Paterson Rescinds "Nuisance" Tax Proposals ALBANY, NEW YORK (WXXI) - Governor Paterson has rescinded 137 so called "nuisance" taxes proposed in his budget, ranging from taxes on clothing, hair cuts, and even I-Pod downloads, and will substitute funds from the federal stimulus package instead.

The governor says agreement has been reached with majority party legislative leaders to cancel the proposed taxes, which even Paterson has admitted were "annoying". They would have placed new levies on everything from cable TV, to concerts, golf and skiing. But now, the governor says, they are all off the negotiating table, and $1.3b in federal stimulus monies will fill the gap instead.

Paterson says negative comments from the public at a series of town hall meetings he's held around the state contributed to his decision to axe the tax hike proposals.

"It really has disturbed a lot of New Yorkers," said Paterson."They just see it as inconvenient and frustrating."

The governor and leaders agreed to use part of the state's $11 billion dollars in federal stimulus Medicaid monies to plug the budget gap created by rejecting the taxes. There are few restrictions on how states can use the Medicaid monies, though their intent is to provide more health care for people during an economic downturn.

Groups that have been protesting proposed taxes in the new budget were heartened by the announcement. Ken Adams, President of the state's Business Council, says now the governor and legislative leaders can get to work rescinding $3 billion dollars worth of planned taxes on health care policies, utilities, and insurance companies. Adams says those taxes will only contribute to the economic slowdown and could be the "tipping point" that leaves some employees without any health care.

"Employers will either pull back from the benefit or stop providing the benefit," said Adams. "And then what happens?"

He predicts those people would be forced into the public health care system and cost taxpayers even more money.

Adams says business leaders are also against a proposed income tax hike on the wealthy, supported by a significant number of democratic lawmakers.

Education advocates say they are encouraged by the decision to use the Medicaid stimulus dollars for other purposes than health care, and say they hope more of the money can be used to fill cuts to education that are not covered under the federal stimulus plan for schools.

"We now can move the debate off of the I-Pod tax and the hair cut tax," said Billy Easton, with the Alliance for Quality Education. "And on to what are we doing to protect our school children and our communities during these difficult times."

But health care groups are not pleased with the use of Medicaid monies for other purposes. The hospital lobby group, the Health Care Association of New York State, says if there's enough money in the Medicaid stimulus plan for non- health related items, then there should be plenty of funds to cancel proposed deep cuts and new taxes on hospitals.

It may be awhile before hospitals and all other groups, including the public, find out more about what steps lawmakers are taking to close the state's $14 billion dollar budget gap. The Assembly and Senate have rescinded plans to put out their own one house budget plans, which were to publicly outline which cuts and new taxes legislators support for closing the gap. The Senate and Assembly were then to have held open conference committees to discuss their proposals and work out a settlement.

Instead, says Assembly Speaker Sheldon Silver, the two majority party legislative leaders will continue to work behind the scenes with the governor to come up with a budget plan that all three agree on, and "avoid the bickering that takes place with one house budgets".

Good government groups decried the return to a three men in a room budget process. Blair Horner, with the New York Public Interest Research Group, says the lawmakers have already indicated, by canceling some of the tax hikes, that they will be negotiating a completely new spending plan much different than the one put out by the governor in December. Horner says that budget was at least subject to public hearings. He says now lawmakers are "rewriting" the budget, with no public participation.

"This is a gold mine for lobbyists, and the salt mines for the public," said Horner.

Governor Paterson defended the practice of the closed door leaders meetings. He says it's useful to have privacy when negotiating controversial matters, and says President Obama does not make public the content of his meetings with Senate Leader Harry Reid and House Speaker Nancy Pelosi.

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