Last week, the Legislature was called back into session to conclude this year’s long and torturous budget process. When the majority of the State Senate passed the revenue portion of the budget on Wednesday night it was decreed that final action has now been taken on the 2010-2011 State budget. This was one of the latest budgets in state history and, unfortunately for New Yorkers it is also one of the worst.

This revenue portion of the budget increases taxes and fees by $1.2 billion. This is in addition to the $8 billion of new taxes and fees that were included in last year’s budget. Some of the new taxes in this year’s budget include: (i) the temporary reinstatement of sales tax on clothing purchases under $110, which is expected to raise $330 million; (ii) a reduction in allowable itemized deductions for taxpayers earning over $10 million a year (as a result wealthy taxpayers will now be able to claim deductions for only 25% of the charitable contributions); and (iii) a $1.60 increase in the state cigarette tax--which makes New York’s taxes on cigarettes the highest in the nation.

Maybe most egregious is the state’s deferral of state tax credits earned by businesses that invest or create jobs in New York. This deferral is expected to raise the tax bill for businesses by $200 million this year and by more than $1 billion in both 2011 and 2012 when fully implemented. These tax credits were specifically geared towards helping New York business grow and create jobs. By deferring them, New York is just continuing to add to the poisonous business climate that already exists in Upstate New York.

In addition to the revenue bill passed in the state Senate last week, the majorities in both the Assembly and Senate passed a contingency plan that would be put into place if Federal Medicaid Assistance Percentage (FMAP) for the state did not come through. I voted against this measure for several reasons:

• This bill gives the Governor the authority to determine further cuts. This is the Legislature’s job and it leaves too much authority to the Executive and his budget office.

• The Governor did not release a clear plan in terms of how reductions would be made and there were too many unknowns in this bill.

• This bill has the potential to delay local assistance programs which could affect school aid payments.

Shortly after the legislature passed this measure this week, the U.S. Senate passed a measure which restores FMAP funding. Though counties will likely see Medicaid dollars from the federal government, it has not passed Congress nor has it been signed by the President at the time of this publication. Funding amounts are unclear at this point but according to Senate press releases, roughly three-quarters of $1.085 billion would be restored, leaving the Governor and his budget office to close the remainder.

If there is any good news it is that the budget is passed. Unfortunately, we continue to make the same mistakes in Albany as we have for several years now. The majorities in both houses refuse to address the huge structural budget issues that we have—namely, state government spends and taxes too much. This year was a tough budget year. Next year could be much worse in light of continuing lackluster recovery and the expiration of the so-called federal stimulus money. Hopefully, better leadership will be provided next year.

If you have any questions or comments on this or any other state issue, or if you would like to be added to my mailing list or receive my newsletter, please contact my office. My office can be reached by mail at 200 North Second Street, Fulton, New York 13069, by email at barclaw@assembly.state.ny.us or by calling (315) 598-5185.