The sky might be falling or it might not be in New York State. The state has a $15 billion dollar deficit in the midst of a pandemic but Governor Andrew Cuomo is proposing two state budgets, one has huge cuts and tax increases while the other actually calls for a modest increase in spending and no higher taxes for the 2022 fiscal year that starts in April. The budget that will be in place depends on whether the federal government comes to the rescue.
From Rochester First.com:
Tuesday the governor presented two budget proposals, each contingent on different aid packages from the federal government. The first budget, called a “worst case scenario” projects $6 billion in aid from Washington, while the other budget, “called a “fair funding scenario” projects $15 billion from D.C.
State of Politics explains further:
In one world, New York gets $15 billion in aid from the federal government to make up for the revenue that evaporated over the last year amid the worst of the COVID-19 pandemic in the spring.
In another world, New York only gets $6 billion from Washington, forcing spending reductions, tax increases, and more borrowing.
Gov. Andrew Cuomo presented a sliding doors style budget — one that considers the "best case scenario" of $15 billion that closes a budget gap and the worst, which does not get New York halfway there.
A lot is riding on whether incoming President Joe Biden, who is sworn into office on Wednesday, can win passage of a multi-trillion-dollar stimulus package in a Congress that is narrowly controlled by Democrats. Biden has proposed $350 billion for state and local governments.
The governor is placing his faith in Biden, who has been allied with, as well as House Speaker Nancy Pelosi and the incoming Senate Majority Leader Chuck Schumer, a New Yorker.
Cuomo praised all three, but noted the federal government remains responsible.
Under the best case, New York is able to continue to phase a $400 million tax cut for middle-income earners and increase education spending by $3.8 billion. The state would also be able to create a $130 million COVID relief program for businesses, especially restaurants and theaters, that have been hit hard by the crisis.
Cuomo also proposed $350 million for legalizing cannabis for adult retail sale in the state, along with a $100 million "social equity fund" for communities affected by strict drug laws.
But the bigger question becomes what happens if New York does not get $15 billion. Cuomo said New York would face a mix of tax hikes, spending cuts and borrowing to cover the budget gap.
Progressives in the state Legislature are likely to push for tax increases no matter what, pointing to the widening income gap created by the pandemic.
NYS budget is due before April 1. Can Congress get a bailout for the states by then? I think so.
City and State delves into some of the budget details in their coverage:
$192.9 billion – Total spending for fiscal year 2021-2022, according to the new executive budget proposal. State lawmakers approved a $192.7 billion budget for the current fiscal year.
$10.2 billion – The decline in state revenues this year compared to projections from February 2020.
$15 billion – The total budget gaps in fiscal years 2021 and 2022, according to the governor, who is requesting that amount in new federal funding.
$3.7 billion – Total tax increases the governor will propose if $15 billion in new federal aid is not approved by the April 1 budget deadline.
$6 billion – Amount of new funding that the state is assuming it will receive from the federal government over the upcoming two years.
5% – The share of the 20% reductions in state aid to local governments in the current fiscal year that the governor proposed to make permanent in his executive budget.
$130 million – The size of a Pandemic Recovery and Restart Program proposed by the governor. This includes $50 million in new aid for restaurants as well as $50 million for a business rehiring tax credit and $30 million to fund a new musical and theatrical tax credit.
$350 million – Projected state revenues in the first year following the legalization of recreational marijuana. Cuomo proposed that $100 million of this revenue should be earmarked for a social equity fund.
$500 million – Expected annual state revenues from legalizing mobile sports betting.
$31.7 billion – Total amount of total school aid proposed by Cuomo, a $2.1 billion increase from the current fiscal year.
$24.2 billion – Total proposed Medicaid spending in the new executive budget.
The more progressive State Legislature will have their say too so this is just the beginning. I guess this is cautious optimism.