Cuomo announces last-minute budget deal, with final approval expected Friday

In an unusual press conference to announce a budget deal at the state Capitol, Gov. Andrew Cuomo outlined an agreement on a $147.2 billion state budget for 2016-17, which includes a minimum wage hike, paid family leave and a middle class income tax cut while again keeping spending growth at 2 percent.

In the Red Room of the state Capitol, Cuomo announced the agreement with members of his administration – but not with Senate Majority Leader John Flanagan or Assembly Speaker Carl Heastie. The press conference began a little after 8:30 p.m. on Thursday night, with Cuomo touting this year’s state budget agreement as historic.

“Bills are being printed, respective leaders are presenting the final details to their conferences on the assembly side and senate side,” Cuomo said. “The budget is designed to stimulate the economy and raise the minimum wage. There’s been a lot of talk about raising the minimum wage and raising the minimum wage in and of itself is a very progressive, very fair and appropriate initiative.”

Most of the bills were not printed or voted on before midnight, however, technically making it a late budget for the second year in a row. Both houses were planning to vote on the revenue budget bills, but the Assembly was expected to vote on the rest of spending package after a returning on Friday.

Senate Republicans, meanwhile, were poised to stay up late to vote on the full spending package. State Sen. Rob Ortt, a Western New York Republican, told City & State right after Cuomo’s press conference he expects the state Senate to stay until about 3 or 4 a.m. to vote on all the budget bills before it adjourns for the week.

Shortly after Cuomo’s announcement, state Senate Majority Leader John Flanagan issued a statement praising the agreement.

“Working together with our partners in government, we have arrived at a responsible agreement that brings about a sixth consecutive on-time budget, ensures state government continues to live within its means and builds on the progress we have realized in making New York more affordable for middle-class taxpayers and their families -- key goals laid out by our Senate Republican Conference this year,” Flanagan said in the written statement.

After meeting in conference, the Assembly Democrats decided to take up the bulk of the budget later on Friday.  

“From the very first day of this session, the Assembly Majority promised New Yorkers that we would do everything in our power to deliver a stronger minimum wage and paid family leave benefits for every worker,” Heastie said in a statement. “This is a budget that takes the necessary steps to move our communities and our state forward.”

The state minimum wage increase will begin Jan. 1, 2017 and will reach $15 an hour by the end of 2018 in New York City, according to Cuomo’s presentation Thursday evening. Nassau, Suffolk and Westchester counties will reach $15 on Dec. 31, 2019, and the rest of the state will reach $12.50 on Dec. 31, 2020. At that time, the state Division of the Budget will decide whetherto continue to increase to $15 on an indexed schedule.  

Starting in 2019, the state budget director will conduct an annual analysis of the economy in each region to determine whether a temporary suspension of the scheduled minimum wage increases is necessary.

Additionally, in New York City, businesses with fewer than 10 employees will be allowed to phase-in the minimum wage over four years, not three, and the state Division of Budget has the authority to approve a minimum wage hardship for non-profit organizations.

“Raising the minimum wage can be a simulative factor for the economy,” Cuomo said. “You can actually increase economic performance by raising the minimum wage. Why? Because it puts more money into the economy.”

While Cuomo’s original plan was to increase the wage to $15 an hour across the state, he said concessions were necessary to get the wage hike through, even if his original plan may have been better.

“This is a proposal that can pass,” Cuomo said.

The tiered approach to the wage hike and the “safety valve” feature built in with the Division of Budget review will help to ensure that state officials will be able to adjust should the state’s economy weaken and to avoid doing harm by increasing wages too quickly, he said.

“Senate Republicans were anxious about upstate New York, because the economy is not as strong at this time as the downstate economy, and I share their concern about the upstate economy,” Cuomo said. “I think this is a fine proposal to the extent that it has more safety valves.”

Another major priority included in the final state budget agreement is paid family leave. The program is set to begin Jan. 1 2018 and will allow for 12 weeks of paid family leave when “caring for an infant, a family member with a serious health condition or to relieve family pressures when someone is called to active military service,” according to the Cuomo administration.

When the program first begins, an employee can receive 50 percent of his or heraverage weekly wage, although it will be capped at 50 percent of the statewide average weekly wage. When the program is fully phased in, employees can receive 67 percent of their weekly wage, capped at 67 percent of the statewide average weekly wage.

“A victory in the Fight for $15 and Paid Family Leave will make a tremendous difference in the lives of our workforce,” state Sen. Jeff Klein, the leader of the Senate Independent Democratic Conference who had also joined the closed-door budget talks, said in a statement. “New York State put together the best Paid Family Leave policy in the nation. Nobody will ever have to choose between what their heart tells them to do and what their bank account allows them to do.”

Other key funding in the state budget agreement includes $24.8 billion in school aid, $100 million for community schools and the full elimination in one year of the Gap Elimination Adjustment – a major priority for the state Senate Republican conference. Foundation aid is also increased by $627 million and the budget includes $54 million for charter schools. There also will be a one-year tuition freeze for SUNY and CUNY.

The state’s receivership law will remain unchanged and school aid will continue to be linked to teacher evaluations, Cuomo said.

Other significant funding initiatives include $27 billion for the MTA’s five-year capital program and $27 billion for the state Department of Transportation and Thruway program.

However, a Cuomo administration official said there was only $1 billion actually allocated in the budget for the MTA capital plan.“There is an appropriation for the first year and there is language as well that addresses the long term,” state budget director Robert Mujica said.

Several proposed cuts ultimately did not make it into the state budget, including the controversial $250 million cuts to Medicaid, including $180 million in proposed cuts to New York City, a small business tax cut and a toll credit for frequent drivers on the Thruway.

To offset the lack of a small business tax cut, included is an income tax cut for the middle class. Income tax rates will be lowered from 6.85 percent to 6.45 for taxpayers who make $40,000-$150,000 annually and to 6.65 percent for taxpayers who make $150,000-$300,000 annually. The rate will continue to drop to 5.5 percent when fully phased in, but not until 2025.

Cuomo repeatedly touted this budget agreement as the state best budget agreement – not only in his tenure, but ever.

“I am very excited about this budget. We call it a budget – really it is an overall operating plan for the state of New York and I believe that this is the best plan that the state has produced, if its passed, in decades, literally,” he said.