State and Local Issues
Testimony of Ross A. Frommer, Vice President of Government & Community Affairs and Associate Dean at Columbia University Medical Center, at the New York State Legislature Joint Hearing on the FY 2016/2017 budget.
February 2nd, 2016
Good afternoon. My name is Ross A. Frommer, Vice President of Government & Community Affairs and Associate Dean at Columbia University Medical Center and I strongly urge the committee to include $50 million for the New York Fund for Innovation in Research and Scientific Talent: “NY FIRST” in the FY 2016/17 budget.
The deans of New York State’s 16 medical schools, through the Associated Medical Schools of New York, are urging a $50 million investment in what many other states have recognized as a central component of our new innovation economies – biomedical research. For several years, with some degree of success, the deans of New York’s medical schools have been advocating for funds to support the recruitment and retention of world-class scientific talent. We are honored to have received the support of more than 30 members of both the Assembly and Senate for the Faculty Development Program (FDP), including Majority Leader Morelle, Chairman Farrell, Chairman Schimminger, Chairman Gottfried, Deputy Majority Leader DeFrancisco, Chairman Golden, Chairwoman Young and Chairman Boyle.
NY FIRST improves on the FDP by focusing investments squarely on the economic development capacities of research laboratories. This investment would support the development of dozens of additional laboratories throughout the state, each of which functions as a small – and sometimes not so small – business within medical schools’ infrastructures, employing 10 or more highly-skilled researchers and support staff, and generating the intellectual property that leads to new cures and new business opportunities.
The goals of the program are to (1) provide support to existing and future economic development and health initiatives along the length of New York State’s bioscience pipeline, (2) maintain New York State’s position as a national and international leader in state-of-the-art research and innovative healthcare in the face of massive investments from competing states, (3) support New York State’s regional economies through the development of startup and spinout companies, and (4) facilitate the development of, and access to, new cures.
With a $50 million State investment we can further transform New York State’s economy into one based on innovation, research and scientific talent. The State contribution will be matched 2:1 by New York State’s 16 medical schools, resulting in an overall investment of $150 million.
You are already aware how successful FDP has been. That program yielded a greater than 7 to 1 direct return on the State investment. Without such support, we will continue to lose our top scientists, their millions in federal grant money, the clinical trials they launch and the startup companies they create, to other states like California, Massachusetts, North Carolina, and, heaven forbid, Texas.
New York State is simply not keeping pace with other states in this field. States such as Minnesota, Indiana, Nevada and Utah – each with only one medical school – are appropriating tens of millions of dollars to those institutions to support bioscience infrastructure. More aggressive bioscience investors, such as California, Texas and Massachusetts, are allocating billions of dollars for the same purpose. When Pfizer closed its Connecticut research and development facilities, the state responded with a multi-faceted $1.5 billion program to bolster its bioscience sector, cognizant that it would continue to play a key role in its economic future.
New York State continues to lag behind these efforts and, as a consequence, notable researchers are being lured to other states. Since 2011, 13 of our state’s top scientists (among them a global leader in immunotherapy) have been recruited to Texas alone; others have accepted offers from Massachusetts, Florida and Nevada.
Of course, this is not merely a direct investment in the economy; the health care cost savings resulting from medical breakthroughs are significant. According to the 2011 report compiled for the Association of American Medical Colleges (AAMC) The Economic Impact of Publicly Funded Research, “by 2050 a projected 11 million to 16 million people age 65 and older will have Alzheimer’s disease. One estimate calculates the cumulative costs of care for people with Alzheimer’s disease from 2010-2050 will exceed $20 trillion in today’s dollars.”
At his State of the State address, Governor Cuomo spoke very eloquently about the effect that breast cancer had on his family this past year and his proposed budget includes significant funding for breast and prostate cancer screening. Like all of us, he wants to see better prevention strategies, more effective treatments, and hopefully someday a cure for these and other dreadful diseases. That will come with research and the NY FIRST program will help ensure that more of that research gets done right here in New York State.
Further details about the NY First program are attached at the back of my testimony, but what I really wanted to do here today is to tell you another story of why this program is so important and would be a very wise investment by New York State. Last year I came before this committee and told you of Rudy Leibel, a faculty member at Columbia and who after receiving an FDP grant, chose to continue his career doing diabetes and obesity research in New York. This year I would like to tell you the story of another fantastic example of a scientist who is doing great work in New York, Angela Christiano.
Doctor Angela Christiano is the Richard and Mildred Rhodebeck Professor of Dermatology and Professor of Genetics and Development at Columbia University Medical Center. Her work focuses on the genetics and cell biology of skin and hair diseases. She and her colleagues focus on ways to better understand, prevent, treat, and hopefully someday cure conditions such as Alopecia Areata (which Dr. Christiano has herself), Androgenic Alopecia (male and female pattern baldness), Epidermolysis Bullosa (blisters), and Hypertrichosis (werewolf syndrome). She is also working to develop a new 3D skin construct to help burn victims with replacement skin that will actually feel sensation and have pigmentation. Last month, we had the honor of hosting Lieutenant Governor Kathy Hochul on campus and she had a chance to meet Dr. Christiano and see her very impressive work up close.
After completing her PhD, Dr. Christiano came to Columbia in 1995 to begin her research career. Very early on she made several important breakthroughs and published important and well regarded papers in many of the most prestigious scientific journals. As you might expect with someone who had such success at this early stage of her career, the offers started coming in as several other medical schools and research institutions across the country, across the world in fact, tried to recruit her away from Columbia.
In 2006, an out of state institution made her a very attractive offer that was almost too good to pass up, but in the end Columbia was able to convince her to stay. The primary reason we were able to do so was that we received an FDP grant from what was then the New York State Foundation for Science, Technology, and Academic Research (NYSTAR), now part of ESD.
The NYSTAR grant was for roughly $250,000 per year for three years, for a total state investment of $750,000. Since that time, Dr. Christiano has received over $25 million in federal grant support and other funding.
Today Dr. Christiano is responsible for fifty good paying jobs and this does not include general campus support jobs like maintenance, security, and animal care which her lab indirectly supports. These are jobs that not only offer a good salary, but provide health insurance, retirement benefits, and educational support for employees and their families as well, i.e. the kind of jobs that allows families not only to support themselves, but to move up the economic ladder and build strong communities.
So in 2006, New York State invested three quarters of a million dollars in Dr. Christiano. She used that money to hire additional staff and purchase equipment. One thing it was not used for was to increase her own salary. All of the state money went into supporting other jobs and making large equipment purchases.
A little over ten years later and the return on that investment is over 35 to 1 and counting. My very back of the envelope calculations show that just the New York State income tax revenue alone from employees in Dr. Christiano’s lab is north of $150,000 per year.
One of the other requirements for the original FDP grant was a proven track record in technology transfer. Dr. Christiano has exceled in this area as well. Since receiving the FDP grant she has filed thirty-five invention disclosures and received twenty six patents. She has also started three companies.
I remind you that the original grant was a retention grant designed to prevent Dr. Christiano from leaving. By definition, if not for the FDP grant, all of her work, and the jobs and economic activity that come along with it, would be occurring elsewhere and not in New York.
I submit that we want more scientists like Angela Christiano, like Rudy Leibel coming to, not leaving, New York, and the FDP had a proven track record of making this happen. I have provided two examples, but there are countless other examples of NYSTAR FDP grant recipients who have had and continue to have very successful research careers in New York – upstate/downstate, SUNY/private. In fact, of the fifty-two awardees, over 80% are still doing research, still moving science forward, still bringing in grant money, and still creating jobs in New York.
You have heard about the highly productive scientists who have left to go to Texas and elsewhere, but research institutions across the state can also tell you stories of big fish that got away – top scientists with significant funding who came very close to accepting a faculty position in New York, but for whatever reason the deal could not be sealed. With a little help from the State, many of these recruits could have chosen to come to New York and would be doing research, bringing in grants, and creating jobs here instead of in other states. And notably, these are jobs with long-term stability in New York State; given their complex infrastructures and deep community ties, our medical schools are not at risk of relocating their operations or jobs outside the state.
Each time we lose a scientist, each time we fail to recruit someone, it is like leaving money and jobs on the table. The federal budget which President Obama signed in December includes a $2 billion dollar increase for the budget of the National Institutes of Health (NIH), the federal agency which funds biomedical research. FY 17 looks promising as well. This may sound a little selfish, but the question is where is this money going to go – to Texas, Massachusetts, Connecticut, or New York? Simply put, the more talent we have, the more NIH dollars we will bring in, and the more NIH dollars we bring in, the more jobs we create.
No doubt this is an extremely exciting time in biomedical research, a time that will lead to better strategies for the prevention, treatment, and cure of a variety of different diseases, as well as spur great economic development and job growth. The question is how well will we as a State be prepared to take advantage of these opportunities? Before coming to Columbia, I had the great honor of serving on the staff of former Senator Daniel Patrick Moynihan. Each year, Senator Moynihan produced a report that showed something that no doubt you are all aware of – New York is a net donor state to the federal government. We pay far more in taxes than we receive in benefits from Washington.
One of the biggest exceptions to this rule though is research funding. New York represents 6.2% of the US population yet we receive close to 9% of the NIH extramural research funding. But how are we going to maintain this stature? How are we going to keep research dollars coming to our medical schools? We used to rank second in NIH funding, but Massachusetts overtook us. Other states, North Carolina, Pennsylvania, Texas, are nipping at our heels. What are we going to do to keep the talent, the research, and the jobs here?
This legislature has done a lot of good work in this area, as has Governor Cuomo and previous Governors, but for the most part, state efforts have focused on technology transfer and private sector development – things like how to get through the so called “valley of death.” This is all important but it is not going to happen without ideas and talent. That is why NY FIRST is so important. The program will attract and keep scientific talent in New York. That talent moves science forward and leads to ideas that can become the next great discovery, the next great blockbuster drug, all the while, generating grant revenue and creating jobs. You can’t get good output unless you have good input.
So for all the reasons mentioned above, I strongly urge you to include $50 million for NY FIRST, to be matched 2 to 1 by the State’s medical schools. Building on the great successes of the Faculty Development Program, this new partnership will keep and attract the top talent, the rock stars of science if you will, in New York and put us in a better position to compete with other states. Let’s continue to make New York a place where scientists want to be. Don’t let our talent get away. Let’s work to ensure that the next Angela Christiano, or better yet, Angela Christianos choose to do their research right here in New York.
Medical schools hope to fare better on state research money
The Associated Medical Schools of New York is renewing its request for the state to invest millions of dollars in the NYSTAR Faculty Development Program, an initiative that aims to recruit and retain biomedical researchers.
Jo Wiederhorn, president and C.E.O. of the Associated Medical Schools of New York, a consortium of the state's 16 public and private medical schools, said she is hoping Governor Andrew Cuomo will put $50 million into this year's budget, allowing New York to compete with states such as California, Texas, Utah, Massachusetts, Connecticut, Maryland and Georgia.
The delegation representing the group met with Cuomo administration officials at the end of last month, according to Wiederhorn.
As Capital previously reported, a similar request was met with a cool response in last year's budget: The program received $650,000.
This year may be different, said Dr. Lee Goldman, dean of health sciences at Columbia University, because the need is even greater.
“What we talked about as a threat is now become a very clear reality,” he said. “This is no longer a hypothetical. People are being wooed away from New York by states that have put in resources.”
Texas, for example, has spent $40 million to recruit 13 scientific and medical researchers from New York in the last four years.
California voters approved a $3 billion investment over 10 years for stem-cell research. Massachusetts committed $1 billion over a decade, and Connecticut put up $600 million.
New York had a similar program. Between 2002 and 2009 the NYSTAR Faculty Development Program spent $36 million on recruitment and retention of leading entrepreneurial research faculty in science and technology fields with strong commercial potential.
But the program, which began under the governorship of George Pataki, was discontinued in 2009, and has never been restored.
“We think we need $50 million to move the needle,” Goldman said. “Only to be used to bring people in and to play defense” against other states.
In addition, Goldman said, the medical schools are willing to match every state dollar with two of their own, a commitment they hope will sweeten the pot for Cuomo.
Wiederhorn declined to discuss what took place during the recent meeting with Cuomo administration officials.
The deans' case is that investing in Science Technology and Research scientists, colloquially known as STAR, provides a solid return.
A 2010 study from Tripp Umbach estimated that for every $1 of investment, the state sees $7.50 of economic output.
To highlight their case, the deans pointed to Dr. Rudolph Leibel, a professor of pediatrics and medicine, and co-director of Columbia’s Naomi Berrie Diabetes Center.
Leibel said that in 2002 he had an offer from out-of-state. Columbia, using $750,000 from the faculty development program, was able to persduae him to stay. Since that time, he has brought in $50 million in grants from the National Institutes of Health and $30 million in private funding. His staff has increased five-fold.
“Other states have dedcided this is too good an opportunity to pass up,” Goldman said. “This in an inflection point.”
Goldman said New York's inaction leaves federal dollars on the table because as the N.I.H. cuts back and as it becomes harder to obtain federal grants, the states that have the preeminent researchers will attract the more limited federal dollars.
“If we don't do this we lose federal dollars,” Goldman said. “That's why other states are doing it.”
The governor's office did not respond to a request for comment.
Author: Dan Goldberg
2013 End of Session Legislative Report
The 2013 Legislative Session started off strong with the immediate passage of stricter gun laws and the passage of this year’s budget days before the April 1st deadline. Additionally, New York expects to receive approximately $30 billion in federal aid for recovery and rebuilding from Hurricane Sandy. This session also produced a number of economic development agendas, including START-UP NY, a High-tech job programs and financial assistance for local governments. A long-overdue increase to the minimum wage was passed, which aligns workers with the standard of living in this state, from $7.25 to $9 per hour over three years.
Late on Friday June 20th, lawmakers voted for a November referendum on a proposal to amend the state’s Constitution to authorize up to seven Las Vegas-style casinos. However, they also approved legislation that would allow only four of those casinos to be developed in the next seven years, in three regions: the Catskills, the Albany area and the Southern Tier.
However, the Governor and legislature did fall short on a number of issues. Most notably, the Senate and the Assembly also could not reach an agreement on measures addressing women’s rights, including a contentious proposal to enshrine abortion rights in state law that had been embraced by Democrats but steadfastly opposed by Republicans. Furthermore, the legislature failed to enact legislation in response to the corruption scandals that swept through Albany this year. Although Governor Cuomo had recommended a package of anti-corruption measures, and government reform groups pressed to enact public financing for campaigns.
During the last week of session, the Trial Lawyers Association made it a priority to pass a Weinstein/Fuschillo bill, which would alter the statute of limitations for medical, dental and podiatric malpractice. The Assembly bill moved to the calendar but was never acted upon and the Senate bill never came out of committee.
New York State Has Largest Medical Malpractice Payouts
Whether you look at it in absolute terms or per capita, New York State has the largest medical malpractice payouts. According to a recent article in Physician’s Money Digest, just five states account for almost half of all medical malpractice payouts. In 2012, payouts from New York, totaled $763 million, a per capita figure of almost $39. The total figure was double that of second highest Pennsylvania, while the per capita amount was more than 50% higher than that the Keystone State which was also second highest in that category.
It is also interesting to note that nationwide in 2012, there were a total of 12,142 payouts costing a total of $3.5 billion, more coming from settlements than verdicts. There has been however a steady decline in payout amounts since 2003 and the total payouts in 2012 was 3.4% lower than the payouts in 2011. The highest percentage of malpractice allegations (33%) were diagnosis related, followed by surgery-related allegations (24%) and treatment-related allegations (18%). Diagnosis allegations had a total of $1.2 billion. The severity of alleged injuries varied greatly, but the largest percentage of cases resulted in death (31%).
We’re Number one – Oh Great
It’s official, New York is the Medical Malpractice litigation capital of the country. According to a recent survey by Diederich Healthcare Plus as reported by Physician’s money digest, just five states account for almost half of all medical malpractice payouts, with New York leading the group with $763 million in judgments and settlements, more than twice the amount of second place Pennsylvania. New York’s per-capita payout rate of $38.99 was also highest in the nation. Pennsylvania was second at $24.77.
The survey analyzed records from the National Practitioner Data Bank in March 2013 and found that 93% of payouts were from settlements, rather than judgments. According to Diederich’s analysis, in 2012 there were a total of 12,142 payouts costing $3.5 billion in payouts. There is a little bit of good news however in that the steady decline in payout amounts since 2003 continued in 2012.. Total payouts in 2012 were 3.4% lower than in 2011.
The highest percentage of malpractice allegations (33%) were diagnosis related, followed by surgery-related allegations (24%) and treatment-related allegations (18%). The severity of alleged injuries varied greatly, but the largest percentage of cases resulted in death (31%).
Albany Budget on Time Again Preserves Stem Cell Research Funding
On March 27th, after wrapping up a late session of debate and voting, the State Legislature passed the 2013-14 state budget, giving the state its third on-time budget in as many years. Because the effect that Passover and Easter had on the Legislative schedule, this budget was actually the earliest in years.
Highlights of the state’s $135.1 billion budget (which totals $141.3 billion if federal funding for storm clean-up and health care reform is included) include increased school aid, tax relief for middle class families, a pension “smoothing” option for local governments and a phased-in increase in the state’s minimum wage. For the third straight year though, spending growth is kept at under 2%. It also provides about $1.1 billion in tax cuts and credits to businesses and middle-income families that will be phased in by 2016, which will be paid for by an extension of the high-earner tax surcharge, which was set to expire next year. One major point of contention was a $90 million cut in funding for services for persons with developmental disabilities. Of particular note to Columbia University Medical Center, the budget continues to fund stem cell research at $44.8 million, the same level as last year, and provides $2 million for spinal cord research.
Governor Cuomo Delivers 2013 State of the State Address
On Wednesday January 9th, 2013, Governor Andrew Cuomo addressed members of the New York State Assembly and Senate, members the New York Congressional Delegation, and the public in his annual State of the State address. The Governor, in a speech directed at restoring “New York as the progressive capitol of the nation” spoke to the necessity of bringing tourism to upstate New York, restoring infrastructure to the hardest hit areas of Super Storm Sandy, revitalizing New York Universities by spending more on research and innovation, and the need for further economic development throughout New York State.
The Governor did not spend much time on health care during his speech; however, the written remarks, published in a nearly 300 page book New York Rising 2013 State of the State, did focus on public health. It included several initiatives aimed at lowering health care costs for patients and lowering the rates of hospital acquired infections leading to sepsis in New York Hospitals. In 2013 New York State will become the first State in the nation to require all hospitals to adopt best practices for early identification and treatment of sepsis. These steps will include:
• Establishing a process for screening patients in all hospital settings to facilitate early recognition of patients with possible sepsis;
• Commencing a countdown clock once possible sepsis has been documented; and
• Establishing clear time-based goals for providing treatment once sepsis has been identified, aiming for administration of antibiotics within one hour, and full protocol implementation within at least 6 hours.
The Governors’ State of the State address is a blue print for his policy agenda for the upcoming year. Further details and specific proposals will be included in his Executive Budget which he will unveil on January 22nd.
For the Second Year in a Row Governor Cuomo and the Legislature Complete on Time Budget
On March 29th, the State Legislature completed action on the State’s 2012/13 budget. The 2012/13 budget totals $132.6 billion, a $135 million reduction from last year. The agreement includes no new taxes, but benefited from the December 2011 tax reform that resulted in $2 billion in additional state revenue. According to the Division of Budget, the projected state budget deficit for 2013/14 is $950 million.
Governor Cuomo hailed the budget as a “really great product,” and he praised Senate Majority Leader Dean Skelos and Assembly Speaker Sheldon Silver for their efforts. After years of failing to pass an on time budget, this was the second consecutive year that the budget has been in place by the beginning of the April 1st deadline, the first time that has occurred since the early 1980’s.
The budget highlights include:
*** Continued funding of the Empire State Stem Cell Fund at $44.8 million.
*** Continued funding of the Centers for Advanced Technologies at $13.8 million
*** A second round of Regional Economic Development Council Awards, including $220 million to implement regional strategic plans – $150 million in new capital funding and $70 million in tax credits from the Excelsior Jobs Program
*** State takeover of the local share of Medicaid costs and the beginning of a phased takeover of local government Medicaid expenses
The budget came in the wake of some other high-profile issues addressed on March, including, redistricting of Senate and Assembly lines, a constitutional amendment to change the redistricting process in the future, expansion of the state’s DNA database, a teacher and principal evaluation system; a constitutional amendment to permit commercial casino gambling in the state, and a new tier VI pension for certain new employees.
Governor Cuomo and Lawmakers Approve Major Tax Deal
In December, state lawmakers approved a blockbuster agreement to rewrite the state's income-tax brackets and partially roll back the MTA payroll tax, dismissing complaints that the process was handled with secrecy and in too much haste. The agreement, which the Senate passed unanimously and Assembly passed with only six no votes, doubles the number of state income-tax brackets. Supporters claim the bill provides greater tax fairness by demarcating a clear line between the wealthy and the middle class.
Couples who earn more than $2 million annually would see their tax rates rise, while couples who earn between $40,000 and $300,000 would see a decline -- effectively pocketing them about $200 to $400 a year. More than four million residents will benefit. Residents in all other income levels would see no change.
The MTA payroll tax will be reduced on small businesses, and private schools will be exempt from the tax. As a result, the payroll tax, first implemented on businesses in 2009, will be eliminated or reduced for 294,900 taxpayers, Cuomo estimates. The income-eligibility for the tax would also be raised, sparring 415,000 taxpayers from the tax. The state would compensate the MTA for the $250 million in lost revenue.”
The MTA payroll tax reduction, included in the legislation, is a big win for the Senate Republicans, some of whom have been pushing for and/or campaigning on elimination of the controversial surcharge for years – practically since it was first instituted as part of the 2009 bailout deal.
The deal also includes $1 billion for large-scale infrastructure projects, $25 million for an urban youth jobs program, and $50 million for upstate communities wracked by floods earlier this year.
Governor Cuomo Announces appointment of Larry Schwartz to Serve as Secretary to the Governor
Governor Andrew M. Cuomo announced that Steven M. Cohen, who has served as Secretary to the Governor since January 1, 2011, will be leaving the administration. Governor Cuomo announced that Larry Schwartz, who has been serving as Senior Advisor to the Governor, will be appointed Secretary to the Governor.
“Since becoming Attorney General in January 2007, Steve has served with dedication and distinction,” Governor Cuomo said. “Steve has been a critical member of a team that has produced results for the people of the State. He has been both a friend and advisor, and he will be missed.”
“it is an honor to have Larry Schwartz in the position of Secretary. For the past six months, Larry has guided the new administration through both the budget and legislative process during one of the most successful legislative sessions in our history. Larry has a wealth of experience in government and brings extraordinary character, intellect and dedication to this key position. I am gratified that Larry has agreed to continue with the Administration,” Governor Cuomo added.
Since January 1, 2011, Larry Schwartz has served as Senior Advisor to Governor Cuomo. Among other responsibilities, Mr. Schwartz was the principal negotiator of the 2011-12 budget, and was critical in the drafting and negotiating of several major pieces of legislation, including the ethics law, property tax cap and NYSUNY 2020. Mr. Schwartz also serves as chair of the Governor’s mandate relief commission. Prior to joining the Cuomo administration, Mr. Schwartz negotiated on behalf of Governor Paterson key pieces of legislation including Tier V pension reform. Mr. Schwartz also served as Westchester Deputy County Executive, where he oversaw the day to day operations of the County government, and handled labor and budget negotiations. Mr. Schwartz graduated with a B.S. in Political Science from Binghamton University. He lives in Westchester with his wife Susan and daughter Carly.
Steven M. Cohen served as Secretary to the Governor from January 1, 2011. From January 1, 2007 until his appointment as Secretary, Mr. Cohen served as Counselor and Chief of Staff to then-Attorney General Cuomo. Mr. Cohen is expected to return to the private practice of law.
Governor and Legislature Reach Deal on Spending Budget Passed on Time
On Thursday, March 31st, Governor Andrew Cuomo announced the passage of the budget for the 2011/12 fiscal year. The new fiscal year began on April 1st and this was only the fourth time since 1983 that the budget had been passed on time.
The $132.5 billion plan is actually $3.6 billion less, 2%, than the previous year’s budget and will eliminate a projected $10 billion deficit. In addition to lowering spending, the budget, according to the Governor, “Includes historic reforms that redesign state government, create efficiencies through consolidation, cap spending increases for education and Medicaid, and transform the future budgeting process.” Out year expected gaps have been also reduced by over $50 billion. Over 90% of the savings comes from spending cuts to State programs.
Despite the challenges he faced in putting together this budget, Governor Cuomo was able to reach agreement with the Legislature and the Republican and Democratic Leaders in both the Senate and Assembly praised the deal. The Governor noted this new spirit of cooperation and accomplishment, which may have come as a surprise to many as Albany had an ever increasing reputation for dysfunction. "Tonight the Legislature not only passed an on-time budget, but a historic and transformational budget for the people of the state of New York," the Governor said. "This bi-partisan and bi-cameral cooperation will give New Yorkers the good budget they deserve. It was an invaluable public service for the state government to 'function' so well at this difficult time and I especially applaud the leadership of Senate Majority Leader Dean Skelos and Assembly Speaker Sheldon Silver for this demonstration of competence and performance in state government."
The budget included over a billion dollars in cuts to education and $2.3 billion in cuts to the State’s Medicaid program. These were based on the recommendations of the Governor’s Medicaid Redesign Team (MRT). There was also a 10% cut to State Operations which could lead to reductions in the State workforce.
Not included in the deal was a plan to place a $250,000 cap on non-economic damages in medical malpractice cases. This idea had been part of the MRT’s recommendations and was strongly supported by the physicians, hospitals, and the business community. Strong pushback from the trials lawyers and opposition from the Assembly ultimately defeated this idea, despite strong support from the Governor who argued that it would save the State well over $100 million a year and reduce malpractice costs for physicians and hospitals across the state.
The budget deal did include one major piece of medical malpractice reform -- creation of the New York State Medical Indemnity Fund. The fund will cover the medical costs in malpractice actions for infants born with a neurological impairment. By removing medical costs from malpractice awards and settlements, the fund will provide care over the full lifetime of the patient and reduce costs for obstetricians and hospitals.
The budget level funds stem cell research and other science based economic development programs. It also folds NYSTAR into the Department of Economic Development but leaves the Foundation’s programs in place as part of a new Division of Science, Technology, and Innovation.
Governor Cuomo Announces New Health Commissioner
Nirav R. Shah, MD, MPH will serve as the Commissioner of the Department of Health. Dr. Shah, a native of Buffalo, N.Y. who now lives in Battery Park City, is a Physician at Bellevue Hospital Center, Associate Investigator at the Geisinger Center for Health Research, and Assistant Professor of Medicine in the Section of Value & Comparative Effectiveness at NYU Langone Medical Center.
Dr. Shah is a nationally recognized thought leader in the very methods needed to transition to the future of lower-cost, more patient-centered, health care for the 21st century. He is tasked with helping Cuomo think of ways to create efficiencies in the state’s healthcare delivery systems, especially Medicaid, which now accounts for more than a third of the state’s budget.
Dr. Shah was vetted by Cuomo’s healthcare transition team, who say they were looking for someone who could understand both upstate and downstate health needs, as well as bring fresh ideas to the state health agency.
Governor Paterson Announces Plans to Call the Legislature in Session to Address Property Tax Caps; Takes Action on Several Bills
Governor David Paterson has said he plans to call the Legislature back into session to vote on property tax cap legislation. The Governor's tax cap proposal is at 4% while Attorney General Andrew Cuomo has a proposal of a 2%. This issue has failed to move in the State Assembly but Assembly Speaker Sheldon Silver seems to be willing to listen to a 2% proposal.
Governor Paterson also has signed fifty bills into law, among them:
A.5653-A/S.4786-A - this bill prohibits insurers, HMO's and health plans from charging a co-payment for a prescription drug which is higher than the usual and custormary cost of such drug.
A.8285/S.7517 - this bill expands the availability of safe, cost-effective medications under the Medicaid program by providing a fast track for adding non-prescription drugs to the list of Medicaid reimbursable prescription drugs in Health Department regulations. This act takes effect on the 30th day after it became law.
A.11380/S.7830 - this law relates to credit line mortgages, secures indebtedness created by future advances under credit line mortgages to 30 years from 25 years.
He also vetoed twenty two bills, including:
A.247/S.7979 - this bill would have established a data base of intellectual property in the New York State Foundation for Science, Technology and Innovation.
A.10005/S.6977 - this bill would have designated uniformed court officers in the town of New Windsor to peace officers.
A.10761-A/S.5913-A - this bill would have allowed employees of the Town or Village of Harrison serving as Court Attendants in the Court of the Town or Village of Harrison to serve as peace officers.
A.2565/S.2664 - this legislation would have capped the amounts of income that public assistance recipients who are HIV positive or have AIDS may spend on rent. The Division of Budget estimated the cost of this bill to the State and New York City would be more than $20 million culminating in its defeat.
State Senate Gives Approval to Long-Overdue Budget
On August 3rd, by a 32-to-28 vote that followed a day of chaos in the Legislature, the New York State Senate, with virtually no debate, passed the crucial final piece of the State’s $136 billion spending plan – a $1.5 billion revenue bill. This budget was 125 days late, is the third-latest ever, coming in at eight days short of the all-time August 11th record.
The budget restores the 4% State sales tax on clothing and shoe purchases under $110. The renewed tax won’t begin until October. Other hikes include: a halving of the allowable charitable deductions for those making more than $10 million, the deferment of a host of business tax credits greater than $2 million per year, the so-called “Expedia” tax that adds a sales tax for online hotel reservation sites. The bill does not, however, include a new tax on out-of-state hedge funds. Lawmakers in both houses voted to strike the measure from the new budget after Connecticut’s Governor, Jodi Rell, made overtures to the industry to relocate. It also does not contain Governor David Paterson’s push for a penny-an-ounce tax on soda and other sugary beverages, or permission for grocery stores to sell wine. Senate Republicans, who voted as a bloc against the budget, criticized it for spending and taxing too much.
The State finalized a budget that closes a $9.2 billion budget gap. This was done primarily through spending cuts and with no borrowing. The completion of the budget means lawmakers who haven’t been paid since April 1st will finally get their paychecks.
The Budget Mess Continues
In late June, the Senate and Assembly adjourned subject to the call of their respective chairs without having completed work on the 2010/2011 budget, which is now over 100 days late. The Legislators were able to pass the spending bills to keep the government running but did not make progress on the revenue measures they need to pass in order to make the budget gap. The Assembly did pass a revenue bill which includes controversial increases in taxes on hedge fund companies as well as a provision that would reduce the state deductibility of charitable contributions given by high income individuals. The Senate, however, has not been able to pass its bill with several members insisting a property tax cap.
Also acting as a sticking point is a provision backed by Governor David Paterson that would give individual campuses of the State University of New York system the authority to set their own tuition. Currently, all tuition increases must be approved by the Legislature. Several Democratic Senators strongly support the measure, but Assembly Speaker Sheldon Silver is opposed.
The budget had assumed that the Federal government would continue enhanced Medicaid payments, “FMAP” as the payments are often referred to, but passage of the FMAP has been held up in Washington. If the measure does not pass, State lawmakers will have to make up an additional $1 billion gap.
In July, Governor Paterson called the Legislature back for a special session in the hopes of addressing these and other issues, but no progress was made. The Governor has promised to call additional sessions throughout the summer until the budget is finished.
State Budget, Getting Closer, but Still not There
Arguing that “this process has got to end”, on Wednesday June 16th, Governor David Paterson said that if lawmakers can’t come to a final agreement on the State’s 2010-’11 fiscal plan by June 28th, he’ll force-feed them his own budget blueprint in a weekly extender bill. Governor Paterson sprung the new deadline during a brief leaders’ meeting at the Capitol. None of the other leaders at the table – Assembly Speaker Sheldon Silver, Senate Democratic Conference Leader John Sampson, Senate Leader Dean Skelos, nor Assembly Minority Leader – had received advance warning. “It’s time to set a deadline, and I’m going to set it”, Paterson said.
Speaker Silver and Senator Sampson responded with a mixture of optimism that the agreement could come even earlier and expressions of concern over remaining issues. One of the main sticking points for the final budget remains education funding, although the Governor and Democratic lawmakers say they have made progress. But at least on Wednesday, the question of how the funding restorations would be paid for was still unresolved – especially since the Governor has said he doesn’t want to raise taxes or approve any further borrowing. Later in the week, the Governor and the Legislature were able to agree on spending plans for economic development, public safety and transportation, some of the least controversial issues.
Earlier in the week, with just 4 ½ hours and 2 votes to spare, the State Senate passed Governor Paterson’s 11th Temporary Budget Extender, a measure needed to keep the State operating. In doing so, it also approved more than $325 million in mental health and human services cuts pushed for by the Governor who the week before had started inserting components of his full 2010-11 budget into the weekly extenders.
Governor Paterson Unveils the 2010-11 Executive Budget
On January 19th Governor David Paterson released his proposed 2010-11 Executive Budget, a plan that makes significant spending reductions in order to eliminate a $7.4 billion deficit and institutes key reforms to put New York State back on the road to economic and fiscal recovery. The total budget is $134, an increase in State spending of 0.9% over last year. The Governor emphasized that this small increase was composed entirely of fixed costs related to prior commitments over which the State had limited control.
The budget closes the gap through $5.5 billion in re-occurring spending reductions, $1.0 billion in tax and fee increases, $430 million in revenue actions that do not increase taxes or fees, and $565 million in non-recurring actions. The deficit reduction plan that the Legislature enacted on December 2, 2009 achieved $2.7 billion in 2009-10 savings which was not sufficient to close the State’s $3.2 billion current year deficit. Rather than proposing additional gap-closing measures in the current fiscal year, when the range of options for achieving re-occurring savings is increasingly limited, the State expects to carry this remaining $500 million deficit forward into the 2010-11, where it is addressed in the budget as part of a multi-year plan that emphasizes recurring savings.
Reaction to the Governor’s plan was mixed. Assembly Speaker Sheldon Silver said the budget was a patchwork of painful decisions that will make life more difficult for working families throughout the State of New York. Speaker Silver indicated that while he understands quite clearly the immediacy of the fiscal challenge facing the State he wants to ensure that the sacrifices called for in the final enacted State budget are shared. Specifically, he took issue of the Governor’s proposal to cut school aid and healthcare services, as well as the Governor’s authorization to raise tuition at SUNY and CUNY in conjunction with proposed cuts to Tuition Assistance Plan funding.
Senate Majority Conference Leader John Sampson indicated that Senate Democrats concurs with the Governor’s assessment on the state of the economy and budget, but indicated that he felt that some components of the proposal needed modification. He said that his Senate colleagues were reviewing the Governor’s proposed tax increases and program cuts as well as structural reforms to State operations as well as basic across-the-board cuts. Senator Carl Kruger, Chairman of the Senate Finance Committee, was more blunt, saying, “There are going to be significant restorations.”
Governor Delivers State of the State Address
In his second State of the State address, Governor David A. Paterson outlined his plans for the upcoming year. In the past Governors George Pataki and Elliot Spitzer had used their speeches to outline a broad array of policy objectives and give a preview of the upcoming budget. Governor Paterson gave a similarly broad speech last year, although in a break from tradition, it came more than a month after he released his budget proposal.
This year’s speech was quite different. First, it was significantly shorter than his one hour and fifteen minute delivery of last year. The Governor finished in less than forty five minutes. He also did not include the traditional salute to heroes and recognition of special invited guests sitting in the gallery, as is done in the State of the Union and as Governors have done in the past. Third was his limited agenda. Instead of a paragraph or two on multiple subjects from health care to the environment to criminal justice, his speech discussed only three policy areas – the budget, ethics, and economic development.
The poor economy, looming budget deficits, and the state’s current political climate lead to a mood in the chamber that was also quite different from previous years. Many thought that the Governor’s tough words on the budget and even ethics were directed at the Legislature, and the reaction from the chamber was considerably lower key than is the norm. The applause was less often and more subdued and at certain points seemed to be coming more from the side of the room where the Republicans were sitting.
Behind the Governor on the podium as he gave the speech stood the State’s leading elected officials -- Lieutenant Governor Richard Ravitch, Comptroller Thomas DiNapoli, Attorney General Andrew Cuomo, Assembly Speaker Sheldon Silver, and Senate Majority Conference Chairman John Sampson. Of the six, only General Cuomo, Speaker Silver, and Senator Sampson were elected to their current office, and Senator Sampson only assumed his leadership role after paralysis that took place in the Senate last year.