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Gov. Pataki Proposes $105.5 Billion State Budget

By Stephanie R. Myers

New York Gov. George Pataki’s proposed $105.5 billion budget, which plans to close a $4.2 billion gap, calls to increase overall state spending by about 2.4 percent.

This is Pataki’s 11th budget proposal as governor.

Pataki’s address on Jan. 18 spotlighted property tax rebates and Medicaid reform.

Specifically, he outlined a property-tax rebate plan under which some taxpayers would receive a property-tax rebate check.

Taxpayers could receive the property-tax rebate under the new Co-STAR plan, which is modeled after the state’s STAR program, a school tax reduction program. In the Co-STAR plan, individual taxpayers in counties that keep their local spending below the Medicaid cap rate of 3.5 percent in 2006 and below 3 percent in 2008 will be eligible for property-tax rebate checks.

Pataki’s address also highlighted his plan for Medicaid reform. Under Pataki’s plan, Medicaid would be subject to cuts of about $1.1 billion. Medicaid reimbursement rates would also see cuts under the plan, and not-for-profit hospitals and nursing homes would be subject to a $264 million tax.

“This particular budget is going to be rather difficult on the nursing-home industry, and I think the same thing can be said about the hospital industry,” Dan Horan, with Horan, Martello, Morrone P.C. in Hauppauge, N.Y., said. “The problem is they don’t really cut back on any expenditures, they just cut back on paying their bills, until they become insolvent. They continue on until the creditors can’t handle them anymore. If nobody bails them out, they go bankrupt. The last several budgets have left the nursing homes with shortfalls.”

New York City Republican Mayor Michael Bloomberg criticized some of Pataki’s proposals, specifically the exclusion of New York City homeowners in Pataki’s Co-STAR plan. Bloomberg said that, for New York City, Medicaid and other expenses are projected to grow by almost 8 percent in the next fiscal year, rendering the city ineligible under the 3 percent rule.

“I see no reason why New York City homeowners should be excluded from Co-STAR because of circumstances so completely beyond their, or our, control,” Bloomberg said in Jan. 24 testimony before the New York State Joint Fiscal Committee.

Bloomberg also criticized Pataki’s plan to discontinue a temporary income tax surcharge for those whose annual income exceeds $150,000, urging the governor to permanently discontinue sales tax on clothing under $110 instead.

In his address, Pataki also proposed Agri-Business Zones for agricultural businesses. Such zones, whose goal is to spur job creation, are similar to Empire Zones and offer property tax breaks to businesses that meet certain requirements within 72 zones in the state.

Pataki also proposed Operation SPUR (Strategic Partnership for Upstate Resur-gence), which gives tax credits to companies that invest in upstate communities, in addition to annual tuition increases for State University of New York students, a hike in the state wine tax and $250 million for a program that lets the state make contributions to high-tech projects.