In 2018, when the Democratic Party won the majority in the State Senate and full control of state government, the calls for big tax hikes began immediately. They have only gotten more intense since, labeled by some as wealth redistribution.
The tax increases did not happen because Gov. Andrew M. Cuomo stopped them. He argued that taxes here are too high, there is considerable waste and overtaxed high-earners may decamp.
But now progressive Democrats are emboldened because Cuomo is weakened by investigations into his handling of nursing home records and accusations of inappropriate sexual conduct. And they're pushing an unprecedented and incautious $7 billion in proposed annual tax increases and the spending of one-time federal money in a way likely to cause recurring expenses, which is anything but good government.
When the pandemic hit, the potential financial impacts looked dire. Commerce stopped as the expense of fighting COVID-19 climbed. Cuomo feared a staggering $60 billion deficit over four years. The federal government passed stimulus bills, but the priority was American workers and businesses, not state budgets.
Revenue projections improved over time, but New York’s outlook remained shaky. Cuomo began talking about a $15 billion deficit, originally using the number to describe the one-year shortfall, then, as the outlook improved, using the figure to describe a two-year deficit. Then that figure was adjusted down to $12.6 billion for two years.
To address those holes, the federal $1.9 trillion stimulus just signed into law gives about $12.6 billion to the state, along with tens of billions more to New York for education, transit, Medicaid, aid to municipalities and other needs.
Senate Majority Leader Chuck Schumer knew what his state needed, and he got it. Good for him. But if the pandemic was the justification for huge proposed tax increases, it’s not anymore.
The fiscal bailout is funded, but on Monday the Assembly and Senate passed budgets including that $7 billion in annual tax hikes. They are far larger and broader than the temporary $1.5 billion increase Cuomo proposed, and mostly permanent. And they are bolstered by tax hikes on inheritance, capital gains and a new surcharge on utilities likely to show up on all our bills.
The Senate and Assembly envision using this new money to increase recurring funding to public schools and universities, small businesses, artists, and the fight against homelessness. They want to help struggling tenants and homeowners, protect the environment and increase Medicaid and other health care funding. For sure these are important state needs, and far too many people are left behind.
But the default position in the most highly taxed and most free-spending state in the nation ought to be a deep suspicion of tax increases. And that's particularly true at a time when federal aid, if it is spent on recurring expenses, will leave New York desperately needing even more revenue once COVID-19 stimulus runs out.
— The editorial board