Let NYC Secede From State,

“New York City residents have big shoulders. While we were able to help other areas of the state through difficult times, we did. But now our taxes are too high and our cuts are too deep. We need to use our own money for our own needs.”

Lashing out at Governor George Pataki and the state legislature for refusing to provide a level of financial aid to help New York City get out of its $3.5 billion financial hole, City Councilmember Peter Vallone Jr. has proposed that the city secede from the state and settle its own fiscal affairs.

In issuing his plan last week, the Astoria lawmaker declared, "If New York City controlled its own money, we could lower the Personal Income Tax by 20 percent and eliminate the property tax increase [of 18.5 percent] and still have a $1 billion surplus to fund police and schools.

Emphasizing that the city sends at least $3.5 billion more in revenues to the state than it gets back in state aid, Vallone stated, "New York City doesn’t need state aid, it needs its own dollars back."

Vallone, a Democrat, also declared: "New York City residents have big shoulders. While we were able to help other areas of the state through difficult times, we did. But now our taxes are too high and our cuts are too deep. We need to use our own money for our own needs."

To implement his proposal, Vallone is introducing legislation that would put the secession question to the voters. He is seeking to place the question on the ballot as to whether a commission should be created to study the issue. If the question is approved, such a commission would hold hearings and draft a proposal to secede, which would again be placed on the ballot. If approved, the state legislature would consider it. If the legislature approved the question, the governor would then have the last word on the question.

In making the proposal to have New York City handle its own affairs and control its own destiny, Vallone listed a long litany of complaints and documented the governor’s and the state’s failure to treat New York City equitably and to provide adequate financial aid or allow the city to pursue its own programs to raise the necessary funds.

Vallone cited as the most recent outrages shortchanging the city in education aid and the governor’s insistence in pursuing a court suit intended to give the city its fair share of education dollars; the state’s refusal to pass legislation to renew the commuter tax; elimination of a payment to the city to cover the repeal of the stock transfer tax, and the state’s refusal to grant any aid for the burdensome costs the city bears for the Medicaid program.

Alluding to the education lawsuit now in the appeals process, Vallone pointed out that upstate each student gets an average of $9,810 aid while New York City students each get an average of $8,934 and the city gets just 35.4 percent of total school aid.

"While refusing to fix this inequity Vallone charged," the state agreed to a $45 million bailout of the Buffalo school system, $10.6 million to the Schenectady school system in 2002 and $300 million to Yonkers schools over the next five years."

Meanwhile, Pataki has proposed deeper cuts in New York City’s schools budget in the next fiscal year.

The governor and Senate Majority Leader Joseph Bruno have flatly ruled out any consideration of reinstating the commuter tax. Vallone noted the city has lost close to $2 billion since the tax was ended four years ago.

Vallone said the reimbursement "should have been done on 9/12/01," the day after the World Trade Center attacks, which rendered a crushing blow to city, state and national economies.

"We don’t need words of encouragement, we need the dollars we are entitled to," Vallone declared. As an example of the immediate aid the city needs, he cited aid given by the state of California to San Francisco after the 1989 earthquake—a quarter-cent increase in the state sales tax, which raised $1 billion.

"That’s real help, not just words," Vallone remarked.

Vallone also pointed out that in October 2001, just a month after the WTC attacks, the state eliminated the payment to New York City that it had been making since the stock transfer tax was eliminated, despite the fact that the city had been attacked and a huge deficit was looming. By stopping the payment to the city, we lost $114 million a year since then, Vallone said.

Medicaid is perhaps the greatest drain on the city’s fiscal resources at this time, yet the state refuses to change the requirement for New York City to pay 25 percent of the state’s total Medicaid cost. At the current level of payment, the city is losing $3.1 billion a year, Vallone charged.

Vallone also issued a list of reasons that add up to New York City’s sending at least $3.5 billion more in revenues to the state than it gets back in state spending for the city.

•In 2000, the state increased revenue sharing aid to localities outside New York City but froze sharing with New York City, thus depriving the city of a $28 million-a-year gain.

•STAR, the school tax relief program, delivers $70 per pupil in New York City, but $413 per pupil outside New York City.

•"We move 84 percent of state transit riders, but receive 63 percent of state transit financial aid, resulting in a loss of $325 million," Vallone said.

•Of $1.75 billion in Environment Bond Act funds, he said, only $222 million is allocated to New York City, even though close to 50 percent revenue for the fund comes from New York City.

•City residents pay a cell phone surcharge amounting to $1.50 each per month, he noted, which has resulted in over $160 million in revenue to the state. The state has used these funds to pay for a state trooper system city residents get no value from directly. In doing this, the state is ignoring state law which requires that the funds be used to enhance the 911 system. Vallone has already introduced a resolution calling for the money to be returned to the city to pay for the emergency 911 system.

Vallone said if New York City gained its independence from the state, there would be a $1 billion balance sheet gain in the city’s favor.

It would gain about $21 billion, in all $14 billion from additional personal income tax, $1.6 billion from an additional business tax, more sales tax revenue ($3.6 billion) and miscellaneous other state taxes ($700 million).

Meanwhile, the city would be relieved of $17.7 billion in expenditures it is presently forced to make to the state, including its share of Medicaid.

When the $1.3 billion savings from the repeal of the recent 18.5 percent real estate tax increase is factored in, the net gain to New York City is a surplus of $1 billion, Vallone said.