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Budget Deficit Looms After Democrats Retain Control in New York

New York state Capitol
Jim Levulis

Democrats will have total control over the state Legislature in New York for another two years after a series of wins on election night — prompting questions about what next year’s legislative session will look like after the party’s command was affirmed by voters in November.

It’s an historic result; Democrats haven’t won control of the State Senate for two consecutive terms in nearly a century, since 1936.

“It’s a tremendous success. I believe it’s a validation of our work by the voters,” said Senate Deputy Majority Leader Mike Gianaris, a Democrat from Queens, in a recent interview on PBS’s New York NOW.

Any other year, Democrats would be preparing to huddle behind closed doors in the coming weeks to discuss their priorities for the upcoming legislative session, which starts in January and usually runs through the middle of June.

When Democrats first took control of the Legislature after the 2018 elections, they hit the ground running the following year with several controversial measures that had historically failed to gain traction because of Republican control of the Senate.

That included a measure codifying abortion protections into state law and, later, new laws to largely limit the use of cash bail for low-level and nonviolent crimes. Both were met with opposition from Republicans in the Legislature.

But next year’s legislative session is expected to be different, even with Democrats retaining full control of state government.

The COVID-19 pandemic has left New York grappling with a budget deficit of more than $14 billion heading into next year. That’s the result of lost tax revenue due to a widespread economic shutdown, coupled with the state’s cost of responding to the crisis.

Gianaris said that anything Democrats plan to accomplish next year will be negotiated in context of the budget gap, which he expects to be their top priority.

“So much has been colored now by the pandemic and coronavirus and our response to it,” Gianaris said. “So, I do expect that 2021 will be largely consumed by budget questions. How do we fill the large budget gap we have?”

But some have found a silver lining in the state’s budget crisis; the deficit could be the final push that some need to get a handful of controversial measures over the finish line.

The legalization of marijuana for adult, recreational use, for example, could be viewed in a new light. While it would be a drop in the bucket compared to the deficit, more than $300 million in annual tax revenue could be generated from the cannabis industry, the state has projected.

Chris Alexander, who does government relations for a cannabis company on the west coast, said revenue shouldn’t be the main driver of legalizing the drug, but that it’s a good bonus for some lawmakers who remain undecided.

“There’s definitely the revenue potential,” Alexander said. “The economic opportunity it presents for new businesses to come online.”

The issue has stalled in recent years because Democrats haven’t agreed on how to use the revenue generated from legalization. Some believe it should be earmarked for communities impacted by the state’s drug laws, while others want the state to absorb the revenue.

Gianaris said that conflict still has to be resolved next year but that lawmakers shouldn’t see the drug as an immediate solution to the state’s fiscal problems.

“I will just give a word of caution,” Gianaris said. “The revenue from legalization won’t be realized right away. You have to set up a whole industry and a whole regulatory structure.”

Some budget analysts have warned that the revenue from legalizing marijuana wouldn’t stabilize until years after legalization and would largely depend on the taxation structure implemented by the state.

That’s why some Democrats have recently thrown their support behind higher taxes on the rich, which would generate revenue for the state on a much faster timeline, depending on how such a measure is implemented.

Advocates, and some Democrats, have been calling for higher taxes on the wealthy for years to boost funding in areas like education and health care. But now they believe those tax hikes could be key to getting the state back on track after the coronavirus.

Even Cuomo, who’s historically been hesitant to raise costs for the wealthy, has left the door open to the idea. But he’s hedged his bets on help from the federal government, especially with President-Elect Joe Biden coming into office in January.

“If we don’t get federal aid, everybody has a doomsday budget,” Cuomo said recently. “That’s why it’s madness for them not to provide state and local funding.”

But Democrats in the Legislature want to have a back-up plan in the event that Biden and Democrats in Congress aren’t able to convince Republicans, who control the U.S. Senate, to approve a stimulus package with billions of dollars in aid for states.

That’s where tax hikes on the rich come in, Gianaris said. And both Senate Majority Leader Andrea Stewart-Cousins, D-Westchester, and Assembly Speaker Carl Heastie, D-Bronx, have both said they’re on board with the idea.

“We have to be prepared to move forward. It’s my opinion that we, under any circumstances, need to avoid deep cuts to important services,” Gianaris said. “They should be expected to do more because they have more.”

Lawmakers aren’t expected to consider new taxes on the rich until January, when the new legislative session is scheduled to begin. But they haven’t ruled out coming back to Albany before the end of the year to address the state’s fiscal crisis.

Even then, it’s not as simple as approving legislation. Lawmakers will have to agree on a plan that can win approval from Cuomo, who’s close allies with Biden and has expressed renewed hope of help from the next federal administration.

Dan Clark is the managing editor of New York NOW, a product of public media covering state government, policy, and politics.

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