Albany Update Volume 4 - January 20, 2004 Budget 2004 Today Governor Pataki unveiled his SFY 2004-05 budget. Once again the Governor's release includes a voluminous paper trail that leaves us scrambling to find the clues to his budget. Though it would be impossible to try to touch upon all the changes put forth by the Governor, as best we can , we will summarize the high points of his presentation. If any client is interested in a particular subject area or needs further information on anything, we have complete sets of the budget story and bills. Please call us at (518) 462-4620 and we will do our best to find what you need. State Fiscal Year (SFY) 2004-05 Budget Summary First and foremost is the fiscal outlook for New York State. The Governor has indicated that they budget gap for SFY 2004-05 will be approximately $5.1 billion, growing to more than $7.8 billion in SFY 2006-07. The targeted plan to restore prosperity in New York includes the following: Reject broad-based tax increases and continue tax reductions; Restructure Medicaid and other health programs to contain escalating cost increases for the State and local governments, including the phased assumption of the local share of long term care costs; Reform pension policies to strengthen and modernize our retirement system while producing immediate savings to the State and local governments; Control the growth in State Operations, through spending reduction and management efficiencies; Invest in targeted economic development projects and tax cuts to stimulate job creation in the private sector, particularly the high-technology industry; and Reserve new dedicated video lottery terminals (VLT) revenues to support expected reforms to our education system. Economic Growth in New York The major focus of the Governor’s last several budgets has been on fostering economic growth in New York. The Governor believes that this can be achieved through: keeping commitments to prior tax cuts; proposing new targeting tax cuts; extending successful tax incentives; and bringing high technology to New York State. Some of the new tax incentives proposals include: A new STAR-Plus tax credit; Biotechnology Capital Access program; Exemptions for Military and Naval personnel; and Incentives for manufacturers including: decreasing the tax burden on manufacturers; proposing a targeted job training assistance program; and a new Manufacturers Assistance Programs (MAP). Education Never a budget year passes without Education being the center of the budget discussions. Last September the Governor announced the formation of the Zarb Commission, headed by former NASDAQ Chairman Frank G. Zarb. Its charge was to examine sound basic education with regards to its cost and to provide opportunities to all children. The report is due in March. While we anxiously await this report the Governor has proposed the following for SFY 2004-05: Flex Aid—a program designed to give our schools greater flexibility in the use of nearly $10 billion in State aid; Building Aid Reform which includes Priority Based Project Selection, Simplified State Aid Calculation and State Clearinghouse for Efficient Construction; Transportation Aid Reform; BOCES Reform—eliminating BOCES Aid for routine administrative services, ensuring true cost efficiency in BOCES contracts for telecommunication and other services by requiring BOCES to demonstrate savings compared to existing State contract prices; Special Education Reform; A cap on school budget increases; and Establishing the Sound Basic Education Fund, which will be funded by expanding the Video Lottery Terminal program, allowing up to 8 new sites across the state. Higher Education will see various new proposals, such as: A report by the Graduate Medical Education Council to assess New York's public and private graduate medical education programs; Changes to TAP—a two award system; a "base" award and a "performance" award. The base award will be consistent with the current payment schedules of TAP. The performance award will be paid upon successful completion of a degree. New Capital Investments will include:$1.8 billion for SUNY Senior colleges providing essential funding for infrastructure improvements; $1.1 billion for the same to CUNY; and a new $350 million higher education facilities capital matching grant program providing funding for both public and private colleges and universities. Public Safety The threat of terrorism has become a focal point for state policies on safety and security. As expected the Governor has put forth resources to; offset the costs to increased national security levels; buy new equipment for state and local first responders; construct a new biohazard laboratory; secure public buildings and spaces and conduct a comprehensive assessment of security measures at all significant power generating and transmission facilities in New York. Outside of terrorism, the Governor is looking to restructure some of the administrative operations in the State, such as merging criminal justice agencies and consolidating overlapping responsibilities. In addition, the Governor various fees; crack down on violent criminals, assist localities in fighting crime. Some of these proposals include: Establish a new fee to be paid by sex offenders; Expand parking ticket surcharges statewide; Establish a State licensing fee on pistol and revolver permits, and an expiration date for all guns; Consolidation of services from the Crime Victims Board and Division of Parole into the Division of Criminal Justice Services; Health Care Once again, the Governor has proposed major changes to the Health care System in New York. His proposals include changes to the Family Health Plus Program, Reforms in Medicaid, increased assessments on Nursing homes, Home Care and Hospitals, Pharmaceutical Reforms and Restructuring the Early Intervention Program. While we can't touch upon all the proposals, we have touched upon a few below: This year the Governor has decided to tackle the Long-Term Care System. This reform would include: State takeover of Local Medicaid Long-Term Care Costs; Closing existing eligibility loopholes which allow individuals to refuse to contribute any of their income and assets towards the cost of health care for a spouse; Improving Long-Term Care Insurance Options; Updating Nursing Home Rates; Re-establishing a .0.7% non-reimbursable assessment on home care revenues and increasing the assessment on nursing home receipts from 5% to 6%. In addition to Long-Term Care, the Governor is advancing several pharmaceutical savings initiatives, including: A Preferred Drug Program; New Medicare Discount Drug Card; "Forge–proof" Prescription Program; and Reduce pharmacy reimbursement rates for brand name and generic drugs in both the Medicaid and EPIC programs. Proposals impacting Hospitals include: Permanently reinstate the 0.7% gross receipts tax; Require Co-payments for FHP services; and Lag the last Medicaid payment in 2004-05, thus pushing Medicaid costs into the next fiscal year. Finally, the Governor has put forth a proposal to restructure the current Early Intervention Program, which includes: A two-tier approval process for services, which will require county approval if the number of services for a child exceeds five per week; and State approval for more than seven services per week. A provider registration fee is proposed to strengthen the provider approval and certification program; Allowing counties the option of using the State rate or negotiating a lower rate with providers; Increase health insurance reimbursement of medical services; Restructure the rate of reimbursement for home visits to establish one rate, rather than separate rates for basic and extended visits; along with a capitated rate for service coordination; and Institute Family fees that will vary depending on income - families earning less that 250% of the Federal Poverty Level are exempt. A Few Reminders As always, we at Bolton-St. Johns are committed to providing our clients with the best services scheduling lobby days, researching proposals, tracking legislation, and keeping our clients up to date. Again, if you are planning on a Lobby Day, please let us know as soon as possible. Many clients have already submitted requests and we are diligently working on setting up those meetings. Also, for planning purposes, the Legislators will be in Albany on Mondays and Tuesdays through February, with the exception of February 16-20 when they are on President's week break. Starting in March they will be here Monday—Wednesday. Passover/Easter Break is April 2-13th. Please plan you schedules accordingly. Now that the Governor has officially submitted his SFY 2004-05 budget, the staffs of each house will be spending the next 4-5 days preparing summary documents and responses to these proposals. As these documents become available, we will let you know. Also, we will send our regular newsletter at the end of this week, which will hopefully offer some insight into the responses of the Legislature, the public and various advocacy groups. Again, if you need further information on any of the Governor’s initiatives, please call us at (518) 462-4620. Back to newsletter list

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