GOVERNOR PATERSON ANNOUNCES ENACTED STATE BUDGET PROVIDES BENEFITS TO NEW YORK CITY

Governor David A. Paterson today announced that the Enacted New York State Budget provides New York City with a positive benefit of nearly $1.4 billion through substantial increases in education and other State aid, as well as by continuing to assume a portion of the City’s health care costs.

Maintaining the State's historic support of New York City schools, the Enacted Budget provides an additional $644 million (8.4 percent) in School Aid, bringing total School Aid to $8.33 billion. Combined with the 2007-08 increase, this action will increase support for City schools by nearly $1.4 billion compared to 2006-07.

“Despite our challenging economic circumstances, New York City is a vital fiscal engine for New York State and a strong partner,” said Governor Paterson. “The State tightened its own belt so it could continue to provide critical support to local governments like New York City.”

Governor Paterson made significant reductions to state agency spending, which will grow by only 1 percent in the Budget. By contrast, New York’s local governments, including cities, towns, villages, and school districts, receive a net benefit of $3 billion.

In addition to direct funding assistance to the City, the Enacted Budget provides $95 million in increased operating aid to the MTA, a 4 percent increase. The Budget also provides the New York City Transit Authority with a $60 million (3 percent) increase and the MTA's commuter railroads will receive a $35 million (5 percent) increase. Along with these operating funds, the MTA will also receive a new 2008-09 Bond Act appropriation of $487 million. These funds will be available for projects such as East Side Access and the Second Avenue Subway.

The 2008-09 Enacted State Budget provides these direct benefits to New York City:

• Transportation: The Enacted Budget also includes $5.3 million in increased operating aid to the Staten Island Ferry and the New York City DOT and $7.1 million in increased Consolidated Highway Improvement Program (CHIPS) funding.
• Medicaid Cap and Family Health Plus (FHP) Takeover: Continuing the implementation of the State takeover of FHP and capping county Medicaid costs will save New York City more than $522 million in City Fiscal Year (CFY) 2009.
• NYC Aid and Incentives for Municipalities (AIM): The Enacted Budget provides $246 million in AIM aid to New York City. The Executive Budget had originally proposed providing $164 million in AIM funding, which was half of New York City’s previously scheduled $328 million payment for 2008-09. Under this proposal, the full AIM payment of $328 million will be restored in the 2009-10 fiscal year.
• Reauthorization of the City’s Local Sales Tax: Legislation included in the Budget, at the request of the Mayor, will permanently reauthorize the fourth cent of the New York City local sales tax. This revenue, commonly called the “MAC penny,” is worth $1.15 billion this fiscal year. Currently due to expire at the end of June 2008, the ongoing revenue from this tax has long been fully assumed in the City’s financial plan.
• Wicks Law Reform: As part of an overall effort to reduce local property taxes, the Wicks Law threshold will be increased from $50,000 to $3 million, which is projected to reduce the City’s long term capital construction costs by more than $200 million in its upcoming CFY 2009 capital plan. Additionally, the City's annual debt service savings associated with Wicks reform will reach $14 million by 2012.
• Internet Sales Tax: Authorization has been included in the Enacted Budget to enforce Internet sales tax collection, which will increase City revenue by $26.5 million in CFY 2009.

A chart summarizing the 2008-09 Enacted Budget’s impact on New York City (PDF) is attached.