News from STATE SENATOR

Liz Krueger

New York State Senate, 26^th District

COMMUNITY BULLETIN – March 2003

Message from Liz . . .

Despite our serious fiscal crisis, the New York State Legislature continues to operate according to its own unique rhythms. In keeping with the season, the legislature hibernates until well after the coming of Spring, and doesn’t really get down to business until the final days of session, when we no doubt will once again rush through close to a hundred pieces of legislation a day. Late last month, after a total of eleven days in session, the Senate took its annual “Presidents Week” break.

This pace is particularly disturbing this year, when the state is facing the problem that it is approximately 2.8 billion dollars in deficit for the fiscal year that ends this month. This unaddressed deficit, and the fact that we will clearly once again not have a budget in place for the beginning of the new fiscal year on April 1^st, will have serious impacts on local governments, school districts, and social service organizations that rely on state funding. The failure of the State legislature to do its job in a timely manner has serious consequences for the provision of vital services, and these consequences are exacerbated this year because of the depth of the fiscal crisis faced by all levels of government. Unfortunately, while just about everyone in the legislature talks about a crisis, we continue to conduct business as usual.

I believe that reform of the budget process is one of the key goals we must accomplish this year. I have offered a number of proposals that would force the legislature to deal more responsibly with the budget. Among those proposals are changing the beginning of the fiscal year to June 1^st, when the State is in a better position to have an accurate estimate of revenues. Since New York State is particularly dependent on revenue from personal income tax, beginning the fiscal year before the April 15^th tax deadline, results in consistently inaccurate revenue projections in the budget. I have also proposed requiring that if the budget is not passed on time, no legislation other than the budget be considered in committee or on the floor until the budget is passed. Furthermore, I propose requiring the legislature to remain in session every work day until a budget is passed. I also support the creation of a non-partisan budget office to provide a more objective evaluation of the governor’s revenue and expenditure proposals.

These and other reforms I have proposed would go a long way toward creating a reliable and deliberative budget process. In the meantime, we must try to deal with the realities of the current budget crisis. Last month I outlined some revenue generating ideas to meet our needs. In this months policy statement below, I will discuss some of the Governor’s revenue generating ideas.

District Office: 211 East 43^rd Street, Suite 1300, New York NY 10017 (212) 490-9535 Fax: (212) 490-2151

Albany Office: Room 302, Legislative Office Bldg., Albany NY 12247 (518) 455-2297 Fax: (518) 426-6874

Community Spotlight

Fighting the Elimination of Stops on the M15 Bus:

I have written to New York City Transit (NYCT) President Laurence Reuter expressing my concern over the net loss of ten bus stops along the M15 line on First and Second Avenues, including a net elimination of four stops in Community Board 8. I am concerned that this decision by the MTA is just another example of how the use of articulated buses results in decreases in service and convenience. NYCT is also lengthening all the stops along the line, in order to allow the longer articulated buses to approach the curb. I continue to hear reports that articulated buses are difficult to board because they frequently are unable to reach the curb. Furthermore, articulated buses do not use green technology such as compressed natural gas, and therefore worsen air pollution problems in New York City. It is unfortunate that during a period where NYCT has been stepping up its efforts to purchase cleaner buses, it is also relying increasingly on articulated buses that do not use pollution reducing technologies. I will continue to pressure the MTA to reduce its reliance on these buses, which provide a lower quality of service and safety and increase pollution.

Tax Clinic for Seniors and Low Income People:

Eviction Intervention Services is offering a tax clinic for seniors and low-income people every Tuesday through April 8^th. The clinics will take place every Tuesday from 10:30AM to 2:00PM at the Eviction Intervention Services offices, located at the Lexington United Methodist Church at 150 East 62^nd Street between Lexington and Third Avenues. For further information, please contact Shari Goodman at 308-2210, x.207.

Summer Internships for Junior High and High School Students:

The Manhattan District Attorney’s Office has summer internships available for students between the ages of 14 and 18 who are interested in learning more about the legal process. Interested applicants should send a resume and essay explaining their interest in the law to the Community Affairs Unit, New York County District Attorney’s Office, One Hogan Place, Room 824, New York NY 10013, postmarked no later than April 11, 2003. For further information, contact the Legal Bound Program at (212) 335-9082.

New York Council for the Humanities Scholarships Available:

The New York Council for the Humanities is conducting a research essay scholarship competition, which will award 30 scholarships ranging from $250 to $5000 to winning essays. This year’s topic is “The Source of Ideas.” The deadline for submission is May 2, 2003. For more information, visit the Council for the Humanities website at http://www.nyhumanities.org/ysc2003/ysc2003contestpage.html, or call

(212) 233-1131 x24 and request a brochure.

Veterans Advocacy Available through Vietnam Veterans of America:

The Vietnam Veterans of America, Manhattan Chapter 126, has established a new advocacy and assistance program for Veterans. They can assist with health related matters, and provide advocacy with the Department of Veterans Affairs. For more information, contact John Rowan, Service Representative, at (212) 349-1895.

Spotlight on Policy

Tobacco Securitization

As part of his plan for addressing New York State’s fiscal crisis, Governor Pataki has proposed “tobacco securitization,” which involves selling bonds to raise $4.9 billion through the 2004-2005 fiscal year, to be backed by future revenues due New York State from the tobacco suit settlement. The State is still owed approximately $10.5 billion from the tobacco companies through Fiscal Year 2025. This proposal would reduce our current operating deficits over the next few years, but at a tremendous cost over the long term. Securitization is bad public policy for several reasons:

• Securitization offers an extremely low rate of return to the State: Current estimates are that the State will receive 40 cents on the dollar or less. Because many other states and localities have already securitized their shares of the tobacco settlement, the market for these bonds is saturated, which reduces the return to newly securitizing states. Furthermore, because the state is not guaranteeing these bonds, which are the obligation of the tobacco companies, they are subject to a higher interest rate – and lower return to the state – than general obligation bonds.
• Securitization Bonds would be used to pay general operating expenses: These bonds are in fact a huge “one-shot” – the largest one shot in the history of New York State. This will create substantial revenue problems over the longer term after the bond returns have been spent. This is why it is considered bad fiscal policy to use bond revenues for recurring general operating expenses.
• Tobacco Settlement Funds are already committed to programs to reduce smoking and promote health: The governor offers no real mechanism for replacing the funding for programs such as HCRA 2003 that were supposed to be funded with tobacco settlement revenues. This settlement was based on the understanding that it required tobacco companies to address the cost to the state from smoking. By moving the funding out of health and smoking reduction programs, the state is not living up to its end of the bargain, which could have consequences for future litigation aimed at holding corporations responsible for the damage done by their products.

I share the Governor’s recognition that the State needs to find revenue, but tobacco securitization is just about the worst mechanism we could use to deal with the fiscal crisis. That is why I have joined many of my Democratic colleagues in calling for a more realistic approach to revenue generation that aims to create a more progressive tax structure through mechanisms such as closing corporate tax loopholes, an income tax surcharge on higher income New Yorkers, a reinstatement of the commuter tax, and a reinstatement of the stock transfer tax. Raising taxes may not be popular, but it is a great deal more responsible than simply pushing our fiscal problems off on our children through bonding schemes like tobacco securitization.

Elimination of SSI Cost of Living Increases

Another example of the misplaced priorities in the Governor’s budget is his proposal to refuse to pass along the federal cost of living increase to SSI recipients, and instead apply that money to general operating expenses. Simply put, this proposal represents a tax on some of the poorest and most vulnerable New Yorkers, people with disabilities. In New York, an SSI recipient living independently can receive up to $639 per month. The governor proposes capturing the federal cost of living increase of approximately $13 per month and applying it to other SSI costs, and justifies this measure on the basis that the captured revenue would help to cover state SSI costs, which are higher than some states that provide lower benefit levels. The Bush administration is cooperating with this effort, which will have a tremendous impact on New Yorkers of limited means.

SSI recipients in New York State (and particularly New York City) face one of the highest costs of living in the country, and to deny them the increase that recipients in all other states are getting is truly inhumane. Ironically, for many years, people with disabilities have been fighting to be included in the SCRIE program, which would protect them from rent increases, but the state has been unwilling to grant them this protection. Now the state will also take away their cost of living increase. The mathematics of this situation are clear – many SSI recipients will simply be unable to afford the increases in their rent they will face this year. This proposal is in many ways symptomatic of the Pataki approach to our fiscal crisis, which is to balance the budget on those least able to protect themselves, and those least able to afford it, whether they are people with disabilities, children, or senior citizens. We in the legislature have an obligation to defeat these outrageous proposals, and to develop a budget that deals both responsibly and compassionately with the crisis we face.