ALBANY — A $4 billion state deficit, the threat of losing billions more in federal aid, a cloud of corruption trials and a contentious election year for the governor and every legislator are part of the drama in store for Albany in 2018.
Even Gov. Andrew M. Cuomo, who has to contend with some of those issues in his State of the State address on Wednesday, isn’t putting a positive spin on 2018 yet.
“We’re going to have to find additional savings in the budget. That’s clear,” Cuomo recently told reporters. “The problem is, there is no more money.”
Cuomo will issue his address on the first day of the six-month legislative session. Such speeches in election years like 2018 have traditionally been ambitious wish lists of big spending and major policies to solidify the governor’s Democratic base. Cuomo is expected to again insert major policy initiatives — keeping guns from the hands of domestic abusers, expanded health care and ending secret settlements of sexual harassment cases among them — into the spending plan that is due April 1. Under state law, governors have exceptional leverage over the State Legislature in crafting a budget and any attached policies.
But unlike recent years, lawmakers won’t have extra money to spread around.
In fact, Cuomo will be hamstrung more than any year since his first budget in 2011 by what the independent Citizens Budget Commission estimates will be a $4.4 billion to $6.3 billion deficit before the loss of federal aid and amid declining state tax revenues. New York also faces the threat of substantial losses in federal funding as the Trump administration and the Republican-controlled Congress plan cuts to entitlement programs, including Medicaid and Medicare.
“The person most likely to set the legislative agenda isn’t Andrew Cuomo or Speaker Carl Heastie or Senate Majority Leader John Flanagan or all of the above,” Lawrence Levy, executive dean of Hofstra University’s National Center for Suburban Studies, said. “It’s another New Yorker — Donald Trump.
“The session is likely to be one of the most reactive in years, as the state waits to hear — really feel the tremors of — what happens in Washington with the president’s agenda on tax cuts and human service spending,” Levy said.
Cuomo will be hard-pressed to continue his seven-year record of spending on liberal programs while keeping total state spending increases to about 2 percent and contend with cuts in federal aid.
“The damage will start in this first budget and then will grow in the following budgets,” said Heastie (D-Bronx). “This is going to do all kinds of damage up and down.”
Suffolk County Executive Steve Bellone warns that any cuts in Washington and Albany will put more pressure on local property taxes.
“It’s all bad news for New York taxpayers,” Bellone said. “If all of a sudden you see big cuts to entitlement programs . . . it will take a significant amount of money out of pocket.”
“New York State has a spending problem, not a revenue problem,” said Susan Del Percio, a national Republican strategist and commentator who once worked for Cuomo. “This is going to be extremely tough to tackle in an election year, where elected officials like to add lots of items for constituencies.”
She said the Republican-led State Senate will have a “hard time pushing for a middle-class tax cut at a time when other cuts will have to be made” and might have to focus on regulatory reform that doesn’t require tax cuts.
The State Senate’s Republican majority has said its priority will be cutting taxes and fees. That will make raising revenue more difficult for Cuomo and the Democrat-led Assembly in state budget negotiations.
“Raising taxes right now would be the dumbest thing in the world,” said Senate Majority Leader John Flanagan (R-East Northport). “We actually believe cutting taxes will spur the economy.”
Flanagan’s partner in a power-sharing deal in the Senate, Sen. Jeff Klein (D-Bronx), head of the Independent Democratic Conference, has proposed that the state provide a tax deduction to cover state and local property taxes over $10,000 in households making up to $200,000. The proposal is a response to the new federal tax law that will cap the federal deduction for state and local taxes at $10,000.
Klein said the conference plan could cost the state budget $450 million — but also help New Yorkers to stay in their homes and keep the state competitive.
“You have to see how you can be creative in an emergency situation,” Klein said in an interview.
Further complicating any cutting in the $165 billion state budget due by April 1 is that two biggest areas of spending education and health care — are fiercely protected by important constituencies to Cuomo and by legislators on both sides of the aisle. The Board of Regents has proposed a $1.6 billion — 6 percent — increase in school aid alone.
Cuomo also will be under pressure to fund improvements for a troubled subway and commuter rail system that serves both his base in New York City and suburban swing voters.
Assembly Minority Leader Brian Kolb (R-Canandaigua) argues New York’s lack of affordability “is causing a mass exodus; an infrastructure crisis that’s making everyday life more difficult for millions; and government accountability issues that have been ignored for too long.” He is the first of what is expected to be several Republicans to announce a bid for governor.
Liberal Democrats in Albany, however, will try to push the traditionally centrist Cuomo to the left. Some Democratic voters nationwide following potential 2020 presidential candidates also may be looking for Cuomo to lead a liberal agenda.
Senate Democratic leader Andrea Stewart-Cousins (D-Yonkers) ticked off some fiscally and politically dicey priorities: expanding health care as New Yorkers lose coverage under Trump’s action; boosting school aid; strengthening gun control; and protecting civil rights of minorities and immigrants as the Trump administration limits immigration.
While the session is going through June, federal prosecutors will be pursuing trials in five major corruption cases. The cases begin Jan. 8 — just five days after the State of the State address — with the trial of Joseph Percoco, Cuomo’s former top adviser, campaign manager and political enforcer. Percoco, whom the late Mario Cuomo considered a “third son,” Gov. Andrew M. Cuomo once said, is accused of conspiring with others to rig bids for major state construction projects in favor of Cuomo campaign donors in exchange for kickbacks. Percoco has pleaded not guilty.
The former speaker of the state Assembly, the former leader of the state Senate, a former Western New York political power broker, and a former university president involved with the same projects as Percoco separately will be facing corruption charges they have denied. The cases will hang figuratively over the session, analysts have said.
Those are the kinds of challenges that will force Cuomo to act on several fronts at once.
“To prove management skills, Governor Cuomo will have to work around a budget hole to find new funding for the MTA,” said Hank Sheinkopf, a national political strategist who has advised former President Bill Clinton and Cuomo. “To ward off the left, prekindergarten funding seems a winner and north of Orange County all that matters is the economy.”
“Governor Cuomo doesn’t need to create explosive accomplishment,” Sheinkopf said. “He needs a workmanlike agenda enacted containing something for everyone.”
With Yancey Roy