The (Syracuse) Post-Standard on Gov. Andrew Cuomo’s budget proposal, March 2
Gov. Andrew Cuomo reminds us at every opportunity that Congress and the Trump administration aimed a “missile” at New York with its tax reform legislation. Never mind that most middle-class New Yorkers will see their federal taxes go down, and that the state already faced a budget gap of $4.4 billion before Washington lifted a finger.
And with so much uncertainty about the federal funding picture, you’d think the governor would put forth a cautious, even austere, spending plan for 2018-19.
You’d be wrong.
Cuomo’s $168.2 billion budget proposal increases school aid by 3 percent, continues to pour hundreds of millions of dollars into economic development programs and funds dozens of new policy initiatives. The governor also preserves the phase-in of a middle-class tax cut passed in 2016.
To keep up that level of spending, Cuomo proposes almost $1 billion in “revenue actions” — which the rest of us call tax increases. They include tax on opioid prescription drugs, a highly speculative tax on health plans that convert from nonprofit to for-profit status, a tax on for-profit health insurers who will pay less in federal tax, a tax on “vaping” products and a sales tax on all internet purchases, no matter where the retailer is located.
Cuomo also boasts that the portion of the budget he controls does not exceed the state’s 2 percent tax cap. But the governor only gets there by employing sleight-of-hand — moving some spending off-budget, changing the timing of debt payments, reclassifying other spending. When you add those back into the budget, State Operating Funds spending would increase by more than 4 percent, according to an analysis by the state Comptroller’s Office. Remember that the next time Cuomo criticizes your school, city, county, town and village officials for complaining about the tax cap.
Cuomo’s budget also would use $383 million from the $10.7 billion pot of settlement money that has flowed into state coffers from banks, insurance companies and automakers who settled claims for alleged misdeeds. “One-shot” revenues should be used for one-time expenses, not to fill a budget gap. The proposed budget also would give the governor’s budget director even broader powers to impose budget cuts, without legislative approval, if Washington cuts more aid than expected. The Legislature ought to think twice about ceding its oversight and accountability.
After much sound, fury and missile hyperbole, in the end, Cuomo’s budget fails to circumvent the cap on federal tax deductions for state and local taxes for 2018. The governor proposes some ridiculous, unworkable, flawed schemes to convert federal taxes into state taxes, make school taxes into charitable contributions and otherwise get around the $10,000 cap on the SALT deduction. These are not serious tax proposals. We agree with the assessment by the Empire Center for Public Policy that they add up to “a solution in search of a problem.”
In his recent budget amendments, the governor did get around to rectifying an omission that would have forced New Yorkers to pay $1.5 billion more in state taxes. Cuomo proposed legislation “de-coupling” the state tax code from the federal tax code, preserving itemized deductions for state tax filers — including the deduction for local property taxes.
We’ll have more to say about the governor’s spending priorities and policy initiatives in the coming weeks. But here’s the bottom line: Cuomo’s budget keeps the gravy train rolling while pushing tough fiscal choices into the future. That may help his re-election prospects this year, but it’s not a responsible way to govern.