New York State Executive Chamber | Governor Eliot Spitzer

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07-08 EXECUTIVE BUDGET SHIFTS STATE SPENDING PRIORITIES

Governor Eliot Spitzer today proposed major increases in funding for education and children’s health care, property tax relief for middle income homeowners and special aid to distressed cities.

These and other initiatives are part of the 2007-08 Executive Budget Proposal, a $120.6 billion plan that increases overall spending by 6.3 percent. The $53.3 billion budget supported by State tax dollars (General Fund) proposes growth in spending of 4.2 percent, as compared to ten percent last year.

The budget proposal does not increase taxes.

“This budget makes targeted investments in our future, provides overdue property tax relief to middle class homeowners and drives resources to communities in need,” Spitzer said. “It also makes the tough decisions necessary to bring spending growth under control.”

To fund the initiatives, the budget proposal implements a comprehensive savings plan that sharply reduces runaway spending growth that has occurred in some program areas. For example, the proposal reduces the State funds growth in Medicaid from 8 percent over the last five years to 1.7 percent in 2007-08.

The savings plan eliminates the state’s projected 2007-08 budget gap of $1.6 billion with health care, local aid and operational reforms that will provide $2.8 billion in savings.  The value of the savings grows to $4.7 billion in 2010-11, helping to offset projected gaps through the life of the four-year financial plan.

The budget proposal includes $449 million from the elimination of certain tax loopholes and tax shelters, many of which have already been addressed by other states and the federal government. These specific provisions are not tax increases, but rather limit the ability of taxpayers to take advantage of unintended provisions in law to reduce their tax exposure through sophisticated tax planning techniques.

The budget proposal maintains nearly $3 billion in total reserves, equal to 5.6 percent of General Fund spending.  It includes deposits into both the Debt Reduction Reserve and the new Rainy Day Reserve, established as part of the recent budget reform agreement.

Key initiatives in the budget proposal include the following:

• $1.4 billion in new education funding, which will grow to an unprecedented $7 billion additional annual infusion of resources to schools by 2010-11;
• $165 million over two years for an expansion of the Child Health Plus program, providing access to health coverage for all 400,000 currently uninsured children in New York and streamlining enrollment procedures for Medicaid patients.
• $1.5 billion in additional property tax relief, including an income-based benefit targeted to middle class homeowners statewide and additional benefits for senior homeowners, the first phase of a three-year plan to provide $6 billion in property tax relief; and,
• $50 million in performance-based aid increases targeted to distressed cities, towns and villages, the first installment in a four year $200 million program.

“These are all critical initiatives that will help spark a turnaround for the state, but they won’t occur without implementation of the savings plan, which is the focal point of the budget,” Spitzer said.

Details regarding the education, health care, property tax relief and distressed municipalities aid and other components of the budget are provided in the attached materials.