The 5 big themes of Cuomo’s budget address
The 5 big themes of Cuomo’s budget address
Speaking to the state Legislature like a coach at halftime when his team’s outcome seems almost impossibly grim, Gov. Andrew Cuomo presented his $168.2 billion budget for fiscal year 2019 on Tuesday.
“This year is going to be challenging, my friends,” he said at the beginning of the address. “In many ways, this is going to be the most challenging budget that we’ve had to do.”
The challenge, Cuomo said, is not closing the state’s $4.4 billion deficit, which he called the “easy part"; it is adjusting to the federal tax overhaul signed by President Donald Trump in December.
Cuomo’s speech included his trademark granular details and accompanying slideshow presentation. Another familiar element was the outburst by firebrand Assemblyman Charles Barron to protest the governor’s budget priorities. Barron heckled Cuomo during the speech, charging that he was not spending enough for poor children.
“It’s never enough,” Cuomo retorted.
Here are the major takeaways from the governor’s budget address, as he tried to convince legislators that balancing priorities and working together would, in fact, be enough for this year.
The Empire State strikes back
Cuomo dedicated the beginning and end of his speech to laying out New York’s response to the new federal tax law that limits the state and local property and income tax deduction to $10,000, which can be damaging for high-tax states like New York.
Cuomo reiterated his proposal, unveiled during his state of the state address, to sue the federal government over the tax plan and fight for its repeal. He also expanded upon his plan to restructure the state’s tax system by shifting from income taxes to payroll taxes, proposing the introduction of the New York State Taxpayer Protection Act. This would allow employers to pay a wage tax equal to an employee’s current income tax that would be fully federally deductible. Budget Director Robert Mujica said in a subsequent briefing that switching to a payroll tax would be voluntary for businesses.
Cuomo also suggested introducing charitable contributions, which California is also considering, that would allow New Yorkers to give to a state-run charity and be able to deduct that contribution on their federal taxes.
“Washington hit a button, and launched an economic missile, and it says New York on it, and it’s headed our way,” Cuomo said about the tax plan. His advice is to “get out of the way before it lands” by restructuring the state tax system.
Cuomo said that the state Department of Tax and Finance would release a preliminary report tomorrow with recommendations for responding to the new tax plan.
Ponying up for health care and education
Cuomo proposed $1 billion in revenue raisers, as the alternative of cutting health care and education funding is politically unpalatable. Half of the proposed raised revenue would go to a health care shortfall fund, and half to education spending. There will be an increase of 3 percent in school aid, less than the 4.2 percent previously projected. He also proposed an additional $103 million for higher education, and called for implementing phase two of the Excelsior Scholarship, providing free tuition for students from families with up to $110,000 in household income.
To generate all that revenue, Cuomo would tax health insurance companies, which get a 40 percent corporate tax cut under the new federal law, introducing a surcharge on opioid manufacturers, eliminating the carried interest loophole, with the cooperation of other states, and introducing a sales tax on internet marketplaces like Amazon.
No congestion pricing plan – yet
Cuomo’s Fix NYC panel is set to reveal a congestion pricing plan later this week, and the governor repeated talking points with vague details of what the plan is likely to entail. The plan will not involve tolling bridges, but instead will designate geographic zones in the city where tolls will be in place. He said that it would use the same technology used for cashless tolling of bridges and tunnels, and indicated that all cars – including taxis and ride-sharing services – would face the same tolls.
He also took a jab at New York City Mayor Bill de Blasio by saying that the city needed to pay half of the $836 million cost for immediate fixes to the MTA, which de Blasio has adamantly refused to do.
“We have funded it 50 percent, New York City needs to fund it 50 percent,” he said.
Breezing through some details
Cuomo proposed several items that were not fully addressed in his budget speech, such as enacting a uniform statewide policy for sexual harassment cases. He deferred the issue of legalizing marijuana by instructing the Department of Health to conduct a study on its impact on the state.
He noted the judiciary increased its budget request by 2.5 percent, after praising other state entities for limiting their requested increases to 2 percent or less. Cuomo said he supports the judiciary budget only if judges certify that the courts under their jurisdiction are operating properly, but did not go into how this would be enforced. (He also called for courts to be open from 9:00 to 5:00 every day.) After going quickly through several budget proposals, Cuomo noted that lawmakers may not be happy with the balance of priorities presented by the budget, but as his slideshow noted, they must not “lose the forest for the trees” and get caught in the minutiae.
All in this together
As the governor repeatedly used the word “difficult” to describe the budget process, he also implored the state Legislature to work together in responding to the economic consequences of the federal tax plan.
He reminded legislators of what the state has accomplished in the seven years since he has been in office, such as capping property taxes at 2 percent and limiting spending increases each year to 2 percent. Cuomo said that the response to the tax plan was not a partisan issue, but one that affected all New Yorkers, and which the Legislature should address as one.
“At the end of the day, the history books are going to say about you, that you are the legislature that actually performed,” he said, cheering on his team. “This is tough, but it’s doable, and we’re going to do it together and we’re going to do it on time.”
Cuomo has claimed to have delivered a "timely budget" every year since he took office, but as he said in his budget plan, this year offers the biggest obstacle yet to achieving that goal.
Correction: An earlier version of this post incorrectly stated that Gov. Andrew Cuomo has met the April budget deadline every year since he took office. An earlier version of this post also incorrectly stated the amount Cuomo proposed to increase higher education spending.