"Conceptual Agreement" On Late NYS Budget
Five days into the new fiscal year, New York Governor Andrew Cuomo and legislative leaders say they have a “conceptual agreement” on a new state budget. If the deal holds, it would include $4 billion dollars’ worth of new taxes, including new higher income tax brackets on millionaires and a tax increase for some large corporations.If the budget agreement is approved, New Yorkers who make more than $1 million a year will see their hiked by nearly one percentage point. Two new higher tax brackets would be added for those with annual incomes over $5 million, and over $25 million.
It would make New York’s combined state and local taxes on the wealthy the highest in the nation.
Leaders of the state legislature had been pressing for an even larger tax package that would total $7 billion.
Governor Cuomo wanted a significantly smaller package. He argued that that raising taxes too high on the rich would cause them to leave the state.
Cuomo, at a briefing, did comment specifically on the tax plan. But he praised the arrangement overall, saying it will help the state recover from the economic losses during the COVID-19 pandemic.
“This budget will set the trajectory for the state for the next 10 years,” Cuomo said.
Cuomo and lawmakers also tentatively agreed to increase the corporate franchise tax.
The state’s Business Council, which lobbies for business interests, say the additional taxes might end up harming the very people that advocates for higher taxes hope to help.
The Business Council’s Ken Pokalsky says the current New York State corporate tax rate of 6.5% is the 21st highest in the nation. He says the plan to temporarily raise that to 7.25% places the state in the top 10 states for high business taxes.
“It’s going to make it more expensive to do business here,” Pokalsky said.
The tax does not affect unincorporated businesses like LLC’s, which are the bulk of the state’s companies. But Pokalsky says the corporations, which include large chain stores and manufacturing companies, provide the majority of private sector jobs in the state. And he says not all of them have done well during the pandemic.
Pokalsky says the timing of the tax increases is unusual, at a time when the state and local governments are receiving a multi billion dollar infusion of federal stimulus cash that closes most of the state’s deficit.
“We’ve never seen a good justification of why the state has needed to raise any additional taxes, given the substantial federal assistance to the state,” Pokalsky said.
The new taxes would help pay for at least $1.4 billion in additional school aid. Many Democrats and education groups sought a $4 billion increase, to fulfill a 15-year-old court order that said the state needed to pump more money into New York’s poorest schools.
The president of the New York State United Teachers union, Andy Pallotta, says in a statement even with the temporary federal stimulus monies , some of which go directly to schools, more funding is needed in the long term. And he says talks with lawmakers are continuing.
Other final sticking points include how to structure expanded mobile sports gambling, and the potential siting of 3 new gambling casinos in the downstate area.
A $2 billion fund to provide retroactive unemployment benefits to undocumented works who lost their jobs in the pandemic was also not yet finalized. Dozens of the excluded workers, including some who have been on a hunger strike, demonstrated in a hallway in the state’s capitol complex.
Over the weekend, four more budget bills were introduced, including continued funding for the legislature and the judiciary branch of government, as well as allocations for health care, transportation and the environment.
Lawmakers hoped to begin voting on them as early as Tuesday, leaving the unresolved issues, to a final piece of legislation at the end.
State Comptroller Tom DiNapoli has warned that if the final spending plan is not in place by the end of Tuesday, then paychecks for 39,000 state employees, including many frontline essential workers, will be delayed.