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Gov. Andrew Cuomo's 10th state budget to detail how to fill $6.1 billion deficit

Gov. Andrew M. Cuomo delivers his State of

Gov. Andrew M. Cuomo delivers his State of the State address at the Empire State Plaza Convention Center in Albany on Jan. 8. Credit: AP / Hans Pennink

ALBANY — Gov. Andrew M. Cuomo on Tuesday will reveal his 2020-21 budget that includes some big-ticket proposals as well as the legalization of marijuana, while filling a $6.1 billion deficit that threatens funding for schools and health care.

Cuomo said he plans to do it all without further burdens on some of the nation’s highest taxed residents.

The governor got some last-minute help this month when tax revenues through December came in $1.3 billion ahead of projections. He also has promised to find savings in the Medicaid program, which accounts for $4 billion of the state deficit.

However, Assembly Speaker Carl Heastie (D-Bronx) and majority Senate Democrats led by Sen. Andrea Stewart-Cousins, of Yonkers, already have said cuts to health care are non-starters. 

“There are tough decisions to be made,” State Comptroller Thomas DiNapoli said in an interview.

"The state needs to close a significant budget gap," said DiNapoli, a Democrat. "It’s important the executive budget proposal responsibly addresses the state's financial challenges not only for the upcoming fiscal year, but for the long-term as well."

DiNapoli said, "out-year budget gaps point to even greater deficits than we are facing now. The best way to get the state back on solid financial footing is with recurring actions and higher reserves that will better position the state for when the inevitable economic downturn arrives."

Cuomo's 2020-21 budget is expected to exceed $175 billion.

“Revenues are actually coming in above expectations,” said David Friedfel, director of state studies for the independent Citizens Budget Commission.

Nonetheless, the state “needs to address the current year’s deficit and next year’s gap by exerting spending control on Medicaid, and education — the two biggest parts of the state budget, while avoiding fiscal gimmicks, costs shifts, and tax increases,” Friedfel said.

Cuomo, however, already has shifted a monthly Medicaid bill into future fiscal years, which will avoid $2 billion in costs this year.

E.J. McMahon of the fiscally conservative Empire Center said the budget must reflect that the state has a spending problem, not a shortage of revenue.

He said Cuomo can’t just “paper over” this year’s deficit by tapping reserves and employing gimmicks such as one-shot, nonrecurring revenues, but must institute long-term spending cuts and efficiencies in the budget so deficits don’t deepen in bad economic times.

School aid

Cuomo said he plans to funnel more state aid to the poorest school districts and to eliminate a huge per-student funding gap between poor urban districts and wealthier suburban districts.

School aid and Medicaid are the two biggest areas of the budget and could be the most likely candidates for substantial cuts, or holding spending flat.

But both spending pots have strong backers, including politically influential teachers’ unions and state legislators, all of whom are under pressure to send more aid to schools in their districts. Legislators also face elections in the fall.

“The state must make full funding of our schools a priority,” said the New York State United Teachers union in a statement, , which has contributed more than $1.3 million to political candidates, primarily in the state Legislature, since 2018.

Also, school districts only will be able to raise local tax levies by 1.81% under the state tax cap law because inflation has been so low. To exceed the cap, school districts will need the approval of 60 percent of voters, which isn’t common.

Bail changes

Cuomo has increasingly inserted big and controversial policy proposals into the budget process, through which he has extraordinary leverage over the Legislature.

And law enforcement groups are pressuring him to amend the new law that has ended cash bail for misdemeanors and the lowest level felonies that don’t include a violent intent as defined by law.

The intent of the law, which took effect Jan. 1, is to ensure defendants aren’t held without conviction in jails for months or years solely because they can’t afford bail.

Republican legislators, however, have highlighted cases in which some defendants committed new crimes including burglary and vehicular manslaughter after release under the new law.

But liberal Democrats who control the Assembly have said they have no interest in revising the legislation. The Senate’s Democratic majority has said it would consider tweaks.

"I think something is necessary,” Cuomo, a Democrat, said last week. “The question is what … We are now looking at the effect of those changes and considering other changes. It's a complicated system."

Tax increases

Given the deficit, a Cuomo proposal to cut small business taxes and growing state expenses, something will have to give, many legislators say.

Cuomo said there won't be a broad-based tax increase. But there are many other ways to increase taxes and fees. Politicians like to call them “revenue raisers,” and Senate and Assembly Democrats already are eying new taxes on millionaires and billionaires.

One proposal that has failed in recent years might be ripe now.

The pied-à-terre tax would target the very wealthy with an additional levy on their multimillion dollar second homes in New York City. Estimated revenues are $9 billion over several years.

Cuomo has cautioned that continuing to boost taxes on the wealthy will at some point drive more of them, their tax revenue and their businesses out of state. There already is an exodus of New Yorkers to lower-taxed states, according U.S. Census records.

“The very top earners should pay their fair share, just like everyone else,” said Ron Deutsch, executive director of the labor-backed Fiscal Policy Institute.

Deutsch said Cuomo’s budget should invest in infrastructure, job training, health care and tax credits for low-income families as part of economic development, rather than continue to spend hundreds of millions of dollars to subsidize companies with tax breaks for job creation.

Marijuana

Cuomo has promised to legalize marijuana use for adults 21 years old and older this year. The move could generate $300 million in state tax revenue, according to Cuomo. Legalization would also require some spending to regulate the sale and use of the drug.

Environment

Most of the new spending in Cuomo’s budget will be through his proposed $3 billion “Mother Nature Bond Act.” The legislation would pay for a variety of environmental protection and public health projects including sewer and drinking water improvements on Long Island along with protection of commercial and sport fisheries. Voters would have to approve the borrowing in November

Big infrastructure

Cuomo’s big projects are led by a proposed $9 billion overhaul of Penn Station funded heavily by borrowing. The new Empire Station Complex would add eight tracks and increase capacity by as much as 40 percent while creating retail space for a “world-class experience.”

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