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Cuomo's Budget Hinges On Getting $15 Billion From Biden's Washington
By
Christopher Robbins
Published Jan 19, 2021
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Darren McGee-Office of Governor Andrew M. Cuomo
By
Christopher Robbins
Published Jan 19, 2021
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The fate of education funding, middle class tax cuts, and higher income taxes for the wealthy all depend on whether the federal government comes to New York's aid, Governor Andrew Cuomo said during his annual budget address on Tuesday afternoon.
In a nearly hour-long address that was scant on budget details but layered with harsh words for the outgoing Trump administration, Cuomo said the state was essentially preparing two budgets: one that assumes that New York would receive just $6 billion from the Biden administration's $1.9 trillion proposed stimulus—of which $350 is earmarked for state and local aid—and another that accounts for $15 billion, a figure that lines up with the state's current budget deficit over the next two years.
"How do they distribute that $350 billion? And how much goes to the New York state government? We don’t know, in short, what level of aid we will get," Cuomo said. "But the budget is dependent on that number."
Cuomo added that the $6 billion allotment would be "the 2021 version of the federal government saying 'drop dead' to New York."
If the $15 billion doesn't come through by the state's budget deadline of April 1, the Cuomo administration will proceed on a series of revenue-raising and cost-cutting initiatives, including legislation that would raise income taxes on New Yorkers who earn $5 million annually from 8.82% to 10.82%, cancelling a planned middle class tax cut, and keeping education spending flat across the state.
Most districts would see an increase in education spending if the $15 billion is sent by the federal government,
In a briefing after the governor's speech, Cuomo's budget director Robert Mujica told reporters that the tax hike on the rich would raise around $1.5 billion, and would only happen if the state did not receive the $15 billion.
"If we have the federal money there isn’t a need, necessarily, to raise those taxes," Mujica said. He also repeated the need to not scare away wealthy taxpayers, and cited a New York Times report from May showing that wealthy New Yorkers had registered forwarding addresses with the Postal Service, though he did not produce any data from the state's Department of Finance suggesting that high income earners had permanently left. "We want to give them a reason to come back and stay, we don’t want to do anything to impact them," Mujica said.
Mujica was also dismissive about a slew of other legislative proposals to raise taxes on the wealthy, like a stock transfer tax, a wealth tax on billionaires, or a pied-a-terre tax on second residences.
"A lot of these ideas, people talk about them, but they haven’t been fleshed out," Mujica said.
Yet leaders from both the Assembly and the Senate have called for raising taxes on the wealthy to meet other needs the state has. "The wealthy have gotten wealthier during this crisis even as the middle class has shrunk and millions of New Yorkers struggled to make ends meet," Senate Majority Leader Andrea Stewart-Cousins said in a statement. "We must be ready to act as a state to raise revenues, including having the hyper-wealthy share this burden."
Mujica said that New York has done slightly better than projected coming into the end of its fiscal year. Initially, the state was withholding 20% of state funding from localities, per the extraordinary power granted to the executive in last year's budget, passed as the pandemic decimated the state. Instead, the state will only withhold 5%, and will begin restoring that funding in the coming weeks and months. One million people are currently unemployed in the state, down from a height of two million earlier in the pandemic.
The overall state spending budget for 2022 fiscal year would be $193 billion, just a 1% increase from last year, Mujica said, as spending has decreased $7.8 billion compared to this time last year.
Asked what would happen if the state received an amount between $6 billion and $15 billion, Mujica replied that the executive would work with the legislature to address the gaps.
Cuomo said that proposals to raise $500 million a year through legalizing sports betting, and $350 million by legalizing marijuana, would also buoy the state's finances somewhat, but Mujica noted that the marijuana revenue reflects what would be garnered three to four years after legalization.
The budget documents also appear to reduce the MTA's state funding from $6 billion to $5 billion.
"If Washington doesn’t provide New York state with its fair share of funding we’re going to pursue litigation," Cuomo said, though it's unclear how a state could sue the federal government for not providing it with a certain amount of money.
"The state hopes to receive $15 billion in federal aid, which would wipe out its near-term deficits, obviating proposals to increase taxes or reduce spending. While that would be beneficial in the short run, it still would leave the state with significant future gaps," Andrew Rein, the head of the Citizens Budget Commission, said in a statement. "No matter the level of federal aid, the State should be pursuing structural spending reforms to ensure that its finances are stable coming out of the recession.”
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andrew cuomo
state budget
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Christopher Robbins
Christopher Robbins is a New York City reporter covering transportation, affordable housing, local politics, and criminal justice. His work has also appeared in New York Magazine, The Village Voice and The New York Times. Chris is a graduate of Patrick Henry High School in Roanoke, Virginia, and enjoys biking to Fort Tilden in the summertime.
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Gothamist is funded by sponsors and member donations
Gothamist is funded by sponsors and member donations
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