment seeks to compensate counties for increased workload as new federal drivers license regulations take effect;
- Allowing for the Installation of “red light” cameras in Nassau and Suffolk counties and select cities; and
- Amending the Tax law to allow for the collection of sales tax on Internet sales within New York State. This proposal seeks to create a presumption that certain sellers are “vendors” if the sellers enter into agreements with New York residents under which the residents are compensated for referring customers to the sellers and the gross receipts from such sales are more than $10,000.
The budget proposal also seeks to increase the State real property transfer fee that is paid whenever a deed is recorded. The current fee is $50 for housing cooperatives, $75 for residential or agricultural property, and $165 for commercial property. The new fee is structured as a graduated, priced-based assessment, with increases targeted to higher-priced real estate ranging up to $400 for residential property sales over $1 million, and up to $575 for commercial property sales over $1 million.
Under the plan there will be no increase in fees for residential and commercial sales of $175,000 or less. The county that collects the fee will retain the current $9 administrative fee and not share in the increase, which will be dedicated to fund the New York State Office of Real Property Services.
The budget proposal also includes an overhaul of the several sections of the real property tax law as well as funding for a state commission to cap school real property taxes. This Commission will be chaired by Nassau County Executive, Tom Suozzi and will include former Onondaga County Executive, Nick Pirro.
Other proposed real property tax changes include:
- Authorizing the State Board of Real Property Services to prescribe a Uniform Assessment Code;
- Replacing elected assessors with appointed assessors by January 1, 2012;
- Divesting all villages of the responsibility for assessing real property;
- Restructuring local "maintenance aid” programs, which promote annual revaluation and reassessment, as well as provide incentives for county assessing;
- Creating a sunset for the present $5 per parcel "annual assessment aid" program after the 2011 assessment roll, coinciding with the current expiration of the "triennial aid" program;
- Replacing these existing reassessment programs with a program that will offer $5 per parcel annually to assessing units that have State equalization rates of 100 percent, participate in a centralized data program, can attest to an assessment roll meets professional appraisal standards and contain at least 10,000 parcels (either through a Corporative Assessment Program or contractual agreements for a county to perform the assessment/ appraisal function). The new program will first be available for 2009 assessment rolls. Localities would have to choose between the present annual reassessment aid or the new aid structure for the three years (2009 thru 2011); and
- Providing additional incentives to counties of up to $5 per parcel based on the level of countywide assessing, and up to $3 per parcel to counties that perform the assessment or appraisal functions by contract for fewer than all of its cities and towns.
The budget proposal delays the scheduled increase to the Basic Middle Class Star Rebate program by one year, fully phasing in the program in during 2010-2011. The Enhanced Middle Class Star rebate program for seniors will remain unchanged under the proposal.
In an effort to consolidate the multiple taxes on gasoline and diesel fuel, the budget merges all of the State taxes on motor fuel into one petroleum excise tax. Under the plan, the current local sales tax on motor fuels will be replaced with an equivalent local excise tax. Local sales tax would still apply on other fuels if applicable. The plan includes the following provisions.
- Counties and NYC will impose the new excise tax at a statutory starting rate that is equivalent to their current tax rates calculated as the quarterly average motor fuel price (June – August 2008) multiplied by the applicable local sales tax rate (effective December 2008). There will be annual indexing for the local rates using the State PBT indexing formula (5 percent cap up or down on the index each year), with the first indexing scheduled for January 1, 2010. All county excise tax net collections would be distributed as if these net collections were sales tax net collections. The current county distribution formulas for sales tax to sub-jurisdictions would be maintained.
- Counties which are currently “capped” for sales tax on motor fuels because they elected a fixed cents per gallon method (there will be seven counties in this category on March 1, 2008) will have a one time option to convert to the new local excise tax. The county would be required to enact a local resolution and notify the Tax Commissioner by September 1, 2008 to remove their cap. If they repeal the cap, these counties will have starting rates as indicated above. If the county doesn’t repeal the cap, they will start at their current fixed per gallon rate. There will be no indexing for counties which start at a “capped” rate per gallon.
Native American Affairs
Contact: Mark LaVigne
The budget includes $174 million in sales tax revenue for the State Fiscal Year 2008-09 from tax collections associated with sale of gasoline and tobacco products to non-Native Americans on New York reservations. This figure is based on the assumption that the State will implement the 2005 law requiring the collection of sales tax on cigarettes sold on Native American lands to non-Native Americans.
The budget also provides $2 million to Madison and Oneida counties for financial assistance to mitigate shortfalls in real property tax revenue resulting from the non-payment of real property taxes by the Oneida Indian Nation of New York.
General Government\Mandate Relief
Contact: Pete Savage
As in 2007, shared services and consolidation continue to play a large role in the Governor’s Executive Budget proposal. Taking from the many of the plans submitted to the Local Government Efficiency Commission, the proposal seeks to expand local shared services projects with targeted grants, the loosening of current statutes that hinder collaboration and the abolishment of some outdated public offices.
Details include a restructuring of the Shared Municipal Services Incentive grant program to create the Local Government Efficiency Grant program. The new LGEG program will include an evaluation component, improved technical assistance to local governments, new state agency services for local governments, enhancements to the consolidation incentive offered last year, and a new “21st Century Demonstration Projects” component promoting large regional consolidation and shared services pilot projects. The program is again funded in the amount of $25 million dollars with specific allocations as follows:
- $6 million for regional “21st Century Demonstration Projects;”
- $9 million for shared service implementation grants;
- $4 million for shared service study grants;
- $4 million for consolidation grants with special emphasis on shared highway service programs which, when undertaken, will provide additional highway aide to participants; and
- $2 million for administrative assistance grants.
Additional proposed changes to General Municipal Law and the County Law that assist with consolidation include:
- Amending General Municipal Law (GML) and the Highway Law to facilitate shared services agreements among municipalities and between municipalities and State agencies. These amendments will:
- Expand the list of services that can be the subject of shared service contracts;
- Authorize non-monetary exchanges of goods and services;
- Allow the State Department of Transportation to contract with municipalities for terms of up to five years;
- Expand the range of emergency situations for which DOT can provide assistance, and allow municipalities to similarly assist the State; and
- Enable municipalities that maintain the roads and bridges of other municipalities to receive the same level of payments under the Consolidated Local Highway Improvement Program (CHIPS).
- Amending the Real Property Tax Law, the GML, the Town Law and the Education Law to remove statutory impediments for the consolidation of local government tax collection functions. Specific changes include:
- Eliminating elected tax collectors in towns and making these offices appointed at the end of terms ending December 31, 2009, or at the end of any terms that extend beyond this date;
- Dispensing with the requirement that town tax collecting officers be town residents;
- Allowing towns and counties to enter into cooperative agreements so tax collection may be centralized at the county level;
- Abolishing the position of school district tax collector at the end of terms ending December 31, 2009, or at the end of any terms that extend beyond this date, and transfer responsibility for this function to the appropriate city or town; and
- Eliminating statutory authority for fee-based tax collection.
- Authorizing consolidated, county-based tax collection to take place via the Internet, electronic funds transfer, or through contracts with banks for collection services;
- Creation of a uniform, simplified process by which citizens can submit petitions for municipal consolidations and dissolutions;
- Updating various sections of county law to allow for shared weights and measures enforcement;
- Requiring municipalities, if feasible, to post financial reports on their websites, including their most recent budget, independent audit and multi-year financial plan; and
- Requiring the State Comptroller to collect and report new fiscal performance data for all local governments.
The plan also amends the Public Health Law residency requirements to allow certain county health districts to share the same commissioner and/or director and to also have common district board members, subject to the approval of the State Department of Health (DOH).
The Executive Budget Proposal restructures the aid program for local governments in which a video lottery gaming facility is located (“VLT aid”). Changes to the existing VLT aid program include:
- Setting payments in SFY 2008-09 at amounts paid in SFY 2007-08, and
- Transitioning to a reimbursement program outside the City of Yonkers with a 50% reduction in aid for SFY 2009-10, followed in SFY 2010-11 and thereafter with payments to reimburse local governments for the net costs incurred as a result of VLT operations.
Revenue Sharing
The Executive Budget Proposal amends the Aid and Incentives for Municipalities (AIM) program, increasing the threshold for distressed municipalities and phased in restorations in AIM funding for New York City.
Under current statute, a fiscally distressed municipality that receives additional AIM funding based upon the level of fiscal distress also qualifies for an AIM funding increase of 4.5% if its per capita basis is less than 75 percent of its peer municipalities average. The proposed changes increase the 75 percent threshold to 80 percent in SFY 2008-09, 85 percent in SFY 2009-10, and 90 percent in SFY 2010-11. This will accelerate the equalization of disparities in AIM funding among similar distressed cities, towns and villages.
The proposal also includes a plan to phase in restorations in AIM funding for New York City. The City’s AIM funding was reduced to $20 million in SFY 2007-08. The proposed change will provide the City with $163.9 million of AIM funding in SFY 2008-09, half the amount needed to fulfill the State’s commitment to fully restore the City’s AIM funding for the coming fiscal year. The full restoration of $327.9 million is now scheduled to be take place in SFY 2009-10.
The budget will also clarify that Erie County will continue to receive AIM funding at the amount provided in SFY 2006-07, and that merger incentives awarded under the new Local Government Efficiency Grant program will be included in a municipality’s base-level AIM funding for purposes of calculating future year AIM funding.
Mandate Relief
The Executive Budget Proposal includes a Wicks reform plan that mirrors negotiated reform passed by the Assembly last legislative session. This proposed reform will increase the current $50,000 threshold to $3 million for projects in New York City, $1.5 million for projects in Nassau, Suffolk, and Westchester counties, and $500,000 in all other counties.
In addition, the bill will allow for the pre-qualification of bidders, provide protections for sub-contractors, authorize the use of project labor agreements for projects otherwise subject to the Wicks Law and allow the Commissioner of Labor to issue a stop-bid order to enforce compliance with the Wicks Law requirements. Although these proposed reforms are laudable, NYSAC has called for additional reforms to the Wicks Law that will provide more significant cost savings for counties.
Additional proposals aimed at providing mandate relief to counties include allowing local governments more procurement and contracting flexibility by:
- Allowing localities to purchase materials, equipment and supplies through certain contracts let by other states and local governments;
- Allowing purchasing of information technology products and services through cooperative purchasing under the federal General Services Administration Information Technology Schedule 70 or successor schedules;
- Making permanent existing authorization to use electronic bidding tools;
- Increasing the competitive bidding thresholds from $10,000 to $20,000 for commodities and from $20,000 to $50,000 for public works projects; and
- Allowing contracts for services to be awarded on the basis of "best value" rather than lowest bid.
The Governor is also proposing changes to the State Insurance Law to allow for broader local government health insurance consortiums and relaxes the requirements for forming municipal cooperative health benefit plans. These proposed changes include:
- Requiring insurers to provide up to three years of claims experience to a municipal corporation when it requests such information for the purposes of forming or joining such a cooperative;
- Reducing the minimum number of municipal corporations needed to establish such a cooperative from five to three;
- Providing flexibility in the reserve requirements for such cooperatives by allowing a qualified actuary to determine the amount of reserves each individual cooperative needs, and by allowing new cooperatives to amass these reserves over a five-year transition period; and
- Directing the Insurance Department to conduct a study, to be completed by September 1, 2009, of the impact on the community-rated health insurance market of allowing municipalities with 50 or fewer employees to join with larger municipalities to purchase experience-rated policies.
Summary
While NYSAC welcomes the Governor’s proposal to reduce the growth of county Pre-K expenses, we are concerned that the fiscal benefit will not offset the increased property tax burden caused from the other cost shifts and aid reductions contained in the budget proposal.
NYSAC will present a full analysis of the county impact of the 2008-09 Executive Budget on January 29th at the NYSAC Legislative Conference. If you have any questions about the Governor’s budget, please contact the NYSAC offices. (Ken Crannell)
2008 County Directory
NYSAC is currently updating its roster of thousands of elected and appointed county officials in New York State. The directory will be available in April. To order a copy of the 2008 Directory, visit
www.nysac.org/About/documents/2007DirectoryOrderForm.pdf.
Coming Next Week
Monday, January 28th – NYSAC Conference begins with standing committee meetings, workshops and a plenary dinner with an address by NYS Comptroller Tom DiNapoli
Tuesday, January 29th – NYSAC Conference continues with a full day of workshops and addresses by Governor Eliot Spitzer and state legislative leaders. A reception with state lawmakers will be held from 5:30 to 6:30 p.m.
Wednesday, January 30th – NYS Empire State Development Co-Chair Dan Gunderson will present facets of the New York State Blueprint for Economic Growth.
The State Legislature will be in session on Monday and Tuesday.
To unsubscribe, visit this link
To subscribe, visit this link
