Senate, Assembly budget plans call for some new taxes

ALBANY — The prospects of a state budget with new taxes was outlined Tuesday after both the Senate and Assembly called for a surcharge on top earners and a pied-à-terre tax. Both also raised potential revisions to Gov. Andrew M. Cuomo’s demand that the property tax cap be made permanent.

The legislative budget proposals are a response to Cuomo’s executive budget proposal, which he released Jan. 15. A budget is due April 1.

Complicating the budget process this year is a $3.8 billion shortfall and declining tax revenues. To make ends meet, the legislative leaders appear to agree in concept on new taxes.

They include charging sales tax on all internet   sales for the first time to raise $250 million a year. The Assembly and Senate would extend the current millionaire’s tax, the highest in the nation at 8.82 percent, for five years. The Assembly would expand it to charge progressively more based on income — up to more than 10 percent on earnings topping $10 million.

Cuomo had warned the Legislature on Monday that he wouldn’t weaken the current 2 percent cap on property tax  levy increases. But opponents, including worker and teachers unions, want to make it easier to exceed the cap.

Senate Majority Leader Andrea Stewart-Cousins said Tuesday that she is still listening to concerns by local government and school officials who may want to change the measure. The Assembly’s Democratic majority didn’t include the measure in its budget proposal.

“We are very, very clear that we need to pass the tax cap,” said Stewart-Cousins (D-Yonkers). “We need to make sure it’s permanent and, as I said, if we are going to make something permanent, we have to make sure it’s something that our municipalities can sustain.”

The tax cap Cuomo championed six years ago requires local governments and school districts to hold the growth of their property tax levies to 2 percent, unless they hold a public vote to exceed it. Most governments and schools have reduced property tax increases, but they also say services are suffering.

In other budget areas, Cuomo has called for a $1 billion increase in school aid to $27.7 billion. The Assembly’s Democratic majority called for a $1.6 billion increase and the Senate’s Democratic majority wants a $1.62 billion increase.

Tuesday’s kickoff to serious budget negotiations also came with more of the growing friction between the governor and the Legislature. In addition to requiring that the tax cap be made permanent, Cuomo has insisted that the Legislature couldn’t raise spending over his $175.2 billion plan without new revenue.

“You can’t just draw a line in the sand,” said Assembly Speaker Carl Heastie (D-Bronx). “I don’t think it’s fair when you have to talk to two other parties”

The Senate wants to change Cuomo’s congestion pricing plan, which would charge a fee to motorists at peak times to enter Manhattan below 60th Street to relieve traffic and generate funds to repair the city subway system.

The Senate, led by more moderate suburban Democrats on Long Island, proposes that some of the revenue go to the suburbs to improve train and bus services.

In other elements:

• Cuomo and legislative leaders appear to agree on the pied-à-terre tax, which would assess a surcharge on Manhattan apartments and condominiums worth $5 million or more and mostly owned by residents of other states and countries.
• Although the Senate and Assembly agree on legalizing recreational marijuana, the measure might have to wait for adoption after the budget in order to negotiate law enforcement and other issues, Heastie said. It’s worth $300 million in revenue annually.
• Cuomo also said he won’t agree to a budget without criminal justice reform, which would end cash bail in most cases, end a provision that allows some defendants to be held for months without a trial and ban prosecutors from withholding basic evidence such as police reports and witness statements from defense attorneys until trial. The Senate and Assembly offer versions of that plan. 

Republicans quickly criticized the Democratic proposals. “It’s liberal, it’s radical, it’s over the top, it’s off the cliff for taxpayers,” said Senate Minority Leader John Flanagan (R-East Northport).

By Michael Gormley

michael.gormley@newsday.com@GormleyAlbany

Michael Gormley has worked for Newsday since 2013, covering state government, politics and issues. He has covered Albany since 2001.