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Pot, taxes, tuition among budget flashpoints for Cuomo, Legislature

The 2021-22 New York State budget faces an

The 2021-22 New York State budget faces an array of thorny issues including marijuana, sports betting and taxes on the wealthy. Credit: AP / Hans Pennink

ALBANY — Marijuana, sports betting, taxes on the wealthy and a grab bag of college costs will be among the flashpoints for Gov. Andrew M. Cuomo and state legislators when they try to craft a budget as New York grapples with year two of the pandemic.

School aid — the amount of money the state sends to school districts for K-12 education — will be a top priority for the 213 legislators as it always is. It is sure to be the linchpin to a budget agreement, which lawmakers are supposed to complete by April 1, the start of New York’s 2021-22 fiscal year. Cuomo’s overall budget proposal totals $193 billion.

But school aid is just one of many thorny issues looming. And the outcome of some will depend heavily on how much more federal aid New York receives under the new Biden administration.

With the State Legislature commencing budget hearings on Tuesday, here’s a look at some potential fights on the horizon:

Millionaires’ tax

The key point here is the Legislature, which is more progressive than the Democratic governor, wants to raise income-tax rates on seven-digit income earners, perhaps implementing a higher rate at different levels — such as $1 million annually, $5 million and $10 million.

Cuomo wants to raise the rates only for those earning $5 million or more annually and, even more important, only if Washington doesn’t provide the state government with an extra $9 billion he’s requested. If Washington comes through, Cuomo doesn’t want to raise those rates at all, saying he doesn’t want to chase the wealthy out of New York.

Democrats who lead the Assembly and Senate say the hike is needed — no matter what Washington does — to avoid spending cuts to schools and other programs.

Marijuana, online sports betting

These two are linked because they are the two highest-profile "revenue raisers" lawmakers are considering other than income taxes.

And while there is strong momentum for each, legislators and advocates are saying Cuomo’s proposal for each has problems.

On marijuana, the cannabis growers’ association said the governor’s proposal would give New York among the highest marijuana tax rates in the nation — driving people to stay with the black market.

Further, some activists said Cuomo’s proposal to earmark about one-third of the annual marijuana tax revenue for communities affected by the "war on drugs" isn’t enough.

On online sports betting, industry types are decrying Cuomo’s proposal to run it like the state lottery. They said that means it would be operated by the state or a vendor chosen by the state and not a freer market scheme with multiple venues and vendors.

Under some legislative proposals, New York could have up to 14 betting app vendors.

Local government aid

When the pandemic hit last year, Cuomo began withholding 20% of the state’s payments to a variety of programs, including aid paid to municipalities.

The good news for them is Cuomo is proposing repaying three-fourths of that. The bad: He wants to make permanent a 5% reduction.

The governor also wants to end the parade of counties needing to ask state government to renew local sales taxes every two or four years. He says the sales tax shouldn’t have to be renewed in regular incremental periods and instead changed only when a county is altering rates.

But the need for sales tax renewals is a piece of leverage the house majorities (Democrats) have over minorities (Republicans) they aren’t eager to relinquish.

Higher education

Cuts to community colleges, elimination of a financial-aid program that boosts private colleges, and a tuition hike at the State University of New York campuses are among the Cuomo proposals legislators are flagging.

The governor wants to institute another series of rolling tuition hikes at SUNY, increasing it $200 per year through the 2024-25 academic year. Current base tuition for four-year colleges is $7,070.

The governor and legislators had instituted regular tuition hikes nearly a decade ago. But the latest authorization has expired and legislators — last year, after the pandemic hit — rejected the governor’s proposal to start again.

He also wants to eliminate "Bundy Aid," a Rockefeller-era initiative that sends money to private colleges, which is often used for student financial aid. Cuomo would stop payment on $16.8 million in Bundy Aid that was supposed to be paid out this fiscal year and eliminate another $35 million colleges expected in 2021-22.

Finally, Cuomo wants to reduce state payments to community colleges by $35 million this year and $11 million next. He said recent federal aid to these schools offsets this cut; he also cited a dip in community college enrollment.

DMV fee

OK, it’s just an additional $1 on every online transaction with the state Department of Motor Vehicles. But it would generate nearly $13 million a year as the state shifts — in reaction to the pandemic — more and more DMV interactions online.

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