Budget would increase school aid, legalize recreational marijuana, reduce business taxes
ALBANY — Gov. Andrew Cuomo proposed a $178 billion budget Tuesday that closes a $6 billion deficit through reducing the growth in Medicaid, limiting aid to local programs and expecting tax revenue to grow by $2 billion.
The budget includes spending from the state and federal government, and it would limit the state spending piece to $105.8 billion — up 1.9%, Cuomo said. Overall spending would grow 6%.
The budget would increase school aid, legalize recreational marijuana, expand a new child tax credit, reduce business taxes and continue an already planned tax cut for the middle class.
“This budget is a roadmap for delivering progressive results for the people of this state and addressing the imminent challenges of our time by advancing social, racial and economic justice,” Cuomo said.
Cuomo, however, didn’t include any expansions to gambling in New York, as the industry had hoped. A state study on whether to add mobile sports betting and allow full-scale casinos in the New York City area is expected in April.
The state Legislature will now deliberate over the Democratic governor’s 10th budget proposal of his tenure in hopes of having an on-time deal for the start of the fiscal year April 1.
Here’s what you need to know:
How does NY close a $6 billion budget gap?
The budget gap is the largest since the $10 billion one Cuomo faced when he first took office in 2011.
About one third of the cap is due to growing costs for Medicaid, the health insurance program for the poor and disabled.
This year, he is proposing some basic, yet nebulous, ways to close most of the gap:
$2.5 billion through Medicaid restructuring based on recommendations from a Medicaid Redesign Team
$2 billion in expected more tax receipts
$1.8 billion in reduced spending to local assistance programs from “targeted actions and the continuation of prior-year cost containment.”
Republicans criticized the plan for a lack of detail.
“Andrew Cuomo has run New York’s budget into the red to the tune of at least $6 billion, but all we heard from him was dishonest rhetoric, obfuscation, and his fuzzy Albany math,” state GOP chairman Nick Langworthy said in a statement.
Tax cuts for New Yorkers will continue
New York started lowering middle class income taxes in 2012, and the budget would continue the planned reduction, which is expected to continue through 2025.
In tax year 2020, middle-class New Yorkers are expected to save $1.8 billion, Cuomo said.
Under the new rates, tax rate will drop to 6.09% in the $43,000-$161,550 income bracket, and 6.41% in the $161,550-$323,200 income bracket.
Businesses will also get a tax break. The income tax rate would drop from 6.5% to 4% for businesses with 100 or fewer employees and with net income below $390,000.
Health-care groups warned about cuts in their industry.
“We remain committed to working with the Executive and Legislature to address the structural deficit and protect the coverage and services for the millions of New Yorkers who rely on our member Medicaid plans,” Eric Linzer, president of the state Health Plan Association, said in a statement.
Cuomo wants to expand a child tax credit
Cuomo proposed expanding an Empire State Child Credit.
“Too often, parents incur significant childcare costs in order to work or forego employment entirely due to unaffordable expenses,” Cuomo’s budget briefing book said.
New York is one of only six states providing a state-specific credit, and it has been equal to 33% of the pre-2018 Federal Child Tax Credit, or $100 per qualifying child aged 4 to 16, whichever is greater.
The budget would expand the credit to include children under age 4. It would aid nearly 400,000 families whose income is $50,000 or less.
Here’s how much school aid would grow
Despite the deficit, Cuomo proposed an increase in school aid of $826 million, a 3% increase.
He said 80% of the money would go to poorer districts, and he proposed to overhaul the school-aid formula so less goes to wealthy school districts that rely mainly on property taxes to fund their schools.
Overall, school aid would grow to $28.5 billion — by far the most per capita in the nation.
School advocates are pressing for $2 billion more in school aid for the coming year.
“What we know is true is: education is the civil rights issue of our day,” Jasmine Gripper, executive director for the Alliance for Quality Education, a labor-backed group, said in a statement.
“It is New York State’s responsibility to use its funding to achieve equity and fund poorer schools.”
Cuomo again proposes legalizing recreational marijuana
After failing to get approval in the state Senate, Cuomo again is proposing the Cannabis Regulation and Taxation Act.
The act would regulate “the production, distribution, transportation, sale of cannabis and cannabis related products.”
The state estimates it could bring in $20 million in the coming fiscal year and $60 million in the following year — ultimately getting to $300 million in annual revenue when the program is fully phased in.
Heastie said he was open to legalizing the drug, but added that “communities that suffered the most under the criminalization of marijuana” must be prioritized under the plan.
Film tax credit program would face a cutback
New York spends $420 million a year in incentives to have films and shows shoot in the state.
But the budget gap appears to have enough impact that Cuomo, its staunch supporter, is considering scaling it back.
The budget would reduce how much studios receive back in tax breaks for filming in New York City from 30% to 25% of production costs. It’s unclear if that cut will also apply to productions filmed upstate, where studios currently receive a 40% tax break.
Eligible productions would also need to spend at least $1 million in New York City and its suburbs to be eligible, while future variety shows would be excluded from the program — which would also be extended to 2025.
Cuomo says cash bail reform is needed
Last year, Cuomo and the state Legislature agreed to end cash bail in most misdemeanor and non-violent felonies.
But the law, which took effect Jan. 1, has been under heavy criticism for law enforcement, who contend dangerous people accused of crimes are being released from jail when they should be retained.
Advocates said people are innocent until proven guilty and cash bail only hurts poor people who can’t afford to post it.
Nevertheless, lawmakers have indicated they want to revisit the law.
“Reform is an ongoing process,” Cuomo said during his budget address. “Let’s discuss it rationally.”
The Legal Aid Society said “reversing this historic reform because of fear mongering and falsehoods from law enforcement and other critics who have always opposed any change is a direct affront to New York’s progressive promise.”
When asked about the governor’s remarks, Assembly Speaker Carl Heastie, D-Bronx, had a simple response.
“It’s day 21,” he said. “Next question.”
Heastie has not supported changes, while Senate Majority Leader Andrea Stewart-Cousins, D-Yonkers, said she is open to having discussions.
Investing in New York’s infrastructure
In May 2018, Cuomo announced a plan to invest $150 billion in the state’s infrastructure through 2024.
Now he wants to expand the investment to $175 billion to fund transportation and mass transit systems, affordable housing, schools, park facilities and and energy efficiency programs.
The plan also includes the Restore Mother Nature Bond Act: a $3 billion borrowing plan that would need voter approval this November to upgrade the state’s environmental protection plans.
Local governments would face a squeeze
In addition to $1.8 billion in reduced spending, local governments would face a squeeze on their Medicaid costs.
Cuomo railed against counties, who have had a cap on their Medicaid costs since 2015 — which the governor and the Legislature agreed to.
But Cuomo said with rising health-care costs, local governments need to do more to curb costs.
So he proposed that in order to keep having their Medicaid costs capped, they would have to adhere to the property tax cap and not increase their health-care spending by more than 3%.
If they don’t, counties would have to pay the additional cost.
Another hit to local governments: Cuomo would eliminate the aid some receive from hosting video-lottery terminals in their communities.
Only Yonkers would be able to keep the roughly $20 million it gets each year from Empire City Casino at Yonkers Raceway because the money goes directly to school aid, Cuomo said.