State budget battles coming to a climax

Sunday, June 27th, 2010 at 1:37 pm by

On Friday, Governor Paterson followed through on his promise (or threat) to introduce final emergency appropriation and language bills to force completion of a 2010-11 state budget, now almost three months into the fiscal year.

The Governor’s proposals include a property tax cap on school districts and local governments.  They would also restore $391 million to School Aid.

The Legislature responded by introducing its own budget bills, getting them into print on Friday to make votes on Monday possible, thereby avoiding possible shutdown of state government.

Without the Governor’s consent to an immediate vote, bills must be in print in final form for three days before the Legislature may act on them.

The Legislature’s proposals do not include the tax cap and would restore nearly $600 million to School Aid.

Property Tax Cap
Two groups should be troubled by the Governor’s use of the budget emergency to try to force adoption of a property tax cap:  (1) anyone opposed to a cap on principle; and (2) everyone else.

Crisis circumstances related to one year’s state budget should not be abused to force permanent and fundamental changes in state law, especially when those changes are absolutely unrelated to the state budget being negotiated.

Hypothetically, a future Governor could exploit similar circumstances to seek legalization of marijuana, criminalization of smoking, or anything else.

Governor Paterson’s proposed school property tax cap would apply to taxes to be levied for the 2011-12 school year, beginning three months after the end of the current state fiscal year.

The Governor’s proposal would limit schools to property tax levy increases equal to the lesser of 4 percent or 120 percent of the change in the Consumer Price Index over the preceding calendar year.

The proposal would enshrine minority rule, by requiring at least 55 percent of voters to approve tax levy increases above the cap.  Only if state aid is not resolved by the time of the vote would a simple majority either way prevail.

The proposal goes on to become an embarrassing mess by authorizing voter “under-rides” to establish a lower cap through a referendum that would take place just two weeks before the regular vote, negating months of work and public input.

School Aid
The Governor and Legislature employ similar methodologies to distribute their proposed School Aid restorations.

Both would reduce each district’s proposed Gap Elimination Adjustment (GEA) by equal percentages – 40 percent for the Legislature, 27.7 percent for the Governor.  The GEA is lump sum cut the Governor proposed to achieve $1.4 billion in School Aid savings.

Both would limit the uses most districts could make of the aid restorations.

The Governor would restrict districts to using the added aid to for property tax relief in 2010-11 or to mitigate future property levy increases.

The Legislature would provide that for “high need districts, as defined by the [Education] Commissioner” the restoration amount

“…may be deemed a state grant in aid for general use within the meaning of subdivision two of section 1718 of the education law and may be used for the purpose of maintaining educational programming during the 2010-2011 school year which otherwise would have been reduced as a result of such net gap elimination adjustment.”

For average need districts, as defined by the Commissioner, the Legislature would mandate that, “a minimum of 50 percent of such amount shall be used to reduce property taxes in the 2011-2011 school year.”  The remainder could be used as a grant-in-aid, as with the high need districts.

The Legislature is silent on limitations for low need districts.

A disturbing element in both plans is that they would freeze the data used to calculate aid for the 2009-10 school year based on what was on file at the time the Governor released his budget back in January. This threatens to deny districts tens of millions of dollars in aid.  In some cases, actual data did not become available until later.

Special Session Tonight (Sunday)
Governor Paterson has called the Legislature into special session for this (Sunday) evening.

Interestingly, at least so far the agenda for tonight does not include the Governor’s emergency budget proposals.

Instead, he asks legislators to act on public university flexibility legislation, state budget process changes, and a contingency plan for the state should roughly $1 billion in federal Medicaid funding not come through – a growing risk as Congress becomes more preoccupied with deficit reduction.

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