As Gov. Andrew Cuomo and top lawmakers agreed on a one-week-late $212 billion budget for fiscal 2022, critics, notably business leaders and budget watchdogs, asked if the spending plan will set up the state and its anchor city for a fall.
The budget, up $18 billion or 9.3% from last year, would include about $4 billion of new taxes, including a 1% increase for the wealthiest earners, and would expose New York City residents to the nation’s largest combined state-city rate.
This in a state where many people and companies are already leaving, and one flush with $12.5 billion of new federal aid coming and optimistic state revenue assumptions.
The Senate approved the plan Tuesday night and the Assembly was expected to take it up Wednesday. New York, as the only state to begin its fiscal year on April 1, has the nation’s earliest budget deadline.
“This is a post-crisis budget,” Cuomo said. “We have federal funds. We have state funds.”
That didn’t stop the large tax hike in a most unusual budget season. The package reflects significant pushback from legislative progressives, emboldened by the weakened political position of Cuomo. The usually forceful governor is immersed in multiple scandals, including allegations of sexual misconduct and concealing COVD-19 related nursing home death counts.
Cuomo is also facing an impeachment inquiry and calls for his resignation.
Andrew Rein, president of the watchdog Citizens Budget Commission, said the state’s competitiveness is in jeopardy.
“The tax increases simply are unnecessary and economically risky,” he said.
“Despite having $22 billion more in funds available over the next two years than when the governor proposed the budget in January, leaders agreed to raise personal income and business taxes and to use some portion of federal funds to inflate spending that likely cannot be supported in the out years,” Rein said.
The extra funds include $12.5 billion from the American Rescue Plan, the latest COVID-19 federal aid package.
The budget applies $5.5 billion in federal aid and provides $7.7 billion in state support for higher education. State operating funds total $111 billion.
New York City business leaders are already upset at Cuomo over lockdowns more stringent within the five boroughs than across the state.
They also worry about a further exodus of companies and wealthy individuals, and the effect on tax revenues. State Comptroller Thomas DiNapoli said the securities industry generated more than $15 billion in tax revenues for the state and early $4 billion for the city.
“While New York remains the leading global financial center, the steady decline in our share of U.S. securities jobs, including a loss of 3,600 jobs in 2020, is a great concern and could impact economic and fiscal recovery from COVID-19,” said Kathryn Wylde, president of the business group Partnership for New York City.
DiNapoli, citing data from the state Department of Labor, said statewide employment is still more than 1 million jobs below its pre-pandemic levels. The state had lost about 2 million jobs overall from February to April 2020, when the coronavirus pandemic took hold.
By contrast, the budget pleased New York City's mayor.
"It's absolutely the best ever," Bill de Blasio told reporters Wednesday. "It puts working people first." De Blasio cited the record $29.5 billion in school aid, fair funding for city schools, renter protections and aid to small businesses.
Other controversial budget measures include a $2.1 billion “excluded workers fund” to aid undocumented immigrants and legalized sports betting. Cuomo had already signed a bill authorizing
For years, good-government groups railed a Albany’s “three men in a room” budget crafting, the phrase outdated once Andrea Stewart-Cousins, D-Yonkers, became the first female Senate majority leader two years ago. Because of COVID-19 protocols, the trio, which includes House Speaker Carl Heastie, D-Bronx, couldn’t even meet in a room.
“This budget is probably the most complicated, the most ambitious and the hardest budget that we have done,” Cuomo told reporters.
The laundry list also includes a $311 billion infrastructure plan; a broadband-availability program for low-income persons; and $29 billion in public and private green-economy investments.
Transit activists appeared to have won a big victory with the budget bill neutering Cuomo’s “Penn 15” $200 billion Empire Station Complex plan to build skyscrapers around New York’s Penn Station, seizing property through eminent domain.
“What the governor proposed is a mistake,” de Blasio told reporters. “It has to be the right kind of development. It has to respect what people need in a community and achieve something for that community and not just be a giveaway to big developers.”
A coalition of transit groups, including Tri-State Transportation Campaign and ReThinkNYC, scheduled a press conference for Wednesday to recommend alternative plans, which could include a proposal for through-running commuter trains.
Moody’s Investors Service rates the state’s general obligation bonds Aa2 with a stable outlook. S&P Global Ratings and Fitch Ratings each assign AA-plus ratings with negative outlooks. Kroll Bond Rating Agency also rates state GOs AA-plus, but with a stable outlook.
The state’s tentative second-quarter bond calendar features $2.45 billion of sales, according to Comptroller Thomas DiNapoli. That includes $1.55 billion of new money and $901 million of refundings and reofferings.
DiNapoli said $1.18 billion is scheduled for this month, with $1.12 billion for new money and $65 million for refundings or reofferings. In May, the state has scheduled $604 million including $125 for new money. June’s $666 million calendar includes $309 million in new money.
