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Cuomo budget expected to raise school spending, cut business taxes

New York State Gov. Andrew Cuomo is shown

New York State Gov. Andrew Cuomo is shown before giving the State of the State address at the Empire State Plaza and Convention Center in Albany, NY. (Jan. 8, 2014) Credit: Newsday / J. Conrad Williams, Jr.

ALBANY -- Gov. Andrew M. Cuomo is set to propose a state budget Tuesday that boosts school spending and cuts business taxes by banking, in part, on future surpluses.

The state budget has gone from a deficit a few years ago to basically break-even by the start of the April 1 fiscal year. By 2017, Cuomo says, New York could have a $2 billion surplus -- if current trends hold.

Eyeing that, Cuomo enters his re-election year promising to increase education and Medicaid spending by 4 percent each. He's said he wants to keep state spending growth under 2 percent. He's vowed to fund some economic development items but has said little about funding other initiatives, such as expanded prekindergarten programs and a taxpayer-supported campaign-finance system.

"We can increase our investments in education, health care, economic development and still provide more tax relief," Cuomo, a Democrat, said in his State of the State address Jan. 8.

Cuomo is expected to propose a roughly $138 billion budget; lawmakers are hoping to finalize a budget deal by March 31.

Cuomo and legislators have committed to increasing school aid by 4 percent. But he will face pressure from education groups and Assembly Democrats who already have said that's not enough to keep pace with costs.

New York approved $21.2 billion in school aid for the current fiscal year.

A 4 percent bump would bring that to more than $22 billion.

The governor tried to dismiss his critics, saying they always want more money. He said education results don't directly correspond to spending.

"How much more? And is there any economic reality to any of this?" Cuomo said Friday on "The Capitol Pressroom," a public radio show. "The dialogue in Albany is really run by industry groups, who frankly get paid to generate more money for the industry."

One of the education groups fired back, saying he's proposing corporate tax cuts while doing little to address overcrowded classrooms and reduced programs -- especially in economically struggling school districts.

"New York is a national leader in inequality between rich and poor schools and the governor has done nothing to close the gap," Billy Easton, executive director of the Alliance for Quality Education, said in a statement. "We need real progressive leadership on education from Governor Cuomo, not more diatribes about education advocates and more excuses for why funding inequalities are not being addressed."

Assembly Speaker Sheldon Silver (D-Manhattan) echoed the sentiment.

"I think we've lagged behind," Silver said at an Alliance for Quality Education rally Tuesday. "We've made cuts in prior years when money wasn't there. So I think now we should make up for some of those cuts."

But while the state economy is improving, it's not doing so quickly.

State Comptroller Thomas DiNapoli reported Friday that state revenue, through the first three quarters of the fiscal year, is up $2.6 billion from the same period a year earlier. However, it is $534 million less that what the Cuomo administration projected. Government spending also is down, helping the state's bottom line.

Further, the Citizens Budget Commission, a watchdog group, said the state likely would have to reduce payroll and operations costs and aid to localities by about $5 billion to achieve a $2 billion surplus in two years.

"Although the change may look simple on paper, making reductions of this scale will be challenging," the group warned on its website Friday.

Cuomo has said he'll propose reductions in estate taxes, utility surcharges and the state's corporate tax rate. He's proposed even bigger breaks for upstate manufacturers.

Republicans say they're ready to support those initiatives.

"Our commitment to spending less has created a surplus, and given us a once-in-a-generation opportunity to cut taxes, grow our economy and create new jobs," Senate co-leader Dean Skelos (R-Rockville Centre) said after the State of the State address. "For middle-class families who are worried about the future, we must seize this moment."

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