Obama's $3.8 trillion budget a 'mixed bag' for LIers

Long Islanders and other New Yorkers would see an estimated $3 billion to help fill the $7 billion hole in the state's budget, possibly delaying layoffs and tax hikes, under the 2011 budget that President Barack Obama proposed Monday.

But higher-earning Long Islanders likely would see significant income-tax hikes under the $3.8 trillion federal spending plan.

Also, the state would lose more than $1 billion in federal education funds. And some key wastewater and sewage grants, environmental clean-up funds and Homeland Security programs face the ax.

"The budget President Obama released is a mixed bag for New York," said Sen. Charles Schumer, "and Congress must make some critical changes before it is passed into law."

The full impact of Obama's vision for federal spending next year is buried in the details that state and federal lawmakers are just beginning to sift through.

However, here, on first impression, are some of the most significant effects of Obama's first full budget on Long Islanders and other New Yorkers:

Income taxes

Obama's plan to raise tax rates for higher-earning Americans could affect more than 10 percent of the households on Long Island.

The proposal would restore tax rates for individuals earning more than $200,000 a year and for joint filers making more than $250,000 to 36 percent and 39.6 percent, respectively. Former President George W. Bush cut those rates to 33 percent and 35 percent, respectively.

About 14 percent of the 435,069 households in Nassau County, or 60,716, earn $200,000 or more, according to census data. And about 9 percent of Suffolk's 475,966 households, or 44,161, fall into that category. The data are broken down by individuals and families.

The popular Making Work Pay middle-class tax breaks of $400 per individual and $800 per couple through 2011 will be extended under the proposal. They were due to expire after this year. Individuals making less than $75,000 and joint-filers making less than $150,000 would be eligible.

The proposed tax increase received a frosty reception from some on Long Island yesterday. "I'm outraged," said Shirlee Durant, a Dix Hills resident who helps manage the two offices of her husband, an orthopedic surgeon who makes more than $250,000 a year. "I just think the $250,000 [threshold] should be more like $350,000, especially since it's the total household income."

Eric Kramer, who represents high-net-worth clients at the Farrell Fritz law firm in Uniondale, said clients "are very upset" about the proposed increase, which for a client earning $500,000 a year would mean $23,000 more in taxes annually. And that's on top of the state's recent income tax rate hike, Kramer added.

Medicaid

State and local governments in New York - and the taxpayers who support them - would be able to breathe a little easier, at least for a while, if Congress approves Obama's $25.5 billion proposal to extend for six months federal Medicaid reimbursements nationwide.

While it wasn't possible yesterday to determine how much more would be available to Long Island, the state could get about $3 billion of that money. That would represent a much-needed boost as it stares at a $7 billion budget deficit, Schumer said.

Nassau County Executive Edward Mangano praised the proposal, saying it would help the county "immeasurably." Suffolk County Executive Steve Levy said he welcomed the relief from "crushing mandates."

Medicaid provides health care to low-income Americans. Obama's proposal would extend the boost in federal reimbursements that originally passed in Obama's stimulus package last year. By the end of this year, Schumer said, New York will have gotten $11.1 billion in increased Medicaid reimbursements, and if the budget passes it will get another $3 billion next year.

EDUCATION

Overall, New York State would lose $1.2 billion in federal educational aid, according to budget breakdowns released Monday by the Obama administration.

For instance, the spending plan would eliminate the federal work-study program, which distributes money to colleges and universities for help in hiring students.

The potential loss in New York State alone: $6.7 million.

Sergio Donaldson, 20, a junior at Farmingdale State College, says the money would be sorely missed. Donaldson works up to 20 hours a week on campus in a work-study program that pays $7.50 an hour - money that helps pay for books and other necessities.

But it's not just a matter of cash. Donaldson, a computer science major, says the money also helps students like himself work within their own academic departments.

"We're in a recession already, and we can't find jobs off-campus," explained Donaldson. "So this helps us get jobs on campus and get experience as well."

However, there would be sharp increases in some education programs - notably a 64.3 percent jump in school "turnaround" grants, designed to help failing elementary and secondary schools revamp their instruction and raise test scores.

Anti-terror funds

Except for a few key programs, New Yorkers would see an increase in funding for Homeland Security urban security money and for nonprofit grants under Obama's proposed budget.

But as it did in last year's budget, the Obama administration has proposed to zero out funding for the program to create a multi-layered ring of sensors to detect radioactive and nuclear material and keep it out of New York City.

Last year, Congress restored $20 million and the administration awarded $18.5 million to the New York Police Department for the program, called Securing the Cities.

Schumer and Rep. Peter King (R-Seaford) both vowed to fight to restore the funds.

Water and roads

Proposed cuts to the budgets of the U.S. Army Corps of Engineers and the Environmental Protection Agency could trickle down to Long Islanders, leaving them the burden of paying locally for some water and sewer infrastructure projects.

The budget would cut the Corps' budget overall by $500 million to $4.9 billion and would freeze the EPA's budget at $10 billion.

Sen. Kirsten Gillibrand (D-N.Y.) flagged cuts in two revolving funds for states, $400 million from a clean-water fund and $300 million for a drinking-water fund, in the Obama budget.

"These cuts will have a major impact on local property taxes," Gillibrand said, if communities have to pay locally for their water infrastructure projects. New York State has $10 billion in these projects, she said.

Gillibrand also raised concerns about the budget's proposed cuts to transit investments by $1.4 billion, which she called a "critical" issue for New York, where one-third of all transit trips occur.