ALBANY COUNTY — Governor M. Andrew Cuomo introduced his proposed budget of $168 billion in January. Since then, the Assembly and Senate have been working on their own versions of the budget.

Marked differences between the governor’s spending plan and legislators’ proposals — in education, transportation, and tax credits for historic properties and for brownfield redevelopment — were highlighted last Thursday as Assembly members Patricia A. Fahy and John T. McDonald III updated constituents at the Bach Library in Albany. Both are Democrats in a Democrat-dominated house.

This is the sixth budget for both Fahy and McDonald. It is also the first budget that they’ve dealt with a multibillion-dollar deficit, Fahy said.

McDonald represents parts of Albany, Rensselaer, and Saratoga counties. Fahy represents a large part of Albany County, including the towns of Guilderland, New Scotland, and Bethlehem and much of the city of Albany.

The revenue forecast had changed since the governor’s proposal in January, Fahy said. It’s now $170 billion, which is $2 billion more than January.

Education often dominates the discussion of the budget, Fahy said, and it is one of the last things that is negotiated before the final budget is adopted.

The governor has proposed $26.4 billion in state aid for kindergarten through 12th grade education, a 3-percent increase from this year; the Assembly is proposing $27.1 billion in aid, a 5.7-percent increase. The Republican-led Senate is proposing a 3.8-percent increase.

Locally, under the governor’s proposal, Voorheesville would see an increase of 0.8 percent, or $51,000, in state aid from last year; Berne-Knox-Westerlo would receive 2.15 percent more, or $212,572; and Guilderland would receive 0.25 percent more, or $64,314, over last year.

State aid is critical to school districts, Fahy said, because it can make up anywhere from 30 to 60 percent of a district’s budget. In Voorheesville state aid makes up about quarter of its budget; in Guilderland, about a quarter; and in BKW, state aid makes up about 40 percent of its budget.

Local districts have been concerned with the governor’s proposal to cap the annual growth in Board of Cooperative Educational Services, building, and transportation aid at 2 percent.

“It makes our costs unpredictable,” Voorheesville Superintendent Brian Hunt said in February about capping the aid. “Each of those aids is based on a formula, and it varies from district to district, according to the district’s needs and ability to pay — but we do have some certainty about what the aid will be.”

Hunt then provided an example.

In the middle of a school year, a student moves to a residence that the school district’s buses do not currently serve. The district now has to either create a new bus run or alter an existing run, and, under the governor’s new plan, if the aid is capped, the district may not receive aid for that bus run.

As it stands now, the district would get aid from the state for that student in the following school year. With a cap, the district would not be able to get more aid.

So-called expensed-based aid, Hunt said in February, is often needed for services that the district is required to provide by state or federal laws. The cap would, in effect, act as an unfunded mandate for special education, student transportation, and other required services.

Fahy told The Enterprise that the Assembly would reject a 2-percent cap on aid; the Senate’s proposal also denies the 2-percent cap on expense-based aid.

Plans to increase revenue

McDonald said that the Assembly is seeking to codify the millionaire’s tax. The plan would make permanent the current top rate of personal income tax, 8.82 percent, and would increase income-tax rates for those earning over $5 million; for incomes between $5 million and $10 million, the rate would be 9.32 percent; between $10 million and $100 million, 9.82 percent; and for incomes over $100 million, the income-tax rate would be 10.32

An Assembly projection found that the new rates would increase revenues by $232 million next year, and would grow to $4 billion by 2021-22.

The Assembly’s plan also includes the internet fairness conformity tax, which would generate sales-tax revenue for the state from large online marketplaces like Amazon Marketplace, eBay, and Etsy — where consumer transactions are processed by the marketplace operator for a third party — by requiring them “to collect sales tax on taxable sales of tangible personal property by third-party vendors.”

The Assembly projects the internet fairness conformity tax would raise $109 million next year.

This is not a new tax, McDonald said; this is a tax that should have been paid all along.

McDonald said that he and other members of the Assembly met with representatives from eBay, who said the company knows that having the tax is only a matter of time; eBay wants to make sure there is a process in place so the tax is applied universally.

“At the end of the day, the intent of the sales tax was for that money to go back to the counties and back to your cities, towns, and villages to help provide additional revenue, so that we don’t have to rely on the property tax,” McDonald said.

Earlier this month, Albany County Comptroller Michael Conners told The Enterprise that most municipalities receive more revenue from sales tax than property tax, which is why Albany County has some of the lowest property-tax rates in the state.

“Local property taxes are heavily subsidized by sales taxes due to the County sharing 40 percent of the 4 percent,” a report by Conners said, referring to the county’s share of the sales tax.

McDonald offered a chain-reaction example.

“You may say ‘I don’t care if Crossgates is going under.’ Well you should, because there are jobs associated with that,” he said. “But here's another thing that you need to keep in mind with any commercial establishment whether it be a small business on Rensselaer Street in downtown Cohoes or Crossgates Mall: If those owners aren’t collecting any revenue, they march right back into the assessor’s office and get their taxable value lowered, which leads them to pay less in property tax, and guess who picks up the cost? All of us left.”

Conners said that there are municipalities in The Enterprise’s coverage area that would be “slaughtered” with declining sales-tax revenue from brick-and-mortar retail — most notably, Guilderland, which for every dollar of property tax it receives, gets three dollars in sales-tax revenue.

Transportation

There are more upstate Democrats now than ever before, McDonald said. And with those numbers, upstate Democrats are trying to leverage the chaos that with the Metropolitan Transportation Authority downstate to extract more transit money for upstate.

Seeing it also as an opportunity to spur economic development, Fahy and McDonald said, the Assembly has allocated an additional $16.8 million to the governor’s already proposed $221.5 million for upstate transit systems. Locally, public transit is run by the Capital District Transit Authority.

“The CDTA is not only better for the environment, it is also making the Capital Region more of a metropolitan area,” McDonald said.

The Assembly is supporting a new fee-per-ride on for-hire vehicle trips, also known as the Uber surcharge.

There would be a surcharge of $2.75 per ride on trips that enter the zone south of 96th street in Manhattan, and $1 fee per ride on trips in the Capital Region.

Fahy said that, if the surcharge survives, half of the dollar will go toward roads and bridges and the other half toward public transit. “All of that money will go into transportation. This is not a budget balancer; it is to reinvest back into the community,” she said.

Tax credits

Two tax credits — the Historic Properties Rehabilitation tax credit and the Brownfield Opportunity Areas Program — that Fahy and McDonald said are necessary to aid development in the Capital Region, are in the Assembly’s version of the budget.

The Brownfield Opportunity Area Program was established in October 2003. It lets municipalities pursue redevelopment and revitalization of economically-distressed areas.

Fahy said that the Brownfield tax credit had a $2 million cap placed on it by the governor. This would affect local projects like the dilapidated former Tobin First Prize packing plant that straddles the town of Colonie and city of Albany, and whose developers are looking for a $12 million tax credit.

A  developer would first need to remediate the land, and, then the developer would get a tax credit paid back over a number of years, Fahy said.

“The Tobin project is tens of millions of dollars and it sits in Albany and Colonie. That one project alone would be instrumental in turning around the tax base,” she said.

“The small amount of [tax] credit compared to what it leverages, makes the historic tax credit and Brownfield tax credit some of the best tools we have for revitalization,” Fahy said.

Taken out completely of the governor’s proposed budget, the Historic Properties Rehabilitation tax credit covers 20 percent of qualified rehabilitation costs of owner-occupied historic houses, with a cap of $50,000; for commercial properties, the credit covers up to 20 percent of qualified rehabilitation costs, and is capped at $5 million. The Senate’s proposal also includes the credit.

New York State decoupled from the federal government — which would allow the credit to be taken only after five years — so the tax credit can be taken  after the first year.

Land bank

McDonald highlighted a successful program funded by the state: Land banks, for which the Assembly has allocated $20 million.

“If you look back at troubles local governments have had, there has been a lot of blight and distressed properties particularly in urban centers as well as in some rural areas,” McDonald said. “The land bank is a unique not-for-profit, ordained by the state, that allows the state with individuals to bring these properties back to life.”

Adam Zaranko, the executive director of the Albany County Land Bank, told the Enterprise in May 2017: “There were a really significant number of vacant and abandoned buildings in Albany County.” He described the land bank as a “Swiss Army knife” in its various abilities to address property blight.

At the time, Zaranko said that the Albany County Land Bank had acquired over 630 properties, made over 200 property improvements, and sold over 120 properties. As of January of this year, the organization had sold 200 properties, returning $6 million in assessed value to tax rolls, according to the land bank itself. As of February, there were 13 properties available for sale in The Enterprise’s coverage area.

McDonald said that local governments have not had an increase in state aid since the property tax cap was implemented. Putting abandoned properties back on the tax rolls is one way to increase revenue. “It’s not like in the ’80s and ’90s where there were massive increases in taxes,” he said.