New York fails to pass state budget by deadline as negotiations continue
ALBANY — The state budget deadline came and went at midnight Thursday without a passed spending plan for New York’s 2021-22 Fiscal Year as negotiations continue to face challenges amid the coronavirus pandemic.
Three of the state’s 10 traditional budget bills were dropped as of press time late Wednesday night.
The Assembly submitted a $208.3 billion budget proposal — up from $177 billion last year — and slated nearly $6.7 billion in new tax increases, rising to $8.1 billion in 2022, including three income tax rate hikes.
Negotiations could easily continue through next week.
State Budget Director Rob Mujica suggested the budget would not be completed by its April 1 deadline during an exclusive NY1 interview Wednesday morning.
“We’re going to get it done, yes,” he said in response to a question about a timely passage, but would not say when. “The overall financial plan always has to get settled at the end.”
Budget representatives would not say when the remaining budget bills will be released, how long it is expected to take to pass the budget and sticking points as legislative leaders continue to talk.
“Budget negotiations are ongoing,” state Budget Division spokesman Freeman Klopott said in a statement issued Wednesday night.
The potential tax increases and nursing home reform, including a bill setting a minimum amount that for-profit facilities must spend to reinvest back into the residence and patient care, are likely sticking points as discussions continue.
Gov. Andrew Cuomo has spoken out against proposed tax increases on New York millionaires and billionaires for several years, but supports a federal tax hike on the nation’s wealthy.
The Senate and Assembly budget proposals include a 1% tax on capital gains income and want to increase the top income tax rate from 8.82% to 9.85% for single filers who earn more than $1 million, couples who file jointly earning more than $2 million and adding additional tax brackets for higher earners.
The tax increases will depend on household income of more than $2 million; or between $5 million and $25 million; or more than $25 million annually. That tax alone is projected to raise $4.3 billion.
“So where we focused on is, what do we need to fund? What are the top priorities?” Mujica said. “A lot of these are one-time costs to deal with the recovery, and as we recover, the need for some of these items go away, and then there are recurring items. That’s what we’re working on with the Legislature right now. But again, there is a tipping point.
“We don’t know exactly what that is,” he added. “We know a lot of New Yorkers have left New York. We know that the unemployment rate right now is relatively high. And whatever we do on the tax side, we want to make sure … that we’re striking that balance with funding the items for the recovery, but at the same time, not discouraging job growth and not discouraging those jobs from coming back to New York.”
The state will receive about $12.6 billion in federal coronavirus relief over the next several years, leaving a $2.5 billion revenue shortfall of the projected $15 billion hole.
“Last year, following the federal decision to push the income tax payment by three months to July, the state borrowed $4.5 billion to ensure we had the resources to fund critical services and support New Yorkers through the depths of the COVID-19 pandemic,” Cuomo said in a statement Wednesday. “Our borrowing was on a short-term basis, and with a $1 billion payment made in December 2020 and a $3.5 billion payment made today, we have paid all of it back as promised.”
Budget talks and negotiations have persisted seamlessly without issues, Mujica said, adding “we’ve been meeting with the Legislature all day, all night.”
Earlier this month, legislative leaders questioned how the budget process would proceed while Cuomo participates in multiple state investigations, and federal probe into multiple scandals, including the state’s alleged underreporting of thousands of COVID-19 nursing home deaths and nine women accusing him of sexual harassment or inappropriate behavior.
“The governor’s been having calls with the leaders regularly, so, it’s no different than any other budget year, except this is probably one of the most complicated budgets in my career …” Mujica said. “The complication is, you know, not being in the same rooms as a result of COVID, having to do things remotely. That obviously adds to the complexity of the negotiations.”
Republicans in the Senate and Assembly have been all but excluded from the budget process and negotiations, top GOP leaders said Wednesday.
Assembly Minority Leader William Barclay, R-Pulaski, pleaded for more transparency, saying Republican representatives read and see finalized fiscal measures or policy when the documents are released to the public.
“We feel very strongly we have a lot to add to this program,” Barclay said of minority input. “I think it’s going to be very difficult to have an on-time budget. The idea of getting it done (by April 1) is a bit of a stretch, but we’re here and we’re willing to work. Once again, we’re going to have to depend on messages of necessity instead of having public input on this stuff.”
Cuomo’s executive budget prioritizes a $325 billion rebuilding program, funding universal broadband, rent relief and nursing home reform.
Cuomo, Assembly Speaker Carl Heastie, D-Bronx, and Senate Majority Leader Andrea Stewart-Cousins, D-Yonkers, have each discussed potential revenue raisers to help bridge the gap, including increased taxes for millionaires and billionaires and the legalization of mobile sports betting.
Lawmakers voted to pass recreational marijuana in the state Tuesday outside the budget. Cuomo, who included legalization in his last three executive budget proposals, signed the measure into law Wednesday morning.
“The recovery is going to take some time,” Mujica said. “The Legislature had about $7 billion in revenue increases in their proposed budget which included a lot of spending that’s focused on the recovery and I think everyone’s focus is the recovery and making sure that we fund the items to help New Yorkers, at the same time striking a balance so that we don’t reach a tipping point where instead of helping with the recovery we’re actually harming it.”