Budget Deal in Albany

[Chris_Wendt]

Conceptual agreement on a state budget was announced by Cuomo, Skelos and Silver. It is not finished, but should be in 4 days.

High Tax Aid will be fully funded, which will be good news for Wantagh and most of LI.

There will be something called "Pension Stabilization" "funds" about which no details were available other than it will replace some traditional aids.

...Read all about it here(Hyperlink to Newsday

Regards,

Chris Wendt

[Chris_Wendt]

I posted the following information on Patch:

The budget deal announced late last night indicates that High Tax Aid will now be fully funded. That could mean add-backs of $600K and $500K, respectively, to Wantagh & Seaford State Aid. Could...possibly. We will have to see how the entire budget plays out for our schools, in the State Aid computer runs, probably early next week.

$600K more aid for Wantagh could get the tax levy down below "3", potentially to 2.98%. But that would depend upon the actual numbers from the actual application of the actual new budget, when it is completed.

See the February 4, 2013 Article about High Tax Aid cuts to W-S Schools (Hyperlink)

Regards

Chris Wendt

[lilly]

I fail to share your cheeriness about the possibility of a 2.99% or 2.98% tax hike. Better than 3.71% but still unacceptable.

Cuomo mentioned some sort of aid for pension relief. I want details on that. That is what we need. And unless that pension relief is in the neighborhood of $1.8m, it will not meet our needs. Need details as I want to know if it involves kicking the can down the road as we will still be on the hook for it eventually.

[Chris_Wendt]

Please do not mistake my proffering a "2"+ as reason for cheer. To be clear, a tax levy increase that starts with a "2" has a better chance of voter approval than a tax levy increase that starts with a "3". I am not saying High Two's would be affordable, or favorable, or would be guaranteed to win passage of the budget.


A Laffer Curve, or normal distribution curve, could help illustrate voter sentiment (vertical axis) as a function of the tax levy increase (horizontal axis). Ignore the numbers shown on this example.

Chris

[lilly]

Chris, don't have a lot of time today but I will say this.

How about 1%, flat or negative tax levy? This taxpayer's camel's back is broken.

This is not anti-Wantagh, anti-kids, anti-teachers, or whatever ridiculous motive a reader may choose to ascribe, blah blah blah. It is economic REALITY. The LI public school model is broken. Fix what we can within Wantagh NOW and bring it in well under a 1% increase.

[lilly]

And while high tax aid may be up vs. last estimate, potential aid for pensions is unclear. Also unclear is the aid cut for the developmentally disabled (way to go... NOT). I don't know if/how that affects school aid.

[Chris_Wendt]

To Lilly's quandary:

How about 1%, flat or negative tax levy? This taxpayer's camel's back is broken.
...The LI public school model is broken. Fix what we can within Wantagh NOW and bring it in well under a 1% increase.

This is where that Laffer curve is valuable.

When we vote, we don't vote proportionately, or percentage-wise. Votes are Yes, No, or no show, but each vote counts 100% for or against the magic number adopted by the BoE, with the Yes and No votes counting against one another, adversarially.

Also, despite the "Two-percent Tax Cap", the budget vote is limited strictly to budgeted expenditures, irrespective of revenues, and without regard to other exigencies that may arise before the Board adopts the actual new Tax Levy, which has to be filed with the County by early August.

The key is always the Magic Number which will turn on some voters, and turn off other voters. Depending on the Board's magic number, some voters will stay home and not bother to vote; some voters will come out to vote 'Yes' in support of the magic number, and some voters will come out to vote "No!" against the magic number.

Look at the Laffer Curve and note there are high points and low points, either one of which can kill a budget. We have a sense of the Magic Number, but not the actual number, yet.

I suggest anyone who wants to have input to what the final Magic Number will be, prior to its adoption, should come to the Budget meeting next week (April 3rd).

Regards,

Chris Wendt

[lilly]

Or maybe the economic model the BOE uses to set the tax levy increase is like Louie filling out a blank check from Jim's wealthy father in that infamous Taxi episode:

www.youtube.com/watch?v=3QsFDpTEl84

Except in Louie's case, he missed his opportunity in the wrong direction.

Kidding aside, I suspect whatever hybrid Laffer thinking the BOE may use, they may be overestimating since the #'s have changed due to the economic circumstances of late.

I strongly suggest they go back to the drawing board.

[Chris_Wendt]

This is still too tender to speculate about before the runs come down from the State Aid Data Analysis Group next week, and Dana has had a chance to tweak them for accuracy.

I note that NYS Comptroller Tom DiNapoli put the kibosh on Cuomo's Easy-Pay pension funding plan for ERS, (quoting me) calling it a "fiscal gimmick". That gimmick has been replaced with a hybrid version which protects the ERS' (and presumably the TRS') ability to increase contributions should the markets go south in the future. The details are very sketchy, but to me it sounds like you can "finance" part of your pension costs, and that part gets frozen for some number of years, but you add interest (and long-term debt) to that part of your pension obligation. However the rest of your pension obligation can still go up or down as needed, and I don't know what prevents the "up" swings of that other part from swamping any benefit from having "financed" the first part, you know, to keep your costs down.

No mention yet about this being an opt-in or opt-out or universal plan, or whether it applies to TRS in the same manner it would for ERS.

Stay tuned.

Chris Wendt

[Chris_Wendt]

NOT DONE!

It was expected to have been released today, Monday (or yesterday, Sunday).

They are now saying by Friday, to be in-place by April One, and "on time".

We'll see.

Chris Wendt