2010-11 State Budget

1. 2010-11 State Budget Preliminary June 30, 2010 NYSAC

2. Reimbursement Delays Continue • Some counties are down 90 percent in state reimbursements from a year ago in certain programs. • April-May reimbursement has slowed significantly. • Unclear if final budget will improve reimbursement. Note: State Cash Flow - Silence

3. How We Got HereBudget Enactment - $ in millions

4. Process Highlights of the Last Week • Governor submits his final emergency extender bills – Education & Revenue Bills. • Legislature Rejects Emergency Bills – they amend Governor’s existing budget bills. • Governor Signs Bills Passed by Legislature, but with vetoes. • Final Revenue Bill is Pending (Governor has indicated this bill does not raise enough revenue and could be $500 million short – thus more vetoes).

5. Governor Tobacco Tax -- $1 ($218M) VLT & Quick Draw ($78M) Sugary Beverage ($465M) Health Care Assessments ($240M) Wine in Grocery ($250M) STAR Reforms ($210M) Legislature Tobacco -- $1.60 ($440M) VLT & Quick Draw ($78M) Suspend Sales Tax Exemption on Clothing ($330M) Business Tax Credit Deferral ($100M) Reduce Itemized Deduction for Charitable ($100M) STAR Reforms ($180M) Revenue Actions

6. Highlights of What’s Left • No moratorium on new unfunded mandates. • No property tax cap…yet. Governor is still pushing this for his legacy and Senate is interested. • Senator Craig Johnson (D-Nassau) is pushing the cap as well. • Limits cap to lower of 120% of CPI, or 4%. • Cap applies to all local governments and schools • Allows a 2/3 supermajority of county vote to override cap (Schools goes to voter referendum to override)

7. NYSAC Response to Cap • Capping property taxes has been a priority for county leaders for decades. • This support has always been contingent on aggressive reductions in existing and new unfunded mandates. • Counties need authority to manage state programs locally to root out waste, fraud and abuse. • State mandates and fixed costs are 75 to 85 percent of county budgets.

8. Highlights of What’s Left (Cont.) • Legislature Restored $600 million in education cuts. • Governor vetoes $420 million of education restoration. • Governor vows to veto up to $300 million more in Legislative adds. • Nursing Home Reimbursement – keeps rebasing through March 31, 2011. • State Medicaid Administrative Takeover. • Pension Amortization. • Job Tax Credit Deferral will be huge disincentive to business attraction efforts. Appearance of redirecting resources from Upstate to NYC. • Battle over Contingency Reserve in case ARRA FMAP extension does not happen and “shaky” revenue raisers and spending cuts do not materialize – will continue for the rest of the year.

9. $2.5 Billion in Shaky Revenues and Cuts$ In Millions

10. 6-Month FMAP Extension$ In Millions

11. Economic Development • Budget allows the Empire Zone Program to Sunset on June 30, 2010 ($450 million) • Certified Companies maintain tax benefits earned for up to 10 years subject to tax credit deferral contained in Revenue Bill • Establishes an Excelsior Tax Credit Program ($50 million in 2010 growing to $250 million in 2015)

12. Economic Development • Expands the Empire Film Production Credit to $420 Million in each of the next 5 years (+$350 million over 5 years) • Establishes a Small Business Loan Program through Community Lenders • Reduces funding to Economic Development Fund and Programs in NYSTAR

13. Tax Credit Deferral • Enacts 50% deferral of Tax Credits earned by companies for 3 years ($2 Billion) • 33 individual Tax Credits included • Corporate taxes would increase by the deferred amount in 2010 – 2013 • Credits deferred would be gradually refunded w/out interest commencing in 2013

14. 9 Empire Zone Related Credits Investment Tax credit Employment Incentive Credit Mortgage Recording Tax Credit Mortgage Service Credit Employment of Persons with Disabilities Credit Alternative Fuels Credit Low Income Housing Credit Historic Rehabilitation Credit Power for Jobs Credit Historic Home Rehabilitation Credit Green Building Credit Brownfield Redevelopment Credit Remediated Brownfield Real Property Tax Credit Environmental Remediation Credit Conservation Easement Credit Commercial Production Credit Bio-Fuels Production Credit Clean Heating Fuel Credit Solar Energy Credit Transportation for the Disabled Credit 4 other Minor Credits Credits Included in Deferral

15. Essex County – Wants to go from 3.75 percent to 4 percent. St. Lawrence County – Wants to go above current 3 percent rate, which has not changed since 1968. Chautauqua County (S.3301-A / A.8269) – Extender – extends .75 cents above 3 cents from Nov. 30, 2009 through Nov. 30, 2011. Erie County – A.10786 / S.7580 – Extender – ability to impose 1 cent above 3 percent expires November 30, 2010 – bill seeks an extension until November 30, 2011.Passed Assembly. Home Rule Handcuffs Sales Tax Requests

16. Home Rule Handcuffs Wireless Surcharge and Land Line Surcharges • Madison County – S.7015 / A.10608 – raises 30 cent wireless surcharge to $1.00. Also allows Madison to impose a 65 cent surcharge on local exchange access lines to support E-911 operations. • St. Lawrence County – A.9876 / No same as – establishes a 30 cent wireless surcharge per month on wireless service. • Cortland County – A.9918 / S.7716 – Allows Cortland to impose a 65 cent surcharge on local access lines to support E-911 operations.Passed Assembly. • Broome County – A.10221 / S.7628 (Libous) – 65 cent surcharge on local access lines to support E-911 operations.

17. Home Rule Handcuffs Mortgage Recording Tax Requests • Putnam County -- A.8631 / No same as – 25 cents per $100 – from $1.05 to $1.30 • St. Lawrence County – A.9903 / No same as – 50 cents per $100 – from $.75 to $1.25 • Tompkins County – A.10127 / S.7652 (Winner) – 25 cents per $100 – from $.75 to $1.00 • Chemung County – A.10666 / S.7467 (Winner) – 25 cents per $100 – from $.75 to $1.00 • Livingston County – No Bill – 25 cents per $100 – from $1.00 to $1.25 (plus a Real Estate Transfer Tax of $2 per $1000 – No Bill.) • Madison County – A.11327 / S.7983 (Valesky) – 25 cents per $100 – from $.75 to $1.00 • Herkimer County – A.10975 / S.7717 (Seward) – Extender – expires Dec. 1, 2010 extends through 2012 – 25 cents per $100 – from $1.00 to $1.25.Passed Assembly and Senate. • Wyoming County – A.10979 / S.7736 (Volker) – Extender – expires December 1, 2010 – extends through 2012. Current rate is $1.25 per $100.Passed Assembly and Senate. • Dutchess County* – S.4040 (Saland) / A.8780-A – Extender – existing MRT from 2009 to 2011 (or 2010 in Assembly Bill)

18. Past Budget Actions • Medicaid and Public Health Cuts of $775M – marginal impact to counties • Child Welfare Cost Shift of $113 million to counties (2/3 NYC) • Early Retirement Incentive Adopted • +$20 million for E-911 grants • Numerous nicks an cuts – 10% probation aid cut, job training, TANF programs, agriculture, etc. • Total impact to counties TBD, but will be in the hundreds of millions of dollars (mostly impacting NYC)

19. Early Retirement • In an earlier Survey (June 14th), most counties still considering. • Four Counties Plan to Adopt (Cayuga, Steuben, Nassau and Westchester) • Seven Counties Said They Will Not Consider • The rest are still considering the option and the cost

20. Next Steps • Revenue Bill Needs to Be Enacted • Veto Process Continues • Veto Overrides Considered • More detailed analysis forthcoming