Big if: Gov. Cuomo proposes 2 New York state budgets, contingent upon federal aid

ALBANY, N.Y. (WROC) — Gov. Andrew Cuomo and New York State Budget Director Robert Mujica presented the Fiscal Year 2022 Executive Budget for the state Tuesday.

With “adequate federal support,” the budget will focus on:

$306 billion to infrastructure plan
$29 billion in private/public green economy investments
$1.3 billion rent relief program
$20 billion to create/preserve 100,000 affordable housing units
$128 million for homeless housing and assistance
$15 cap on broadband for low-income families
$150 million to address food insecurity
$10 million for Liberty Defense Fund
$130 million Pandemic Recovery and Restoration Program (supporting highly-impacted small businesses, restaurant, arts, and entertainment industries)
$40 million Infectious Diseases Resiliency Commercialization Fund (to fast-track innovation , address emerging health threats, establish Public Health Corp.)

“We have been, probably, one of the most fiscally responsible administrations in modern political history,” Gov. Cuomo said. “We’ve done more with less. We controlled spending and we’ve done it smartly. This is a different type of budget than we’ve done in the past and we shouldn’t be surprised by that because it’s a different time, different year, different state, and different world than we’ve dealt with before. This budget is really an economic reconciliation effort with the COVID crisis.

“I believe this period is going to be one of the periods that is analyzed throughout history,” Gov. Cuomo said. “Every story has different chapters. Last year was about fighting the COVID war; we were in the heat of battle last year. This year it’s going to be about reconciling responsibility for the battle and completing the battle. COVID is still alive and well, and this war is not over. We have the weapon that will win the war, which is the vaccine, but the war isn’t over.”

The governor said New York State is facing a $15 billion deficit this year. Tuesday the governor presented two budget proposals, each contingent on different aid packages from the federal government. The first budget, called a “worst case scenario” projects $6 billion in aid from Washington, while the other budget, “called a “fair funding scenario” projects $15 billion from D.C.

“The overall situation is our four-year financial plan shows a $39 billion revenue shortfall,” Gov. Cuomo said. “It’s $21 billion in revenue loss over two years. Why the revenue loss? Businesses were closed, people weren’t working, they didn’t pay taxes. The gap was projected to be worse, but as the economy started to run again the gap started to close.

“$6 billion would only be 1.7% of the proposed state and local aid package from the federal government,” Gov. Cuomo said. “That is the worst case scenario. I would consider that the 2021 version of the federal government saying ‘drop dead’ to New York.”

The governor said tax increases and borrowing wouldn’t do enough and could cause long term harm for the state.

“To get to $9 billion would require everything that you could do. You need to raise revenue, cut expenses, and borrow funding. The New York State Legislature proposed an income tax increase. If you raise income tax from 8.82 to 10.86 then the state rate and the city would be a total of 14.7, which would be the highest income tax in the nation, you’d raise $1.5 billion. And you’d have to do all of this in the middle of a COVID pandemic. On top of that you’d have to do significant borrowing. That would hurt the state’s credit rating and give our children debt that they would have to pay, dramatic budget cuts would hurt New York state long term and delay recovery.”

Two other revenue avenues the state is exploring is legalizing adult-use recreational cannabis, and legalized online sports betting.

MORE | Legislation for recreational marijuana, online sports betting proposed in New York state

For online betting, the state is projecting $500 million per year in revenue once operation, for a system like the New Lottery mobile app, which bypasses casino host revenues and puts more profit into the state.

For legal marijuana, the state is projecting $350 million in annual revenue, once the infrastructure is in place. The current proposal would call for $100 million of that revenue to go into a social equity fund, with the $250 million remainder going into the state budget.

However, these proposals still leave a big budget gap. Simply put, the governor said New York is relying on Washington to help.

“If the fed government doesn’t fund state and local government, it’s going to hurt all New Yorkers and it doesn’t help if the federal government,” Gov. Cuomo said. “Gives with one hand and takes away with the other. It makes no sense to give a $1,4000 check to a New York family, but then force the state and local government to raise taxes and lay off essential workers.

“We want federal help, but we want the help that is fair,” Gov. Cuomo said. “What is fair? Fair funding from Washington would be $15 billion of the $350 billion. Considering what we went through I think it’s a modest request from Washington.”

The governor also called for the repeal of SALT, which he says was created by party lines, and has cost New York $30 billion over the past four years.

“$15 billion in funding and repeal SALT,” Gov. Cuomo said. “What is SALT? SALT was a tax provision passed three years ago. It was the first double taxation in history and what it did is it placed a federal tax in what a person paid in state and local taxes.. What this is, it you literally taxed what you paid.”

MORE | Gov. Cuomo’s 2021 State of the State: Beat COVID, invest in future, address systemic injustice

The governor said repealing SALT would give New York state $12.3 billion, and repealing it would decrease taxes for New Yorkers. The governor also said New York is owed after years of abuse from the federal government.

“No state puts in more and gets out less than New York state,” Gov. Cuomo said. “The fundamental injustice against New York: We are the top donor state. We pay in, every year, $22 billion more than we get back. Other states receive more than they pay in. West Virginia, Kentucky, Florida … these states boast about low taxes, but that’s because we subsidize these states.

“I represent the people of the state of New York,” Gov. Cuomo said. “That’s my whole job description, and I am here to represent New Yorkers, and fight for them, and they have been abused by Washington for four years. All we want is what’s fair.

“Yes President Trump is gone, but the damage to New York remains,” Gov. Cuomo said. “This isn’t about having an individual leaving the white house. It’s to restore the damage he did and change the policies. That’s why the people of this country voted to remove him. That’s why the people of this country voted to change the leadership in the Senate. It was a vote to undo the damage of the past four years and that’s what we want our federal representatives to do.”

New York State Budget Director Robert Mujica’s briefing:

New York State Budget Director Robert Mujica hosted a briefing with media Tuesday afternoon to answer questions about the budget proposal process and specific agenda items.

The budget director said that before the pandemic struck, New York state was in an advantageous economic situation.

“As a result of controlled spending, we were able to reduce taxes, we reduced middle class taxes to the lowest rate since 1947,” Mujica said. “Going into the pandemic we also had the lowest debt levels since the 1960s and credit ratings were the highest its been since 1972.”

Under the “worst case scenario” plan of $6 billion in federal funding, the state will look to increase tax revenue by $2 billion and decrease spending by 5%. Overall the $6 billion aid budget would include a $193 million spending plan for the state.

“In March COVID-19 struck. The immediate economic consequences were devastating to New York,” Mujica said. “The governor acted immediately, New Yorkers responded and our efforts saved lives. We were able to bend the curved and lowered the infection rate to the lowest in the country but the economic consequences were severe.”

Reiterating the governor’s earlier sentiments, Mujica said federal funding was necessary to offset COVID-19 losses, saying states cannot close these gaps by themselves, and without federal aid, the long term situation would be even harder to remedy.

Budget presentation (1/19/21)

“All of the financial gains over the past few years were reversed,” Mujica said. “The mid-year projection had us with a 63 billion revenue loss over the next four years.”

All told, the state is prepared to move forward with the $6 billion budget, but that would sacrifice many proposals, projects, and some more cuts to offset losses.

“Anything less than the $15 billion will mean negative actions are required,” Mujica said.

The budget director said New York state lost about 1.9 million jobs in mid-2020, but half of which were recovered for an overall employment decline of almost 10%. He added the remainder of the jobs lost likely wouldn’t be recovered for years.

A statement from New York State Republican Chairman Nick Langworthy on the budget presentation Tuesday:

“Cuomo’s so-called budget address was a joke. It was exactly like everything else he does–a political performance with no substance or details. Cuomo is due for a major reality check when his Party’s total Democrat control in Washington and New York will leave him with no one to blame for his failures. New York is facing serious challenges that demand serious leaders. The emperor has no clothes.”