News from STATE SENATOR

Liz Krueger

New York State Senate, 26^th District

COMMUNITY BULLETIN – March 2004

Message from Liz . . .

As the state budget deadline of April 1^st approaches, it again appears we will have a late budget. As I discussed in last month’s report, there is some movement toward reforming the budget process, but as of now we are still operating in the traditional mode of “three men in a room.” And while the state’s fiscal health is improving, this improvement is only relative – we still face a shortfall of at least $4.5 billion. Legislative leaders will need to find ways to close these gaps. Fortunately, there are a number of options that would allow the state to achieve a balanced budget that would be much more fiscally responsible than the proposals offered by the Governor in his executive budget.

As usual, the Governor’s proposals for closing this gap would balance the state budget on the backs of those least able to afford it, such as college students, the disabled, and poor people. Among the governor’s proposals are significant cuts to TAP funding for college students, five percent across the board cuts for most social programs, reduced access to health care for the working poor, and reductions in public assistance for children with families. Furthermore, the governor’s budget practically ignored the court decision requiring New York State to provide a sound basic education to all public school students, which will require billions of dollars in additional funding for New York City schools. Instead the Governor actually proposes cutting state funding to New York City schools by $6 million, and relies on an unreliable and unwise proposal to fund education through projected video lottery terminal revenues.

So what options does the legislature have? I believe our options are twofold. First, we need to reevaluate our tax structure and identify ways of increasing state revenues by increasing the progressivity of our tax system. Second, there is plenty of room in the governor’s budget for reducing unwise expenditures, and establishing accountability standards that would ensure that we are getting our money’s worth out of state expenditures. Here are two ideas:

• Reform Our Corporate Tax Structure: Last year the legislature closed two corporate loopholes, but New York State is still allowing large corporations to avoid substantial tax liability. The main beneficiaries of these loopholes are large multinational and multi-state corporations, not small businesses who are unable to structure their income in ways to avoid paying taxes. Three simple reforms would go a long way toward creating a more balanced tax structure. First, New York State should reform its Alternate Minimum Tax by enacting the more progressive AMT system used by New Jersey. Second, New York State should follow the lead of the 28 states that have adopted “throwback” rules that stop multinational and multi-state corporations from avoiding taxes on profits made on sales in states in which they have no physical presence. Finally, New York State should join the 16 other states that require combined reporting of income for companies and their subsidiaries.

• Increase Oversight and Accountability for Economic Development Programs: At the same time Governor Pataki is proposing substantial cuts to education, health care and social services, he is proposing $250 million in new economic development funding to be administered by the Empire State Development Corporation and increasing funding through the Empire Zones program. The structure of these programs virtually ensures that there will be little oversight of the disbursement of this funding, and little evaluation as to the economic benefits it produces. These programs need to be curtailed and subject to strict accountability standards.

These are just two examples of the many actions the legislature can take to address our current fiscal situation in a responsible manner. Our long-term goal must be to develop a fiscal structure capable of supporting necessary services, and ensuring that state monies are spent wisely. As the budget process moves forward, these are the standards that I will be applying to the legislative budget.

Community Spotlight

Free Tax Assistance Available:

Eviction Intervention Services and Community Food Resource Center are each offering Free Tax Assistance to eligible individuals. Eviction Intervention Services offers assistance to seniors every Tuesday through April 13^th from 10:00am to 1:30pm. They are located at 150 East 62^nd Street between Lexington and Third Avenue. Walk-ins are welcome, or call

212-308-2210 for more information. Community Food Resource Center offers assistance to individuals with incomes below $35,000 if they have dependent children, and below $15,000 for individuals without dependent children. Their midtown location is at the 1199SEIU office, 330 West 42^nd Street between 8^th and 9^th Avenues, on the 9^th Floor. Hours are Monday to Thursday 4pm-8pm, and Saturday 10am-6pm. No appointment is necessary. Call 1-866-924-3759 for more information.

New Services for Seniors:

DOROT, a nonprofit agency that serves New York’s elderly community, now offers services to seniors residing on Manhattan’s East Side. Programs include Friendly Visiting, which provides seniors with a weekly visit from a volunteer, and Shop & Escort, which offers assistance getting to medical appointments and grocery shopping. Volunteers also visit homebound elders with Holiday Package Deliveries before Rosh Hashanah, Thanksgiving, Chanukah and Passover. The Kosher Meals for the Homebound delivers frozen meals, but currently has a waiting list and is available only on an emergency basis. For more information about DOROT services and volunteer activities, please call (212) 769-2850 or visit www.dorotusa.org.

Free Glaucoma Screenings and Diabetic Retinopathy Examinations:

The Manhattan Eye, Ear and Throat Hospital is offering free testing for glaucoma and diabetic retinopathy. These services will be offered on Friday, April 2^nd from 12:30PM to 5:30PM at the hospital’s eye clinic, located at 210 East 64^th Street. No reservation is necessary. For more information, call Manhattan Eye, Ear and Throat Hospital at (212) 605-3770.

Spotlight on Policy

Federal Housing Cuts

President Bush’s proposed Housing & Urban Development (HUD) budget would slash the housing voucher program, also known as “Section 8”, by close to 40% by 2009. According to the Center for Budget and Policy Priorities, nearly 250,000 families will have their housing assistance cut by 2005 and up to 800,000 families by 2009. The housing voucher program currently assists two-million low-income households, most of them low-income working families, elderly people or people with disabilities. President Bush’s proposal would not only destroy the housing voucher program, but it would destroy the lives of hundreds of thousands of families. This cut would be the most severe to a low-income program since the early years of the Reagan Administration.

The Center on Budget and Policy Priorities indicates that New York State presently authorizes over 200,000 vouchers. That number is estimated to be reduced by close to 25,000 by 2005 and by over 77,000 by 2009. There are more than 125,000 families on the waiting list for New York City’s Section 8 program despite the fact that the list has been closed for ten years.

The Administration’s proposed HUD budget and the housing assistance cuts that New York’s families will have to endure are heartless. This is particularly true given the lack of any coherent national housing policy. Such a policy must include the recognition of the importance of governmental support for a variety of programs. These include both market based and publicly funded housing construction.

President Nixon initially created the housing voucher program in 1974 and it has received strong bipartisan support for three decades. At the time, tenant-based housing subsidies represented a bold new effort to use private markets to deliver housing assistance that had previously been delivered through government-owned projects. In 2001, the congressionally chartered Millennial Housing Commission concluded that the voucher program was “flexible, cost-effective, and successful in its mission” and recommended that it continue to serve as the “linchpin” of federal housing policy.

The Bush Administration argues that these cuts are needed to manage an explosive escalation in program costs. Yet budget projections prove that these increasing costs were merely an outgrowth of temporary factors. In fact, according to the Congressional Budget Office, if funding for Section 8 was maintained at its present level, the cost growth would slow down by 2005.

Beyond the proposed massive cuts to housing voucher funding, the program would also be fundamentally altered. Specifically, Section 8 vouchers would become a block grant to local housing agencies. Analysts, both Republican and Democrat, agree that block grants are a bad funding model, as they have a historical tendency of being capped or cut over time. In addition, criteria for receiving vouchers would be significantly relaxed. Presently, those who earn up to 30% of the local median income, or about $15,000 a year in New York, receive 75% of the vouchers based on standards. The Bush Administration plan allows for local housing agencies to distribute vouchers to anyone earning up to 80% of the median income or $41,500 in New York.

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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

On the Web at http://www.lizkrueger.com