Assemblymember Scott Stringer, 67th Assembly District
Faces of the Budget Crisis:
How Much Pataki's Budget Really Costs
ABOUT ASSEMBLYMEMBER SCOTT STRINGER
Assemblymember Scott Stringer is a native New Yorker who was first elected to the New York State Assembly in 1992 after more than a decade of political involvement and neighborhood advocacy. Stringer represents the 67th Assembly District on Manhattan's West Side.
Stringer released a report in November 2002 titled "Total Collapse: How NYC Department of Buildings' Failed Policies Contribute to Crumbling Buildings". In April 2002, Stringer wrote a report addressing the textbook shortage in New York City's public schools. In May 2002, Stringer also issued a report on tax assessor practices and assessment administration in New York City.
Stringer is the newly appointed Chair of the New York State Assembly Cities Committee and serves on the Education, Higher Education, Housing, Judiciary and Health Committees. Stringer is also a former Chair of the Real Property Taxation Committee, the Assembly Oversight, Analysis and Investigation Committee and the Task Force on People with Disabilities. Stringer is also a member of the Assembly Task Force on Women's Issues.
ACKNOWLEDGEMENTS & CREDITS
Assemblymember Scott Stringer wrote this report with the help of his staff:
For additional copies of this report, please contact Assemblymember Stringer's office by phone: (212) 873-6368 or email: email@example.com.
The current fiscal crisis for New York State will without a doubt have dire consequences for New York City's working- and middle-class families if Governor Pataki's plan is implemented. Since Pataki's budget presentation on January 29th, New Yorkers have been flooded with information on the potential increases in fees such as MTA fares and SUNY and CUNY tuition, as well as sweeping cuts to healthcare, education, and various other social services. However, most people do not understand how such overwhelming costs will specifically affect their livelihoods.
The sheer number and volume of Pataki's suggested cuts and fees have no real meaning without breaking down the billions and looking at how the numbers truly affect New Yorkers. This analysis details the real effects on New York City families of Pataki's unbalanced and unfair approach to closing the State's budget deficit. This breakdown reveals just how many thousands of dollars that Pataki expects students and middle- and working class families to pay to balance the State's tremendous deficit. Faced with this analysis, Pataki should no longer be able to hide behind his abstract billion dollar cuts and misleading rhetoric.
Overall, New York State's current budget deficit is $11.5 billion. While preserving $177 million in tax cuts for New York State, the Governor proposes crippling service reductions and buries a whopping $5 billion worth of fee increases and surcharges that will disproportionately hit the working- and middle-class throughout the State in general and New York City in particular. There is absolutely no denying that New York City residents will have to bear the brunt of this budget.
The following provides a brief snapshot of the most prominent cuts in services and increases in fees for New York State and breaks down the overall effects of those cuts on New York City.
Education - Throughout the State, Pataki proposes a $1.24 billion reduction in elementary and secondary school operating aid. To accomplish this service cut, Pataki puts a disproportionate burden on New York City. He wants to cut operating aid to NYC by 8%, or $407 million, while he proposes only a 4% service reduction in cities throughout the rest of the State. In addition to his lack of support for K-12 education, Pataki disregards the central role of higher education for New York City college students. Major features of his proposal include:
Healthcare - Pataki plans to cut Medicaid and other healthcare spending by $2 billion statewide. He proposes a swap in the Medicaid burden, in which the State will pay the cost of pharmaceuticals if localities will pay 12% more for hospital stays and clinic visits. New York City will lose millions of dollars from this proposal, because a higher proportion of New York City's Medicaid costs are due to hospital stays than for the rest of the State. In contrast, suburban localities are estimated to save $200 million from his proposal.
In addition to changes in the Medicaid payment structure, Pataki proposes a slew of additional taxes, increased fees and reduced benefits in healthcare overall. According to the Mayor's office, the City is set to lose $250 million per year due to City hospitals' lost revenue and increased costs associated with Pataki's taxes and fees. These taxes and fees include:
As if these cuts to health services were not enough, Pataki also intends to raid $3.8 billion from the State Tobacco settlement funds, a financial resource earmarked specifically for a range of health promotion programs in New York State. This move is unconscionable as it will sacrifice the health of innumerable New Yorkers. His diversion of settlement funds will be especially hurtful to healthcare programs for low-income New Yorkers and anti-smoking programs throughout the City.
Transportation - The MTA, a State Authority with board members appointed by Pataki, proposes different types of transit fare hikes, which are essentially regressive tax hikes totaling $1.4 billion. Since New York City working families are by far the majority of those using mass transit, New York City will yet again unfairly bear the burden of this fare increase.
Other Hidden Fees and Taxes - Riddled throughout Pataki's budget presentation is his promise to withhold from any form of "job-killing" taxes. However, in cowardly fashion, he uses this rhetoric to mislead the public on the true meaning of his budget-speak mantra. Pataki plans to impose and increase numerous hidden taxes and fees, resulting in higher costs to New Yorkers, such as:
It is nearly impossible to make sense of Pataki's sweeping cuts in services and broad increases in fees. This analysis brings to light just how much the average New Yorker will struggle under the gun of Pataki's budget. Below are five simulated portrayals of households in New York City. Each snapshot includes descriptions of the services and programs many New York City residents rely on and details the quantifiable, unquantifiable and potential losses under Pataki's budget. New Yorkers will now know exactly how the Governor's budget will impact their daily lives. This analysis gives real meaning to the billion dollar cuts written about in the papers and shows how the wallets of New Yorkers will be impacted if Pataki moves forward with his budget plan.
FIVE NYC FAMILIES: THE REAL IMPACTS OF PATAKI'S BUDGET
Ms. Anderson is a 68 year-old woman who has lived in Manhattan for over 50 years. She began living in an apartment in Greenwich Village in 1965 and continues to live there under rent-control to this day. Despite the fact that she has no surviving family, Ms. Anderson has several friends that live in her neighborhood. She is known amongst all of her peers as a loyal and vibrant friend with enormous pride in her independence.
Ms. Anderson relies heavily on Medicaid benefits to help her through the recovery process for a minor stroke she suffered recently. Since her release from the hospital, she receives regular home-care visits from a registered nurse for approximately 10 hours per week. Ms. Anderson's doctor also instructed her to take several prescription drugs to stabilize and strengthen her condition.
The Andersons always struggled to make ends meet, and Mr. Anderson's recent death is making Ms. Anderson even more worried about finances. At least Ms. Anderson will soon be able to access his pension, as soon as she provides his death certificate. Because of her strict budget to afford life's essentials, Ms. Anderson always takes advantage of the sales tax exemption on clothing and shoe purchases under $110. In fact, she has regular shopping dates with her best friend. Ms. Anderson is also an avid rider of the subway, using the subway 6 times per week. As she does not trust the new MetroCard, she only uses tokens to pay her way.
Mr. and Mrs. Robertson live in a house with their two kids in Forest Hills, Queens. Mrs. Robertson is a 48 year-old teacher's aid at a nearby elementary school, but she has been worried lately about being laid off due to budget cuts. Mr. Robertson is a doorman for an apartment building on the Upper East Side and just celebrated his 50th birthday last week. The youngest child, Kim, is a senior at the local public high school. Paul, her brother, is a freshman at SUNY Stonybrook.
Mr. and Mrs. Robertson work long hours to make ends meet, especially to save money for Paul's and Kim's college educations. Due to their restricted budget, Mr. and Mrs. Robertson only own one car, which they share with their kids. Ms. Robertson uses the car to commute to and from work each day. All four family members also use the car for most family weekend and evening activities around and outside the City, and their kids each use the subway on the weekends to see friends. Due to the wear and tear from the family's frequent use of the car, all four tires need to be replaced this year. An additional expense this year for the Robertsons includes the renewal fee for their licenses.
Mr. Robertson takes the subway to commute to work. Out of fear of losing a monthly MetroCard, he buys a weekly unlimited instead to take advantage of longer-term MetroCard discounts. The family also saves money through the sales tax exemption on new clothes and shoes, particularly for Kim, who always wants new clothes. The Robertsons shop about once a month and end up spending $100 on average each trip.
Kim is a very talented artist, recognized with 10 different awards for her excellence in painting and sculpture over the past few years. Even so, she has always had a hard time excelling in some of her required school subjects, especially Math and Science. Luckily, she has access to an excellent tutor through the State-funded Extended After-School Program.
Ever since Paul began college last year, Kim has been working really hard to improve her grades so she can join him at Stonybrook. She also works part-time at a local McDonald's for spending money. Although she refuses to try hard drugs like some of her friends do, Kim has been experimenting with smoking cigarettes with fellow co-workers after school. However, her parents are hopeful that new anti-smoking programs funded by tobacco settlement funds will encourage Kim to stop.
Paul lives at home and commutes to and from college via the LIRR. His parents contribute money towards his tuition, and he receives just enough money in TAP to cover the rest. He is hoping to continue working hard so that he does not have to burden his parents further with his college tuition costs.
Mr. Kramer is a 32 year-old caseworker in the Bronx and a single parent of a 5-year old daughter, Nicole. His wife passed away two years ago, and Mr. Kramer must budget very carefully to afford his apartment and take care of his daughter's needs. An added stress is Nicole's illness. She was identified by doctors at a very early age as having a developmental disability. At least this qualifies her for the State-funded Early Intervention Program. This program currently offers services, including therapy, at no cost to the patient.
Mr. Kramer uses the subway for all of his transportation needs within the City. He also owns a car, which he then uses to visit Nicole's grandparents in Upstate New York on the weekends. Due to the common difficulty in finding parking throughout the City, Mr. Kramer is prone to getting tickets for illegal parking.
Due to Mr. Kramer's financial situation, he cannot afford to put up the money to buy a weekly or monthly MetroCard. Instead, he buys tokens on an as-needed basis. In addition, he heavily depends on the sales tax exemption for clothes and shoes. He must shop for Nicole often, as she is in a stage of development where children grow very quickly. Although he attempts to find hand-me-downs from friends and relatives, he does not have anywhere near the support necessary to keep her well-clothed. Currently, he spends $800 per year on clothes and shoes for both of them on average.
Ms. Delmonico is a 25 year-old lawyer, who just moved from Atlanta to start her first job at a public interest law firm in Manhattan. While Ms. Delmonico is secure with her new position at the law firm, she is still very concerned about her finances. A sizeable portion of her salary must go to pay back college and law school loans, and New York City has a higher cost of living than Atlanta. Due to her sizeable debt and substantial relocation expenses, Ms. Delmonico is very tight with her budget. She currently takes advantage of the discounts that accompany the 30-day unlimited MetroCard, as her job requires a lot of commuting throughout the City.
Since she just became a lawyer in New York, she must pay the fee to register as a new lawyer within New York State. An additional expense to Ms. Delmonico's budget includes monthly mortgage payments associated with her recently acquired ownership of her Uncle's condo in Brooklyn Heights. Luckily, School Tax Abatement Relief (STAR) presently cuts down on the number of taxes she must pay per year. Ms. Delmonico also has an ongoing personal claim in the New York State Supreme Court.
Since she just got her first job in a professional environment, Ms. Delmonico must buy business suits and professional clothing and shoes. When she goes on her monthly shopping trips in New York City, Ms. Delmonico is careful not to spend over $110 in order to keep the sales tax exemption on her purchases.
Ms. Garcia is a 20 year-old student at City College. Because she comes from a relatively poor family, she relies heavily on TAP to assist her in making college payments. While her parents saved as much as they could to help Ms. Garcia afford her college expenses, they are not able to continue their financial support. In order to make up for the end of her parents' financial assistance, Ms. Garcia works a part-time job as a waitress while going to college full-time.
Since Ms. Garcia is so strapped for cash, she usually buys no more than a $10 MetroCard when traveling by subway. She rides the subway about 12 times a week to and from work. Otherwise, she is in class or in the library. Unfortunately, she rarely has the time or the money to go out with her friends. Although Ms. Garcia is not aware of the current sales tax exemption for clothes and shoes purchases up to $500, her small amount of discretionary funds generally limit her clothing purchases to under $110 at a time.
Ms. Garcia has health coverage under Family Health Plus, a State-funded program that provides health insurance for low-income New Yorkers. She is very thankful for this coverage as she would be uninsured otherwise.
1 With Mr. Anderson's pension and Social Security adding up to $300 per month, Gloria is eligible for SSI.
2 Ms. Anderson's transit fare increase is calculated as follows: $.25 fare increase x 6 times per week x 52 weeks. This increase of $.25 (from $.75 to $1.00) for each token purchased is based on the MTA's baseline projection for a 20% increase in average transit fare. (Fare Policy Presentation, January 27, 2003)
3 This increased sales tax is calculated as follows: $100 x 12 months x .0825. New York State is both lifting the exemption on the 4% State sales tax and forcing New York City to impose a sales tax of 4.25% on clothing and shoes.
4 Ms. Anderson loses 2 hours of home care per week because the provider must offset inflationary costs of care with no reimbursement increase.
5 $42,000/year is a little less than median family income in New York City. (U.S. Census Bureau, 2000)
6 This increase in transit fare is calculated as follows: $3 increased fare x 52 weeks per year. The increase of $3 (from $17 to $20) for each 7-Day MetroCard purchased is based on the MTA's baseline projection for a 20% increase in average transit fare. (Fare Policy Presentation, January 27, 2003)
7 This cost is calculated as follows: 7 trips per week x 52 weeks x .5 fare increase. This increase of $.50 (from $1.50 to $2.00) for each token purchased is based on the MTA's baseline projection for a 20% increase in average transit fare. (Fare Policy Presentation, January 27, 2003).
8 The Robertsons' extra sales tax of $99 is calculated as follows: $100 per month x 12 months x .0825.
9 This increased fare is calculated as follows: $214 for a current monthly pass between Forest Hills and Stonybrook x .2 assuming a 20% increase in fares.
10 This potential earnings loss is calculated as follows: $12,773 x .5. A reasonable current estimate in economics literature of the return to a college degree is 50%, and Kim's income as an 18 year-old high school graduate would be $12,773. (Bureau of Labor Statistics, 2002)
11 Caseworkers' salaries range from $25,000 - $50,000. (University of Pennsylvania, 2003)
12 Pataki's budget would require the consumer to pay for the first $5,000 of the services provided by the Early Intervention Program. This fee may be covered partially or in whole by one's insurance or paid for by the consumer out-of-pocket. In this case, Mr. Kramer's insurance only covers $2,000 of this service.
13 This figure is calculated as follows: 10 trips per week x 52 weeks x .5 fare increase. This increase of $.50 (from $1.50 to $2.00) for each token purchased is based on the MTA's baseline projection for a 20% increase in average transit fare. (Fare Policy Presentation, January 27, 2003)
14 Mr. Kramer's extra sales tax is calculated as follows: $800 x .0825.
15 Nicole's potential foregone income is calculated as follows: $23,867 x .08 x .2. This equation is based on Alan Krueger's research on class size (Krueger, 2000). $23,867 is the average earnings for a 22 year-old female college graduate in 2001 (BLS, 2002). .08 represents the decrease in earnings associated with a one standard deviation decrease in reading or math scores. .2 represents a student's standard deviation loss in test scores resulting from attending smaller K-3 classes. Since this estimate assumes her future earnings will remain the same as 2001 earnings, Nicole's loss for one year will likely be even higher. Economic literature suggests that real earnings increase over time. (Source: Krueger, Alan B. Economic Consideration and Class Size Working Paper #447, Princeton University, September 2000.)
16 Ms. Delmonico's extra transit costs are calculated as follows: $5 increased fare x 12 months. This increase of $5.00 (from $63 to $68) for each 30-Day MetroCard purchased is based on the MTA's baseline projection for a 20% increase in average transit fare. (Fare Policy Presentation, January 27, 2003)
17 Ms. Delmonico's increased sales tax costs are calculated as follows: $100 x 12 months x .0825.
18 New York City currently has the lowest overall relief in the State under the STAR program. The lowest STAR rebate given in New York State was $200, which occurred in New York City. In turn, some suburban STAR rebates total up to $1,400.
19 Ms. Garcia' foregone income is calculated as follows: $12,773 x .5. A current estimate of the return to education is 50%, and Ms. Garcia' income as a 19-year old high school graduate is $12,773 (BLS, 2002).
20 Ms. Garcia' extra MTA costs are calculated as follows: .25 fare increase x 12 rides per week x 52 weeks. This increase of $.25 (from $1.50 to $1.75) for each transit ride paid by MetroCard is based on the MTA's baseline projection for a 20% increase in average transit fare. (Fare Policy Presentation, January 27, 2003).
21 Her additional sales tax is calculated as follows: $100 x 3 times per year x .0825.
22 Antibiotics for bronchitis normally range from $18 - $40, depending on dosage.
These portrayals illustrate for the first time the real effects of Pataki's budget proposal on New York City working families, college students, and the poor. The sweeping generalizations currently defining the budget debate disguise the simple fact that New Yorkers will be forced to pay thousands of dollars to make up for Pataki's past mistakes and broken promises. This analysis illustrates in clear terms what Pataki is asking New York City residents to sacrifice in order to balance the State's budget.
For the City that drives the economic engine of the State, Pataki's budget is clearly overly burdensome and unfair. By increasing regressive taxes and out-of-pocket costs for average New Yorkers, Pataki's budget proposals decimate the financial safety nets for New Yorkers already threatened by his spending cuts. Pataki goes even further to hurt the lives of New York City families, refusing to consider Mayor Bloomberg's request for $2 billion in aid from the State to help with New York City's budget crisis. Instead, Governor Pataki only offers a meager $439 million in net aid, most of which is in the form of one-shots that will only hurt the future economy.
It is time to stop adopting policies that balance the budget by crippling New York City. Nor can Pataki continue to support a budgetary plan that hurts those least able to afford it - our working- and middle-class families, students, and the poor. Reasonable alternatives to the Governor's proposed budget exist, and there must be careful analysis of each of those options to protect New York City and the lives of New York City families who are struggling to succeed in these difficult times. People like Ms. Anderson, the Robertsons, the Kramers, Ms. Delmonico, and Ms. Garcia should not have to bear the brunt of Pataki's fiscal irresponsibility.