Cuomo: New tax package saves school funds

Gov. Andrew M. Cuomo said Thursday that the State Legislature's passage of higher taxes for the wealthy has resolved all remaining major issues in next year's state budget and eliminated the risk of additional cuts in school funding.

"It makes next year much easier," Cuomo said in his State Capitol office, "in what could have been a difficult political cycle. It's an election year. Times are tough."

In a hastily called special legislative session, Cuomo and lawmakers enacted a package of bills this week that raised taxes on very high earners and lowered them for middle-income households. It also partly rolled back the MTA payroll tax, and created funds for infrastructure projects, urban youth jobs and upstate flood relief.

Republicans, who earlier this year declared the idea of taxing the wealthy "dead," almost unanimously supported the package, citing the tax cuts. And notably, they praised the deal by saying things such as "this is great for 99 percent" of New Yorkers -- invoking language of the liberal Occupy Wall Street movement.

The legislation is expected to generate about $2.6 billion, with about $1 billion going to the new programs and the rest to reduce the state's projected $3.5 billion deficit. By nearly cutting the deficit in half and settling tax policy, lawmakers have tackled a huge portion of the 2012-13 budget.

The agreement also enables Cuomo and lawmakers to boost school funding by 4 percent next year. Earlier this year, Cuomo and legislators cut school funding for 2011-12 but promised an increase in the next budget. They also promised a 4 percent Medicaid increase for next year's budget.

Without the increased tax revenue, Cuomo said he might have proposed another round of cuts.

"You have a $3.5 billion deficit. Without revenues, you cannot fund the schools at 4" percent, Cuomo said. "You probably would have been below zero for schools. That was the choice."

And, with schools, Medicaid and taxes in place, Cuomo said there were no looming sizable issues for the state budget.

"Normally, you argue about the size of the box, how much revenue, how much expenditure," Cuomo said. "Now you know the size of the box."

Cuomo touted the legislation as "great for the short-term and great for the long-term."

"You have a jobs program now. Not in May. Not in June," Cuomo said. "The tax plan is great short-term because I think it's stimulative."

Sen. Charles Fuschillo Jr. (R-Merrick) said it was a confluence of issues that prompted his colleagues to join with Democrats and back the tax increase.

"The social unrest, the financial instability, Washington's inability to accomplish anything to make the situation better, natural disasters . . . led to all of this," Fuschillo said, the last point referring to two hurricanes that caused massive upstate floods.

Others said it was important to seize agreement while it was at hand rather than wait till the state budget is settled -- likely April 1.