MEMORANDUM IN SUPPORT

A BUDGET BILL submitted by the Governor in accordance with Article VII of the Constitution

AN ACT to amend a chapter of the laws of 2005 amending the tax law and other laws relating to implementing the state fiscal plan for the 2005-2006 state fiscal year, as proposed in legislative bill numbers S.3671 and A.6845, in relation to amending Part A relating to business allocation percentage; in relation to amending Part U relating to emerging technology companies; in relation to amending Part V modifying the distribution of funds from the motor fuel excise tax, in relation to increasing certain motor vehicle transaction fees; in relation to amending Part X relating to mortgage recording tax for real property in certain counties; in relation to amending Part J providing two exemption weeks each year for certain clothing and footwear from sales and compensating use taxes imposed by or pursuant to the authority of article 28 or 29 of such law and authorizing counties and cities to elect such exemptions from such taxes; in relation to amending Part BB relating to the effective date thereof; in relation to amending Part K amending the tax law, relating to taxes on cigarettes, motor fuel and diesel motor fuel purchased on Native American nation or tribe lands; to amend the general municipal law, relating to designation and revision of New York state empire zones and relating to certain empire zone enterprises; in relation to amending Part Y amending the public authorities law, relating to providing for the administration of certain funds and accounts relating to the 2005-2006 budget; in relation to the issuance of bonds; to amend the tax law, relating to sales and compensating use taxes; in relation to amending Part N amending the tax law, relating to the tax shelter voluntary compliance program; and repealing Part W and certain provisions of Part Y relating thereto (Part A); to amend a chapter of the laws of 2005, amending the penal law and other laws relating to implementing the state fiscal plan for the 2005--2006 state fiscal year, as proposed in legislative bill numbers S. 3666 and A. 6840, in relation to Part M creating a program of aid and incentives for municipalities; and in relation to adding a new Part S amending the public lands law, relating to state aid to certain cities containing state-owned lands (Part B); to amend a chapter of the laws of 2005 amending the racing, pari-mutuel wagering and breeding law and other laws relating to implementing the state fiscal plan for the 2005-2006 state fiscal year, as proposed in legislative bill numbers S. 3669 and A. 6843, in relation to amending Part S relating to the authority of the urban development corporation and the dormitory authority to issue bonds; in relation to amending Part R of such chapter relating to the public authorities law, in relation to establishing the New York state foundation for science, technology and innovation act of 2005; in relation to amending Part P relating to the public authorities law and the economic development law, in relation to reauthorizing the New York power authority to make contributions to the general fund; in relation to adding a new Part T relating to UDC bonding authority; in relation to adding a new Part U relating to the establishment of the New York state quality communities program; and in relation to adding a new Part V amending the state finance law, relating to the environmental protection fund; and to amend the public authorities law, in relation to certain regional partnerships (Part C); to amend a chapter of the laws of 2005, amending the labor law and other laws relating to implementing the state fiscal plan for the 2005-2006 state fiscal year, as proposed in legislative bill numbers S. 3667 and A. 6841, in relation to adding a new part U relating to the composition and responsibilities of the New York state higher education capital matching grant board in administering and awarding capital matching grants for higher education facilities; and to amend part S of a chapter of the laws of 2005, amending the labor law and other laws relating to implementing the state fiscal plan for the 2005-2006 state fiscal year, as proposed in legislative bill numbers S.3667 and A.6841, in relation to correctional facilities; and to amend part B of a chapter of the laws of 2005, amending the penal law and other laws relating to implementing the state fiscal plan for the 2005-2006 state fiscal year, as proposed in legislative bill numbers S. 3667 and A. 6841, in relation to a project at Queensborough Community College; in relation to adding a new part V amending the education law relating to the New York state nursing faculty loan forgiveness incentive program and the New York state nursing faculty scholarship program, and to repeal certain provisions of such law relating thereto, and providing for the repeal of such provisions upon expiration thereof (Part D); and to amend a chapter of the laws of 2005 amending the public health law and other laws relating to implementing the state fiscal plan for the 2005-2006 state fiscal year, as proposed in legislative bill numbers S.3668 and A.6842, in relation to tobacco control and insurance initiative pool distributions, general hospital inpatient reimbursements, health care initiatives pool distributions, professional education pool funding and the distribution of such funding, managed long term care plans, and in relation to hospital specialty rates, and nursing home allowance credits and in relation to creating the commission on health care facilities in the twenty-first century; and to amend the public health law and the social services law, in relation to including dental prosthetic appliances as a covered expense for the purposes of medical assistance for needy persons, hospital assessments, and the family health plus program; to amend the social services law, in relation to emergency medical transportation services; to amend chapter 82 of the laws of 2002 amending the environmental conservation law and other laws relating to enacting major components necessary to implement the state fiscal plan for the 2002-2003 state fiscal year, in relation to making technical corrections thereto; and to amend chapter 570 of the laws of 2004 authorizing the wavier of interest and penalties with respect to certain assessments payable by residential health care facilities, in relation to making technical corrections thereto; to repeal certain provisions of a chapter of the laws of 2005 amending the public health law and other laws relating to implementing the state fiscal plan for the 2005-2006 state fiscal year, as proposed in legislative bill numbers S.3668 and A.6842, relating thereto; to repeal parts D, F and G of a chapter of the laws of 2005, amending the public health law and other laws relating to implementing the state fiscal plan for the 2005-2006 state fiscal year, as proposed in legislative bill numbers S.3668 and A.6842, relating thereto; to repeal certain provisions of the public health law relating to tobacco control and insurance initiative pool distributions and relating to long term care revitalization pool of a chapter of the laws of 2005, amending the public health law and other laws relating to implementing the state fiscal plan for the 2005-2006 state fiscal year, as proposed in legislative bill numbers S.3668 and A.6842, relating thereto; and (Part E)

Purpose: This bill amends the 2005-06 Budget Article VII bills passed by the Legislature, to refine and complete the actions taken by those bills.

Summary of Provisions: The bill makes changes to the 2005-06 Budget Article VII bills, as passed by the Legislature, to address fiscal and programmatic issues raised by those bills and to facilitate enactment of a constitutionally correct Budget.

Part A amends S. 3671/A. 6845 (Revenue) in relation to the following:

• Section 1: Amends Part F of S. 3671/A. 6845 to change provisions relating to the Business Allocation Percentage – single sales factor.
• Section 1-a: Amends Part C of S. 3671/A. 6845 relating to eligibility requirements for the Emerging Technology Company Facilities Operations and Training credit.
• Section 1-b: Amends Part V of S. 3671/A. 6845 to modify the distribution of funds from the Motor Fuel Excise tax.
• Section 2: Amends Part X of S. 3671/A. 6845 to modify provisions relating to the Mortgage Recording Tax and provide new revenues for transit services.
• Section 3: Amends Part J of S. 3671/A. 6845 relating to the sales tax on clothing and footwear by adding provisions that defer the permanent $110 exemption to April 1, 2007 unless the Governor’s 2006-07 Executive Budget contains a tax cut in which case the exemption goes into effect on April 1, 2006.
• Section 4: Amends Part K of S. 3671/A. 6845 to delay implementation of collection of taxes on cigarettes and motor fuel purchased on Native American nation/tribal lands from September 1, 2005 to March 1, 2006.
• Section 5: Amends Part W of S. 3671/A. 6845 to extend and reform the Empire Zones Program.
• Sections 6 through 9: Amend Part Y of S. 3671/A. 6845 as follows: eliminates certain transfers; increases the Environmental Infrastructure bond cap; authorizes transfer from the State Park Infrastructure Fund and the Environmental Protection Fund to the General Fund; and clarifies the statutory calculations to allow variable rate debt to continue to be issued.
• Sections 10 through 14: Amend Part BB of S. 3671/A. 6845 and the Tax Law to increase the sales tax in the MTA region to support transit services and make technical changes to language.
• Sections 15 through 18: Amend Part N of S. 3671/A. 6845 relating to the Tax Shelter Voluntary Compliance Program.
• Section 19: Amends Part D of S. 3671/A. 6845 to make technical changes and clarify definitions in the certified capital companies.

Part B amends S. 3666/A. 6840 (Public Protection/General Government) in relation to the following:

• Section 1: Amends Part M of S. 3666/A. 6840 to make amendments in relation to the Aid and Incentives for Municipalities (AIM) program.
• Section 2: Adds a new Part S to S. 3666/A. 6840 to amend Public Lands Law to reflect a revised payment schedule for PILOT payments made in accordance with section 19A of the Public Lands Law.

Part C amends S. 3669/A. 6843 (Economic Development/Environmental Conservation) in relation to the following:

• Section 1: Amends Part S of S. 3669/A. 6843 to authorize issuance of $90 million of bonds in support of the Regional Economic Development Program.
• Section 2: Adds new Parts U and V to S. 3669/A. 6843 to establish the New York State Quality Communities Program and to authorize transfers from the General Fund to the Environmental Protection Fund.
• Section 3: Adds a new Part T to S. 3669/A. 6843 to authorize issuance of $250 million of bonds in support of the Technology and Development Program.
• Section 4: Amends Part R of S. 3669/A. 6843 to make clarifying changes to the New York State Foundation for Science, Technology and Innovation Act of 2005.
• Section 5: Amends Part P of S. 3669/A. 6843 to amend subdivision 9 of section 186-a of Tax Law to make a technical change to extend the Power For Jobs Program for one year.

Part D amends S. 3667/A. 6841 (Education, Labor and Family Assistance) in relation to the following:

• Section 1: Adds a new Part U to S. 3667/A. 6841 to create the Higher Education Matching Grant Program.
• Section 2: Amends Part S of S. 3667/A. 6841 to establish procedures relating to correctional facilities closures.
• Section 3: Amends Part B of S. 3667/A. 6841 to delete language relating to a capital construction project at Queensborough Community College.
• Section 4: Adds a new Part V to S. 3667/A. 6841 to amend the Education Law relating to the Nursing Faculty Loan Forgiveness Incentive Program and the Nursing Faculty Scholarship Program.

Part E amends S. 3668/A. 6842 (Health and Mental Hygiene) in relation to the following:

• Section 1: Amends Part A of S. 3668/A. 6842 in relation to the Early Intervention Program.
• Sections 2 through 19: Amend Part B of S. 3668/A. 6842 to increase the number of authorized Managed Long Term Care plans and make technical changes associated with: the recoupment of Graduate Medical Education payments; hospital recruitment and retention and rural rate adjustments; and Health Care Reform Act requirements.
• Sections 20 through 30a: Amend Part C of S. 3668/A. 6842 in relation to:
  • Authorizing a new selective rate adjustment hospital demonstration program (through March 31, 2010) which will allow the State to negotiate rates of payment with certain hospitals for specific services. Through this program - which will encompass five services in five regions of the State - the Department will require non-managed care recipients to receive services in selected hospitals that are best capable of improving health care outcomes in a cost efficient manner.
  • Increasing the reimbursable nursing home assessment from 5 percent to 6 percent through March 31, 2007 and providing a tax credit for individuals who pay the assessment beginning in the 2005 tax year. In addition, a technical amendment is made related to the nursing home tax amnesty program.
  • Modifying co-pays for the Family Health Plus Program by increasing the co-pays for pharmaceuticals (from $1.00/generic and $3.00/brand to $3 and $6, respectively) and establishing new cost sharing requirements for dental ($5/$25 cap), physician and clinic ($5) services. In addition, the vision benefit is modified so that it is comparable to that provided to State employees. This will make the Family Health Plus program more closely resemble private health plans, thus ensuring that the program remains affordable and continues to provide quality health services to more than 450,000 individuals.
  • Implementing the 340 B pharmacy savings program and increasing funding for emergency medical transportation services.
• Section 31: Adds a new Part K to S. 3668/A. 6842 to establish the Commission on Health Care Facilities in the 21st Century, charged with examining the system of general hospitals and nursing homes in New York State and recommending changes to that system. This Commission represents an important step toward a needed review of New York’s health care system. By rightsizing the system, including the recommended closure of certain facilities, resources will be used more efficiently while strengthening the systems’ ability to deliver quality care.
• Section 32: Repeals Parts D, F, and G of S. 3668/A. 6842 which duplicate other parts of the original bill.
• Section 32-a: Repeals provisions related to the Long-Term Care Revitalization Program.
• Section 32-b: This section establishes transportation as a State plan service within the Medicaid program.

Existing Law: This is a new bill.

Statement in Support: Enactment of this bill is necessary to support implementation of a sound and fiscally responsible 2005-06 State Budget.

Budget Implications: The provisions of this bill are accommodated in the current Financial Plan for 2005-06.