Gotham Gazette

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Albany and the City's Budget

With the June deadline for an adopted city budget fast approaching, the State Legislature in early May – independent of Governor George Pataki — cobbled together a $2.7 billion plan that will fill much of the city’s $3.8 billion budget gap for 2004.

In an Albany scenario even more bizarre than usual, Senate Majority Leader Joe Bruno and Assembly Speaker Sheldon Silver have agreed to increase state taxes - which makes it possible to restore many of the governor’s education, healthcare, and other cuts to New York City - and give the city permission to raise a variety of tax and non-tax revenues. If the governor persists in opposing this plan, the legislature will have to override his veto. (For more on how the legislature reached its agreement, see related articleby Assemblyman Scott Stringer)

However, balancing the city’s budget for 2004 depends not only on the governor and legislature’s actions, but also on current negotiations between the Mayor Michael Bloomberg and the City Council.

The state legislative package, for instance, seems to eliminate any need for the mayor’s “doomsday budget” that would have cut $1 billion. However, it has re-opened the question of whether some of the mayor’s earlier $600 million preliminary-budget cuts should be restored.

On the city revenue side, the State Legislature has, as expected, rejected the mayor’s proposed $1.4 billion commuter tax, but replaced it with several new ideas.

The biggest is an increase in the personal income tax on individuals earning more than $100,000 a year and couples making more than $150,000 a year. This will be worth more than $400 million in 2004. Also the state plans to take over the city’s remaining $2.5 billion Municipal Assistance Corporation debt (stemming from the city’s 1970s’ near-bankruptcy) – which will apparently produce $500 million a year for the city in each of the next five years.

Mimicking the legislature’s increase in the state sales tax (0.25 percent), the mayor and the council have approved a smaller city sales-tax increase (0.125 percent) as part of the package (adding up to a new total sales tax of 8.625 percent), along with a modest surcharge on landlords who rent out small properties.

If these actions go through, the mayor and the council must still find a way to fill a $1 billion hole in the city budget.

The remaining weeks before the city budget is adopted will feature more familiar fights between the mayor and council over still substantial cuts to education, youth, senior, health, library, cultural, and other human services.

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Read A New Way of Doing Business in Albany by Assemblyman Scott Stringer










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