Cuomo says New York will have to raise taxes if it doesn’t get $15 billion from federal government

• By Steve Bittenbender | The Center Square/January 19th, 2021

(The Center Square) – New York Gov. Andrew Cuomo unveiled a fiscal year 2022 budget proposal Tuesday with plans to raise taxes if the federal government fails to make the state whole from the losses he blames Washington for regarding the COVID-19 emergency.

Cuomo outlined two plans. One was with the state receiving $15 billion in funding from the federal government, a proposal he called “fair” considering both the pandemic and New York’s status as the top donor state in the U.S.

“The fundamental injustice is that New York state has always given Washington more than it gets back,” he said.

The governor added that the $15 billion total represents 4.3 percent of the $350 billion in state and local aid President-elect Joe Biden is proposing in his COVID relief package. That percentage is lower than the state’s share of the U.S. population, Cuomo added.

The other still relies on the federal government giving New York $6 billion. However, to make up the $9 billion difference, the state would have to increase taxes on high-income residents, cut budgets across the board and borrow funding.

Increasing the state tax top rate 2 percent to 10.8 percent would only raise about $1.5 billion, Cuomo said. To make up the remainder, the state would need to cut $2 billion from education, $600 million for Medicaid and apply a 5 percent cut elsewhere across the board, including to social service agencies.

In addition, if the state gets $15 billion in relief, the governor said the budget would include a tax cut for middle-class payers.

Should the state not receive the $15 billion, Cuomo threatened to sue the federal government for it.

“I cannot in good faith, represent the people of this state and know that they are being harmed and know that they are being treated unfairly and not do everything within my power to try to do what is right by New York,” Cuomo said.

Besides possible tax hikes, Cuomo offers other ways for the state to raise revenue. That includes $500 million annually from the legalization of mobile sports betting and $350 million a year from legalizing recreational marijuana for adults. The marijuana revenue will include $100 million earmarked for a “social equity fund” to help communities hurt by past policies on drugs.

Afterward, Cuomo’s comments, Budget Director Rob Mujica said that both revenue figures are based on when those markets mature in the state, which will likely take a couple of years after they launch.

Mujica added Tuesday the state faces a forecast budget shortfall of $39 billion over a four-year span. And while the economic recovery is starting, it won’t all come back at once. For example, the state’s employment figures likely won’t return to pre-pandemic levels until the first quarter of 2023.

The state’s fiscal year calendar starts April 1.

Senate Majority Leader Andrea Stewart-Cousins, D-Yonkers, said in a statement that Washington needs to help in the state’s recovery, but tax increases will be needed to ensure working-class New Yorkers aren’t harmed.

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“The wealthy have gotten wealthier during this crisis even as the middle class has shrunk and millions of New Yorkers have struggled to make ends meet,” she said. “We must be ready to act as a state to advance efforts to raise revenues, including having the hyper-wealthy share this burden.”

State Sen. Jim Tedisco, R-Glenville, called Cuomo’s plan a “blame game budget,” noting that Cuomo apparently doesn’t believe it’s his responsibility as governor to balance the budget.

He added that the speech did not address the fact that New York leads in both taxes and out-migration, with more than 1 million people leaving the state during Cuomo’s term.

“No one wants to be the last one left in New York to pay for our state’s overzealous taxes, regulations, mandates and laws,” Tedisco said. “The last thing the state should be doing is raising taxes again. We need both a short-term plan to address the budget deficit and a long-term policy of moderation and common sense.”