See below for comments on this story from local lawmakers Assemblywoman Addie Russell & Sen. Darrel Aubertine

GOVERNOR PATERSON, MAJORITY LEADER SMITH, SPEAKER SILVER REACH AGREEMENT TO ELIMINATE $1.3 BILLION IN PROPOSED TAX INCREASES FROM
2009-10 EXECUTIVE BUDGET

Federal Economic Recovery Funds to Help Everyday New Yorkers in Difficult Economic Climate

Governor David A. Paterson, Senate Majority Leader Malcolm Smith and Assembly Speaker Sheldon Silver today announced an agreement to eliminate $1.3 billion in tax increases included in the proposed 2009-10 Executive Budget. The agreement eliminates new taxes on common items, including previously tax-free goods and services such as clothing under $110, sugared drinks, digital downloads, cable and satellite television, manufacturers’ coupons, haircuts, manicures, concerts, movies, live theatre, health clubs, bowling, golf, skiing and others. Additionally, to help businesses and families in a struggling real estate market, a proposal to limit the sales tax exemption on capital construction improvements made to property is no longer advanced.

“The proposed tax increases we are eliminating today were only put forward as a last resort when the deficit ballooned to an unprecedented level,” said Governor Paterson. “Now that enhanced federal funding is available, our highest priority must be to provide targeted relief to those who need it most during this economic crisis – average New Yorkers struggling to make ends meet.”

Senate Majority Leader Malcolm Smith said: “Taking these taxes off the table is a smart step forward in a budget process that should actually force government to do more with less. If implemented, these taxes would have impaired small businesses and adversely impacted middle income families. We have to take this opportunity to fundamentally restructure New York’s budget to make government more efficient and more effective – and in this fiscal crisis, taxes should be the last thing we consider, not the first. Reducing the rate of growth in our spending while investing in job creation and sound economic development will put New York back on the road to economic recovery.”

Assembly Speaker Sheldon Silver said: “At a time when so many working families are struggling to make ends meet, when the cost of everything from food to fuel to tuition is increasing, it is essential that government do all that it can to ease their tax burden. We believe it is particularly important not to increase the cost of those basic ‘quality of life’ products and services that help families tolerate times of hardship and uncertainty.”

These restorations will be financed through aid from the American Reinvestment and Recovery Act (ARRA), which is expected to provide New York with $6.5 billion in fiscal relief through the end of 2009-10. This includes $5 billion in flexible funding through increased Medicaid reimbursements (FMAP), $1.2 billion specifically designated to restore education reductions, and $274 million in other flexible funding. The use of the remainder of this economic recovery aid, as well as further agreements concerning tax and fee actions in the 2009-10 State budget, will be determined through continued budget negotiations.

Governor Paterson continued: “I want to thank New York’s Congressional Delegation for fighting hard for this funding, however we cannot treat a temporary windfall from Washington as an excuse to avoid the tough choices we must inevitably make to get our fiscal house in order. Federal funding will cover only a fraction of our overall budget deficit, and the economic outlook remains uncertain, so we must ensure that we use this aid in a responsible manner that strengthens our State’s long-term finances.”

A full list of taxes that will be eliminated from the proposed 2009-10 Executive Budget is included below:

Eliminate Proposed Restructuring of the Clothing Exemption. The Executive Budget would have eliminated the sales tax exemption for clothing and footwear priced under $110 and replaced it with two, one-week exemption periods for clothing and footwear priced under $500. This proposal is no longer recommended. (2009-10 Impact: $462 million, 2010-11 Impact: $660 million).

Eliminate Sales Tax on Non-diet Soft Drinks. The Executive Budget would have imposed an additional 18 percent rate of sales and compensating use taxes on fruit drinks that contain less than 70 percent natural fruit juice and non-diet soft drinks, sodas and beverages. This proposal is no longer recommended. (2009-10 Impact: $404 million, 2010-11 Impact: $539 million).

Eliminate Proposed Extension of Sales Tax to Cable and Satellite Television and Radio. The Executive Budget would have imposed sales tax on television and radio services provided by cable, satellite or other similar means. This proposal is no longer recommended. (2009-10 Impact: $136 million, 2010-11 Impact: $180 million).

Eliminate Proposed Limitation on the Capital Improvement Exemption. The Executive Budget would have limited the capital improvement exemption under the tax code to new construction, a new addition to existing construction, or complete reconstruction. This proposal is no longer recommended. (2009-10 Impact: $120 million, 2010-11 Impact: $160 million).

Eliminate Proposed Extension of Personal and Credit Services Sales Tax. The Executive Budget would have made personal services (such as beauty, barbering, manicure, pedicure, massage, health salon, or gymnasium services) and credit rating and reporting services subject to sales tax statewide. This proposal is no longer recommended. (2009-10 Impact: $78 million, 2010-11 Impact: $104 million).

Eliminate Proposed Extension of Sales Tax to Entertainment-Related Spending. The Executive Budget would have imposed a sales tax on entertainment-related consumer spending, including but not limited to, movie theaters, live theatre, concerts, golf, skiing, bowling and others. This proposal is no longer recommended. (2009-10 Impact: $53 million, 2010-11 Impact: $70 million).

Eliminate Proposed Digital Property Sales Tax. The Executive Budget would have imposed State and local sales tax on purchases of prewritten software, digital audio, audio-visual and text files, digital photographs, games and other electronically delivered entertainment services. This proposal is no longer recommended. (2009-10 Impact: $15 million, 2010-11 Impact: $20 million).

Eliminate Proposed Change in Coupon Taxation. The Executive Budget would have applied sales tax to the value of a store coupon used for a purchase. This proposal is no longer recommended. (2009-10 Impact: $3 million, 2010-11 Impact: $3 million).

Local Assemblywoman Addie Russell made a statement early this afternoon with regard to the agreement:

"The Assembly has reached an agreement with the Senate and governor to reject a series of taxes – first proposed in the executive budget – that would have nickel-and-dimed New York’s working families in a worsening economy.

I have heard from constituents in every corner of my district who are concerned with these proposed taxes and I share their concerns. Their message to me was loud and clear and I carried it to Albany every day. Clearly this is no time to create additional burdens for families struggling every day to make ends meet.

There is more work to be done, and I will continue to advocate ensuring the final budget meets the needs of North Country’s working families."

ALBANY (March 11, 2009)—State Sen. Darrel J. Aubertine today applauded Gov. David Paterson and leadership in the Senate and Assembly for listening to him and Upstate New Yorkers by eliminating $1.3 billion in taxes and fees from ongoing budget discussions.

“We can ease the minds of our constituents and assure them that these ‘peanut taxes’ that would have adversely targeted the poor and the middle class are in fact not going to be part of any plan to balance our 2009-10 budget,” Sen. Aubertine said. “This is very good news for all of New York, especially rural New York. These were not broad based proposals and they unfairly targeted the working people hit hardest by the economic downturn.”

The Senator, who has been referring to these proposals as “peanut taxes” because of how little each one contributed to closing the state’s budget gaps compared to the negative impact they would have on individuals, was especially concerned about the added expense for family activities from recreational sports to satellite television subscribers in the 48th District’s rural areas.

“In tough economic times, people are looking even harder for value in their entertainment dollar to bond with their families and remain a part of the social fabric,” Sen. Aubertine said. “Especially in our most rural areas, where options are limited, people rely on services like satellite television and radio. These taxes would have unfairly discriminated against upstate and rural New Yorkers and would have added up to little for the state, compared to the impact they would have had on the everyday lives of so many people.”