TO: Executive Board Members, Regional Coordinators, Statewide Labor Management Chairs, and Council Leaders

DATE: February 25, 2003

Based on our analysis of the proposed Executive Budget and consultation with the impacted Statewide Labor Management Chairs, we have identified the following top budget priorities, which focus on preventing layoffs and privatization. In most cases, agency fact sheets will be developed so our members can conduct home district lobbying on these issues. Over the next week, our Civil Service Enforcement/Research Department staff will be in touch with the Statewide Labor/ Management Chairs to get their input on agency fact sheets. We have not highlighted in the summary list second tier budget priorities that do not have the potential for layoffs or privatization. We have included information on those priorities in the memo.

• Deny the planned closure of Elmira, Middletown, Hutchings, Bronx, and Bronx Children’s Psychiatric Centers and restore full-year funding for 331 FTEs. Estimated Cost: $9.997 million.

• Reject the proposal to close the Institute for Basic Research. Estimated Cost: $11.8 million.

• Deny the consolidation of the Nathan S. Kline and New York State Psychiatric Institutes and restore full-year funding for 113 FTEs. Estimated Cost: $8.2 million.

• Restore all 315 OMH shared staff positions and reinvestment positions to ensure continuity of care for their clients. Estimated cost: $16.3 million.

• Reject once again the Executive proposal to circumvent important employee protections in Section 78 of the Civil Service Law by creating a single appointing authority for the Office of Mental Health. Estimated Cost: None.

• Reject the proposal to authorize the SUNY Board of Trustees to transfer the SUNY hospitals to the private sector. Estimated Cost: None.

• Keep the State’s commitment to its employees and retirees by denying the Executive’s request to raise their health insurance premiums. Estimated Cost: $27.3 million.

• Reject once again the Governor’s proposal to transfer the State Library, State Archives, and State Museum to a public benefit corporation. Estimated Cost: None.

• Ensure that there is adequate funding to restore 800 engineering positions at DOT over the next two years. This can be done by either restoring the $53 million cut to capital projects or by providing language that requires that a greater portion of the capital project appropriations are used to support in-house engineering positions rather than costly consultant engineers. Estimated Cost: None - $53 million depending on how much funding is moved from consultant engineer contracts to DOT personal services for the hiring of State-employed engineers.

• Reject the Governor’s proposal to privatize OCFS’s youth facilities program and permanently reduce its bed capacity. Estimated Cost: $11.6 million.

• Maintain adequate staffing levels at DEC by restoring 234 FTEs to ensure the future purity of our air, water, and land. Estimated Cost: $8.6 million.

• Reauthorize Superfund at a funding level sufficient to maintain its current staff and services. Estimated Cost: None.

• Recapture a small part of the windfall federal tax cuts received by the wealthiest New Yorkers by imposing a small temporary surcharge on the adjusted gross incomes of the wealthiest New Yorkers. Estimated Revenue: $3 billion.

• Close corporate tax loopholes that would eliminate gimmicks like “income shifting” that enable large multinational corporations to avoid paying their fair share of New York taxes. Estimated Revenue: $1.5 billion.

It is important to realize that the State is in the midst of its worst fiscal crisis in history. Our number one priority is to avoid the layoff of any PEF member and we will take all action necessary to achieve that priority. The State is unlikely to avoid layoffs if it closes three psychiatric centers and the Institute for Basic Research by July 1 and eliminates 113 positions at the Nathan Kline and New York Psychiatric Institute.

We have already developed a fight-back plan to achieve each of our top priorities against actions that are likely to result in a large number of layoffs. We will develop similar plans for our other top priorities. The plans will involve member mobilization efforts to get our members to call, write, and lobby their local legislators, local newspapers, the Governor, Speaker Silver, and Senate Majority Bruno. In addition, we will be asking our members and PEF leaders to develop alliances with community groups that share our goals as well as to participate in rallies. We are also developing a media campaign to achieve our goals. I have directed that all of PEF’s resources be dedicated to achieving our top budget priorities and avoiding layoffs. These are unprecedented times and we must take unprecedented action if we are to succeed.

The following pages contain detailed justifications for all our budget priorities, including those that are not likely to result in layoffs or privatization. We will continue to keep you informed on the status of the State budget, our priorities, and our fight-back efforts.

Roger E. Benson
President

The proposals in the Executive Budget that impact the mentally ill in New York have one thing in common-they lack the credibility that would come with a true comprehensive plan. They are not justified by an assessment of local needs, nor are they accompanied by strategies for mitigating the effects of severe loss of services. The closure of five psychiatric centers will deprive residents of these areas of inpatient psychiatric services close to home. It will create substantial hardship for the families of patients who will have to devote an extra one to four hours of travel time to visit their loved ones. The closures also violate Section 5.07 of the Mental Hygiene Law, which requires that mental health services be based on assessment of needs, input by all stakeholders affected by the system, and the creation of a continuum of services meeting the needs of all users of the system. The Commissioner of OMH has admitted to the Fiscal Committees that these actions have not been taken.

Middletown PC has long been known for its advancements in psychiatric services, especially as the forerunner of the Treatment Mall concept that has been duplicated in 60 programs in 30 states. Middletown has received extensive international and national praise for its programs, including its Success Program for treatment resistant patients and its Cognitive Mediation Program. As deinstitutionalization made space available at the facility, Middletown created the “community campus” concept of co-locating other community providers in the unused portions of the hospital. The closure of Middletown will not only remove the cornerstone of this program, it will deprive the community of coordinated service provision.

Hutchings PC is a relatively new facility; it is styled like a garden apartment complex and is very accessible and patient-friendly. Because it houses eleven patients per pod, it requires a higher staff-to-patient ratio than the larger 20-patient wards typical of older facilities. Its closure will eliminate one of OMH’s most accessible facilities and deny important services to the Central New York area.

Elmira PC serves a 10-county area encompassing 15% of the geography of New York State. The almost 100 inpatients include 18 children and adolescents, whose families will have a difficult time visiting on a regular basis if they have to make the four-hour round trip between Tioga County and Rochester. Closure of the children’s unit in Elmira PC will leave the entire Southern Tier without inpatient services for children and adolescents. Rochester does not currently serve patients under 12 years of age, who comprise 21% of Elmira’s juvenile admissions.

Bronx and Bronx’s Children PCs comprise the only location in the State with bilingual wards, and have a client population that is 85% to 96% minority. Programs are geared to the psychiatric and cultural needs of the Hispanic patients and their families. Staff are fluent in the language and customs of the Hispanic and Latin American countries. These variables are fully integrated in the provision of treatment and other services and closely embrace family and friends in programs and cultural events. Bronx PC has two residency programs in collaboration with the Albert Einstein College of Medicine. It is unlikely these programs would survive the transition of the inpatient population to Queens and Long Island, depriving patients of an additional source of care and students of a unique training ground.

The proposed merger of Nathan S. Kline Institute for Psychiatric Research into the New York Psychiatric Institute (NYPI) appears to be the first step towards the ultimate closure of Nathan Kline. The loss of a substantial portion of the research staff would make continuing operations difficult, if not impossible. Research staff does highly specialized work on specific studies and cannot be easily reassigned to alternate studies. Nearly $24 million in research grants at Nathan Kline alone will be jeopardized by this proposal. Nathan Kline has been at the cutting edge of biomedical research for more than 50 years, improving the lives of individuals affected with schizophrenia, Alzheimer’s disease, and other complex neurobiological disorders of the brain. The clinical wards of Nathan Kline house some of the State’s most difficult to treat and hard to place patients. Unique staff have been assembled to treat these individuals and to identify ways to minimize violence and aggression among all hospital inpatients elsewhere in other State psychiatric centers and forensic facilities. Nathan Kline provides centralized services for other facilities across the State, including administrative and scientific management of clinical laboratories and the provision of pharmacological information to improve prescribing practices.

Estimated cost - The Executive Budget claims that it will save $9.997 million by closing the three PCs on July 1, 2003, which is the cost of restoration. The consolidation of Nathan Kline and New York Psychiatric Institutes will save $6 million in personal services and $2.2 million in nonpersonal services or a total of $8.2 million, which is the cost of restoration.

Shared staff are OMH staff assigned to provide professional expertise to local mental health programs, many in smaller counties that cannot provide these services without the additional State resources. There are currently 135 shared staff and 185 reinvestment staff statewide. These professionals, including psychologists, psychiatrists, social workers, and nurses, provide clinical, case management, day treatment, home care, and emergency room screening services. These employees provide services that prevent their clients from needing the compulsory outpatient treatment imposed by Kendra’s Law. Their clients will needlessly suffer from the disruption of their treatment. All these employees are a valuable part of the county mental health services community.

This proposal requires professional employees to either take positions with their county mental health programs or transfer to the psychiatric center that issues their paycheck, but where many, if not most, of these employees have never worked. In many instances their worksites and homes are well over an hour away from the psychiatric center. These distances will be even longer if their psychiatric centers close as proposed by the Executive Budget. There is nothing in the proposal that requires localities to use the transition funding from the State for mental health purposes and the State is only providing one year of funding with no funds for employee fringe benefits. Given the extreme fiscal hardship that many counties are experiencing, it is likely that much of this funding will not actually replace the services currently provided by shared staff. The counties may benefit by a quick influx of cash, but ultimately the mentally ill will suffer most. Even if the counties use the State money for employee salaries, they will not be able to pay employees their current salaries without increasing their own costs, which will be difficult to do given most counties’ current serious fiscal problems.

Estimated cost - The Executive Budget claims this proposal will save $16.3 million, which is the cost of restoration. We believe this estimate is accurate based on our estimate of the average salary of an employee in a shared staff or reinvestment staff title.

Both staff and patients will be negatively affected by the proposal to create a single appointing authority. This would transfer control over where employees can be assigned from each individual facility director to the Commissioner of OMH. This proposal would allow OMH to target individual employees for reassignment hundreds of miles from their homes without regard to their seniority, change their layoff unit and change their relative seniority. While some State agencies do control all appointments, reassignments, and transfers centrally, separate appointing authorities for OMH were established because the nature of the therapeutic relationship is unique and demands the protection that comes with local autonomy.

This proposal is also unnecessary. Section 78 of the Civil Service Law allows the State to move employees across layoff units to where they are needed in order to avoid layoffs. It also contains provisions that protect employees’ seniority and give them some choice in the job assignments they are offered. The Governor’s proposal to create regional appointing authorities in OMH is simply a way to get around the employee protections contained in Section 78 of the Civil Service Law.

Estimated Cost: None, as there is no cost savings associated with this proposal in the SFY 2003-04 Executive Budget.

The shortsighted proposal to close the Institute for Basic Research on July 1, 2003, will not only cut short critical research in developmental disabilities and neurological disorders, but will deprive more than 2,000 families of vitally important clinical services. On an annual basis, the soon to be eliminated clinical services include: more than 3,000 evaluations for children and adults with mental retardation and other developmental disabilities; evaluations of nearly 300 families with autistic children; about 1,000 comprehensive evaluations, including genetic, neurology, psychiatry, psychology and electrophysiology, for indigent children with special needs; treatment of more than 2,000 patients with epileptic seizures from New York City and the tri-state area; and genetic services for more than 600 families. IBR’s Fragile X Center is the only center of its kind in the Northeast providing families with annual comprehensive evaluations for fragile X syndrome, the major inherited cause of mental retardation. In the past 12 years, more than 10,000 neurobehavioral and neurofunctional assessments of over 4,000 premature and at-risk newborns and infants have been conducted at IBR to facilitate early diagnosis and intervention.

Research staff at IBR have earned international recognition for discoveries that help prevent mental retardation. They are responsible for the discovery of the genetic Phenylketonuria (PKU), a cause of severe mental retardation, and the subsequent development of a special diet that prevents or alleviates mental retardation in individuals affected by PKU. In New York alone, 20 to 27 new PKU cases are prevented each year, saving millions of dollars annually in lifetime care over the last two decades.

Ongoing research efforts include a multi-center trial of vitamin E in Down syndrome to prevent dementia, and treatment of late-infantile neuronal ceroid lipofuscinosis, a fatal neurodegenerative disorder. Collaborative efforts with the College of Staten Island include research covering infant development; social development; applied behavior analysis; studies of perception; molecular genetics; cell, molecular, and developmental biology; transplantation studies; experimental neuropathology; neuroimmunology; and neurochemistry. Staff at IBR’s Center for Trace Element Studies and Environmental Neurotoxicology are also conducting research on various aspects of the possible role of environmental agents in causing birth defects and neurodegenerative disease. The future benefits of all of this research would undoubtedly be lost, as the private sector will not support programs such as these because they are unlikely to yield a profit.

The economic impact of the closure has been overlooked. IBR is the sixth largest employer in Staten Island. This area was disproportionately hurt by the World Trade Center bombings and has an unemployment rate of 6.4%. The $7 to $9 million generated annually in grants from the National Institutes of Health support an additional 130 Research Foundation jobs that will be jeopardized. In addition to lost jobs and revenues, the cost of dismantling IBR will be enormous because of stringent OSHA regulations dictating proper disposal of scientific equipment, chemicals, and specimens.

Estimated Cost: The Executive Budget assumes that the closure of IBR on July 1, 2002 would save $11.8 million in SFY 2003-04, which is the cost of keeping IBR open and fully functioning.

Since it was established by the Legislature in 1967, the Youth Opportunity Program has helped economically disadvantaged and at-risk high school students stay in school and experience “real life” work at OMRDD and OMH facilities. Over 90% of participating students are minorities. Students are provided work experience, support services, and basic life skills training while serving OMRDD and OMH consumers in a structured work environment.

Since its inception, over 19,000 students have participated in the Youth Opportunity Program. Ninety-five percent of these students successfully graduated from high school. In the last five years, over 60% have gone on to college; a sizeable percentage of these students majored in health and human services fields.

Over 86% of 2000-01 YOP participants who were graduating seniors went to college after leaving the program. More than half of these students planned to major in health or human services fields.

Over 220 students are currently participating in the program. These students come from high schools throughout the State, including Binghamton, Elmira, Newburgh, Poughkeepsie, Rome, Staten Island, Syracuse, NYC, and Long Island. Each year students spend thousands of hours working with consumers. They work in OMRDD community residences, Intermediate Care Facilities, nursing units, and Developmental Services Offices as well as in OMH State Operated Community Residences, Residential Care Centers for Adults, and Psychiatric Centers. They also get hands-on research experience at the Institute for Behavioral Research and the New York Psychiatric Institute.

Many YOP students continue to work in the mental health/mental retardation field. Many recent YOP graduates have taken the Developmental Aide exams, and many currently work for public and private agencies while they attend college.

Preserving YOP funding will continue to provide at-risk students with a reason to stay in school as well as the skills needed to proceed to college and worthwhile employment. It will allow these students to enhance the lives of the mentally retarded, developmentally disabled, and mentally ill consumers whose treatment they assist. Furthermore, in this time of difficulty in recruitment and retention of health care staff, it will continue to generate skilled workers for the future.

Estimated Cost: The Executive Budget estimates that eliminating the program would save $1.3 million, which would be the cost of restoring it.

The Executive Budget includes a proposal to privatize the three SUNY hospitals in Stonybrook, Brooklyn, and Syracuse. The privatization itself is not described in detail. The Executive Budget simply gives the SUNY Board of Trustees the authority to do it without legislative approval.

Two years ago, SUNY engaged a health care consulting firm to assess the current finances of SUNY’s teaching hospitals and recommended short-term and long-term actions needed to maintain their fiscal viability in today’s changing health care environment. The PriceWaterhouseCoopers study of the SUNY hospitals’ financial health identified the cause of the hospitals’ financial problem. It found that much of the problem was caused by the State increasing the assessment on SUNY hospitals by over $66 million annually, from $50.1 million in SFY 1995-96 to $116.2 million in SFY 1996-97, with additional increases every fiscal year thereafter. The report confirms that SUNY Hospitals operate more efficiently then 75% of their academic peers and have both good market position and programmatic potential.

The SUNY teaching hospitals are an important part of SUNY’s educational mission because education and research in the health sciences are an integral part of SUNY’s mission. Such vital elements must not be separated and left to the private sector. It would also have a dramatic impact on employees because they would lose their status as State employees. This would mean the loss of pension rights, union contract rights, and Civil Service Law protections. In addition, the communities they serve might lose important health care services if the new private operators felt them to be unprofitable.

No evidence has been presented that privatization of these hospitals would improve efficiency or the quality of services to the public. There are no savings associated with this proposal in the Executive Budget. The Legislature should reject this proposal to authorize the SUNY Board of Trustees to transfer the SUNY hospitals to the private sector. These hospitals should remain part of the SUNY system.

Estimated Cost: None, as there is no cost savings assumed in the SFY 2003-04 Executive Budget.

The Executive Budget proposes increasing the share employees and retirees pay for health insurance. In order to make this change for unionized members, the State will have to negotiate it as part of the current contract negotiations. Retirees and unrepresented employees, however, are afforded no such opportunity to bargain.

A retiree who retired after January 1, 1983 will have their share of the health insurance premium for the Empire Plan increased from 10 percent to 15 percent for family coverage and from 25 percent to 30 percent for family coverage. The same will be true for anyone who retires prior to January 1, 2004.

After January 1, 2004, the bottom drops out from under retirees. The State will provide a 50 percent benefit for the first ten years of services and 1.75 percent for every year thereafter, up to a cap of 85 percent for individual and 70 percent for family coverage. This means that a State employee who retires with 20 years of services will have to pay 32.5 percent of their health insurance premium. Currently such a retiree pays $1,686 a year for family coverage through the Empire Plan and would pay $2,984 a year under the Governor’s proposal, a 77% increase. Retirees with less than 20 years of service will face even greater increases. For example, a retiree with ten years of State service would face a $2,904 a year increase for family coverage. These additional costs for retirees do not include any increase in the cost of the premium which the Executive Budget estimates will increase by 15% a year.

This is an incredible burden on a group of people who can least afford it. The average pension for a State employee retiree is $1,200 a month; retirees can’t afford to use between 20% and 32% of their pension check for health insurance. Long-term employees and retirees who committed their careers to the State rely on these benefits. The State must not break its commitment to them. This is particularly true in light of the fact that the recent contract settlement between the MTA and its employees includes no increase in their health insurance premiums. MTA employees currently pay nothing towards the cost of their health insurance premiums.

Estimated Cost: The Executive Budget claims a savings of $27.3 million in fiscal year 2003-04, which would be the cost of restoration. In SFY 2004-05 and beyond, the Executive Budget estimates a cost savings of $114 million per year.

The Executive Budget recommends, once again, transferring the State Library, Archives, and Museum from the State Department of Education (SED) to the Council on the Arts. These entities would become the newly created New York State Institute for Cultural Education (NYICE). NYICE will have “as its sole focus the promotion of New York’s cultural resources.”

While PEF certainly supports the Arts in New York, we are concerned about the “sole focus” of the State Library, Archives, and Museum being cultural promotion. These are educational institutions. They should remain educational institutions.

In the past, the Governor has claimed that these important institutions did not receive adequate funding from the Regents. Others have claimed that it is the Division of Budget, which the Governor does control, that has under-funded these vital institutions, not the Regents.

The State Library is the largest of its kind in the nation, providing reference information and other library services to State agencies, businesses, and the public. It also charters all libraries in the State and distributes State and Federal aid to local libraries. It serves as a “back-up” to the State’s libraries and provides them with guidance on what books to carry. The State Library does this based on its complete knowledge of the requirements of school districts throughout the State.

The State Museum is a major research center and home to the Geological Survey, Biological Survey, Anthropological Survey, and Historical Survey.

We believe that all three are very successful, very valuable educational institutions. These institutions provide valuable services to many New Yorkers, not related to promotion but related to learning. As such they should remain in the State Education Department.

Estimated Cost - None to $2 million. The Executive Budget states that $2 million will be saved in this program. It is unclear if this savings is a result of the transfer or is just a cut in funding. The Executive Budget does not call for any reductions in the 400 FTEs that currently work in these institutions, so any savings would be in non-personal services Therefore; it is possible that this savings would be realized if the Museum, Library, and Archives remain in the State Education Department. There is also mention in the Executive Budget about using an existing surcharge for the recording, indexing, and certifying of documents by county clerks as the funding source for NYICE. It is not clear what programs are currently supported by this funding stream and how they would be funded if this funding stream is used for NYICE.

The Executive Budget proposes a change in funding for the costs of educating children with serious disabilities who are placed in residential special education programs. This proposal would shift costs to school districts and could discourage school districts from making the most appropriate placement decisions. This could have a negative impact on specialized programs such as the State School for the Blind in Batavia and the School for the Deaf in Rome.

The Executive Budget proposes privatizing the Youth Facilities program in the Office of Children and Family Services. The first step is to start sending these children to community-based not-for-profit providers.

These privately run programs will, according to the Executive Budget, provide services ranging from family-based counseling to specialized after-school programs. The Executive Budget claims that these programs will reduce recidivism rates and, coupled with a reported declining population, result in 250 fewer beds in the secure facilities.

We are not opposed to the provision of these programs. We are opposed to using these programs as a rationale to claim a reduction in beds. PEF has been advocating for years to have the teacher/student ratios at the secure facilities decreased. In 1990, the ratio was 1:8. Since then it has gone to 1:14 and efforts have been made to push it to 1:16. At the same time the student/teacher ratio was rising, so were the number of youths entering OCFS custody with serious problems. Between 1990 and 1998 the following occurred:

Tremendous increases in the number of youth in OCFS custody with serious problems make it more difficult to teach, counsel, and rehabilitate them. Increasing funding and reducing the student/teacher ratio will definitely reduce recidivism rates.

It is also well known that youth crime rates generally increase during a recession due to the increase in the number of economically deprived children in our population. We are in a recession and the number of economically deprived children in this State and in the country is projected to significantly increase over the next ten years. This is not the time to permanently reduce OCFS’s secure bed capacity; we may need those beds sooner than the Executive expects.

It is very difficult to improve the lives of adolescents with serious health, mental health, and learning problems, particularly when they have been involved in serious crimes. These youth need to get help while they are in OCFS custody. If not, they will most likely continue or amplify their serious criminal activity upon their release from OCFS. Privatization will increase juvenile delinquency rather than prevent it. Family counseling and after-school programs are not the only answer. Community-based programs should be used to complement services provided in the secure facilities, not supplant them. We need more teachers and counselors at OCFS facilities if we are to truly prevent delinquency and rehabilitate troubled youth.

The Executive Budget also proposes to explore the privatization of the remaining OCFS residential facilities by SFY 2005-06. This is a frightening prospect. The record of privately-operated correctional and youth facilities across the country is a dismal mix of incompetence, corruption, and child abuse.

There have been widespread reports of abuses at privately run juvenile facilities. The Pahokee facility in Florida was the subject of court proceedings concerning excessive use of force and physical abuse of the children under the facility’s care. The facility also failed to release children on their court ordered release dates in order to get more reimbursements from the state. The New York Times reported that the Tallulah Correctional Center for Youth in Louisiana run by the Wackenhut Corrections Corporation was “a juvenile prison so rife with brutality, cronyism and neglect that many legal experts say it is the worst in the nation.”

In 1999 a lawsuit was filed against a for-profit institution for young girls in Texas which was run by Wackenhut Corrections Corporation. The lawsuit claimed that the girls, some as young as twelve, were “made to live in an environment in which offensive sexual contact, deviant sexual intercourse and statutory rape were frequent, and which resulted in a hostile, permissive sexual environment, and where residents were physically injured to the point of hospitalization.” Wackenhut settled out of court. In South Carolina, the state decided not to renew a contract with Corrections Corporation of America after receiving and verifying reports of physical abuse of the children under their care. This abuse involved the use of gas to enforce orders, as well as punching, kicking, and shackling children without cause.

Estimated Cost: The Executive Budget claims that the reduction of 250 secure beds will save the State $11.6 million, which would be the cost of restoration.

The Executive Budget proposes legislation that authorizes the Division of Parole to grant a merit termination of sentence to certain non-violent parolees and conditional or presumptive releasees who have served at least one year on parole supervision, provided that they have not been convicted of any new offense or engaged in any behavior that is deemed a significant violation of the conditions under which they were released. Non-violent felony offenders convicted of an A felony defined in Article 220 of the Penal Law will be eligible for merit termination of sentence after 2 years on parole supervision and non-violent offenders convicted of a B, C, D, or E felony will be eligible after 1 year. The Board of Parole is authorized to grant an absolute discharge from parole or conditional release when the parolee or conditional releasee has been on unrevoked community supervision for a period of at least 3 consecutive years, release is in the best interest of society, and the releasee has no pending restitution matters. The Division of Budget estimates that this bill will result in the merit termination of sentence of 3,100 releasees.

The Executive justifies this proposal by claiming that studies have shown that the number of arrests and parole violations decrease dramatically for non-violent parolees who successfully serve one year of parole. That is true. Unfortunately, the Executive does not tell you the complete findings of these studies. These same studies found that the criminal activity of parolees spikes upward after their parole supervision is terminated. That is why they remain on parole. A fiscal crisis is no excuse for endangering community safety. We ask the Legislature to reject this unwise proposal to terminate parole supervision for non-violent parolees.

Estimated cost: The Division of Budget states that this proposal will achieve an annual cost savings of $1.6 million, which would be the cost of restoration. DOB is also assuming that the proposal will not have an impact on parole officer caseloads because caseload reductions resulting from the proposed merit termination provisions will be offset by an increased amount of non-violent inmates released from DOCS. Nevertheless, the Executive Budget calls for the elimination of 57 parole officers positions. We believe these position eliminations will result in increased caseloads which are already too high. Parole officers’ unweighted caseloads average over 75 parolees downstate and over 60 parolees upstate. These positions should be restored in order to maintain or reduce current caseloads.

By any objective measure the greatest value in transportation maintenance is found in the State workforce. Multiple bi-partisan studies spanning significant periods of time have indicated that State-employed engineers cost significantly less than private sector consultants, including the cost of their benefits. Studies by State Comptrollers Regan and McCall both concluded that tens if not hundreds of millions of dollars can be made available for actual highway and bridge projects simply by hiring more Department of Transportation engineers while reducing the Department’s reliance on costly consultant engineers.

The recent KPMG report commissioned by the Department of Transportation confirmed the findings of the Office of the State Comptroller’s 1990 and 1998 audits. For example, the KPMG report found that consultants are approximately 75% more costly than in-house resources for comparable design projects and are more expensive to use for 85% of such comparable projects. The report also found that using consultant resources for construction inspection projects is approximately 50% more expensive than using in-house resources for comparable construction inspection projects, and using consultant resources is more expensive for 85% of such comparable projects. The report also found that consultant overhead rates are on average 32% and 29% higher than in-house overhead rates for design and construction inspection projects respectively.

The enacted SFY 2001-02 budget was supposed to add 144 engineering positions to the Design and Construction program for a total of 4,521 FTEs. However, these positions were never added. Overall, this program will experience a net loss of 983 FTEs from the enacted SFY2001-02 budget, including the loss of 523 FTEs in SFY 2003-4. As the funds dedicated to funding transportation projects continue to shrink, the Department of Transportation needs to reverse this trend and hire more in-house engineers. This proposal is in agreement with the Governor’s desire for “smarter government” and a “cost-effective workforce.” Significant savings can be achieved at DOT. However, it requires more DOT engineers, not fewer. To this end, we urge the Legislature to ensure that there is adequate funding to restore 800 engineering positions at DOT over two years, including 523 FTEs in SFY 2003-04.

Estimated Cost - There is no real additional cost to the State as a larger proportion of the Engineering Services Fund can be dedicated for State engineers as they assume the responsibility for more DOT design and construction work. The Executive Budget claims it is saving $53 million in SFY 2003-04 by eliminating 523 FTEs in SFY 2003-04, 435 (83%) of which are in the Design and Construction program. We assume that 83% of the $53 million savings is due to the elimination of these Design and Construction positions for a savings of $44 million. DOB has changed the way it accounts for positions funded by the Engineering Services Fund, but they have confirmed to us that it is being reduced by $42 million or roughly equal to the savings we projected for the 435 FTEs eliminated in the Design and Construction program. We believe that there are no cuts to the consultant share of the Engineering Services Fund in SFY 2003-04.

The restoration of personal service cuts is essential for maintaining the staffing levels necessary to ensure the future purity of our air, water, and land. Overall DEC’s budget is cut by 234 FTEs in SFY 2003-04. The Air & Water Quality Program has a $2.8 million dollar personal service cut. This represents a cut of 28%, and yet, the workload is expected to increase. For example, there is a March 10, 2003 implementation date for Phase II of the Stormwater Program, which will result in an increased workload. The Stormwater Program is related to a Federal Regulation requiring permits, generally known as MS4 permits, for stormwater discharges related to construction activities disturbing one or more acres. The Stormwater Program is environmentally important because stormwater is the runoff from rain and snow that is not absorbed into the ground but collects and transports various pollutants that degrade our lakes, rivers, wetland, and other waterways. The degradation of our waterways affects plants, fish, and swimming water. Stormwater management is a necessary step in seeking further reductions in pollution in our waterways. In fact, there is evidence to indicate that developed-area runoff may be as harmful to water quality as municipal or industrial waste discharges. However, simply paying attention to what happens during runoff events can lead to relatively inexpensive ways of preventing pollutants form getting into the runoff in the first place. It is estimated that 10,000 MS4 permits will need to be issued during Phase II.

With diminishing resources, the permits and inspections related to Concentrated Animal Feeding Operation (CAFO) present another challenge. The CAFO permits monitor the pollutant (feed, manure, pesticides) runoff from large animal feeding operations. Presently there are approximately 686 CAFOs in New York State, and the Environmental Protection Agency (EPA) expects that DEC will inspect 25% of these per year. It will be impossible to meet these workload demands with the proposed staff cuts.

The Legislature must reauthorize and expand the Superfund with at least $138 million in support as recommended by the Superfund Working Group so that current staff and remediation standards are maintained. This funding is important to continue the identification and remediation of hazardous waste sites. The reauthorization legislation refers to the need to clean up 785 hazardous waste sites. Our DEC members estimate that there are between 1,000 and 3,000 additional dry cleaning sites that may require remediation and another 1,000 to 3,000 sites that may need to be reviewed. Ninety-five employees currently administer the Superfund program; the Legislature must provide sufficient resources to at least maintain this level of employment and the important services they provide.

We are concerned that the dispute over reauthorizing the Superfund has hampered the important staff work that needs to be done to ensure these sites are properly remediated. A quick resolution of this dispute is necessary to ensure that the Superfund staff can continue to protect the public from the dangers posed by these hazardous waste sites.

Estimated Cost: It is difficult to estimate the actual cost of restoring the 234 FTEs cut in the SFY 2003-04 Executive Budget because of cost shifts to other funds and half-year funding for unidentified items. The maximum cost would be $8.6 million, which assumes an average annual salary of $36,752 per restored FTE. There is a reference in Executive Budget documents stating that DEC achieves $4.7 million in half-year savings from the reduction of 171 positions due to the early retirement incentive. If the Legislature only had to restore half-year funding for 171 FTEs and full-year funding for the remaining 63 FTEs to be eliminated in SFY 2003-04, the cost would be approximately $7 million ($4.7 million plus $2.3 million, which is derived by multiplying $36,752 by 63).

• Recapture a small part of the windfall federal tax cuts received by the wealthiest New Yorkers by imposing a small temporary surcharge on the adjusted gross incomes of the wealthiest New Yorkers. Estimated Revenue: $2.7 - $3 billion.

• Close corporate tax loopholes that would eliminate gimmicks such as “income shifting” that enable large multinational corporations to avoid paying their fair share of New York taxes. Estimated Revenue: $1.5 billion.

While the Executive Budget does raise $1.4 billion in revenues, it does so by raising regressive taxes, such as sales tax, and fees that put a greater burden on working families who already pay more than their fair share of State and local taxes. According to the Institute on Taxation and Economic Policy, in 2002 all New York’s non-elderly taxpayers paid about 12% of their income in State and local taxes except the wealthiest New Yorkers, who make $634,000 or more a year and pay only 6.5% of their income in State and local taxes. The Executive Budget will exacerbate this gap rather than close it. According to the New York State School Board’s Association and NYSUT, property taxes will increase by an average of at least 13% to 15% in most school districts throughout the State.

The Governor portrays this budget as a choice between jobs and taxes. We disagree. Many economists (most notably Joseph Stiglitz, the 2001 Nobel Prize winner) believe that severe spending cuts during economic downturns are actually greater obstacles to economic recovery than modest tax increases. We estimate that the Executive Budget would result in the loss of up to 50,000 public and health care sector jobs.

New York can raise the personal income tax on its wealthiest taxpayers without losing jobs. New York used to have third highest top income tax rate of all the states with income taxes. It is now 19th out of 42, with a top rate of 6.85%. Many states, including North Carolina, Massachusetts, and Connecticut, have either raised or are seriously considering raising their personal income tax rates.

As an alternative to the Executive Budget’s cuts, we should capture part of the windfall federal tax cut by raising taxes on incomes of $100,000 and above. If you earn $300,000 a year, you’ll be getting a $4,777 tax break from the federal government. No taxpayer would pay a higher combined state and federal personal income tax under this proposal. A modest, temporary .07% surcharge on the portions of a taxpayer’s New York Adjusted Gross Income above $100,000 and another .07% surcharge on the portions above $200,000 would raise between $2.7 and $3.0 billion annually.

Many large multi-state and multi-national corporations that profit from New York markets (and others that rely heavily on New York services) pay little or nothing in New York State taxes by using accounting tricks currently allowed under law. Toys R’Us, for example, avoids taxation in New York by shifting income, in the name of royalty payments, to a subsidiary that owns its trademark Geoffrey the Giraffe. That subsidiary just happens to be located in a state that does not tax income from so-called “intangibles.” New York should join California, Colorado, Illinois, New Hampshire, and the 12 other states that use a reform called “combined reporting” to prevent profitable multi-state and multi-national corporations from avoiding state corporate income taxes through something called “transfer pricing.” The adoption of combined reporting in NY would raise between $340 and $392 million annually.

Since 1995, New York has added loopholes to the corporate Alternate Minimum Tax (AMT), which was established to ensure that profitable corporations made at least some contribution to the cost of government services. Ensuring that all New York corporations pay a fair minimum tax is a strategy that Ronald Regan used when he implemented his national tax cuts in the 1980s; no one claimed that he was hurting job creation. The fact that New York’s large and profitable corporations are not asked to pay their fair share of the State’s fiscal burden is illustrated by the fact that, since 1977, New York’s corporations’ contribution to State revenues has decreased from 10% to less than 4%.

To address this inequity, New York should adopt a new AMT similar to the new Corporate Alternate Minimum Assessment (AMA) enacted earlier this year by New Jersey. The reformed New Jersey AMA applies to businesses with gross profits of $1 million or more, with those businesses subject to a new low rate assessment on either the portion of their gross profits over $1 million or the portion of their gross receipts over $2 million, whichever is less. It is estimated that this new assessment will raise between $202 and $234 million per year in New Jersey. In New York, a similar assessment would probably raise at least $400 to $460 million per year.

From the late 1980s until 2001, nearly all states used the federal definition of taxable business income - including the federal allowance for depreciation - as the basis for their own tax calculations. A federal tax law enacted March 2002, however, created a new tax deduction for “bonus depreciation” that will cost states very large amounts of revenue. This tax reduction gives corporations a reduction in their federal and NY State corporate franchise tax for investing in new equipment no matter where those investments are made (including foreign investments). There is no evidence that this tax cut would create jobs in New York. Thirty states plus the District of Columbia that previously followed federal depreciation rules are now decoupled from federal tax law - in effect, disallowing the new bonus depreciation provision in their states. If New York decoupled from the Federal Bonus Depreciation Tax Cut, it would generate between $270 and $545 million in SFY 2003-04. New York City would also gain substantial revenue due to this proposal.