Weakened Cuomo, Lawmakers Reach Deal on Massive $212 Billion Pandemic Budget

Josefa Velasquez, THE CITY

This article was originally published
on Apr 6 at 8:30pm EDT
by THE CITY

State lawmakers and Gov. Andrew Cuomo reached a deal on the state’s $212 billion budget Tuesday, agreeing to tax increases on wealthy New Yorkers and to create a fund for undocumented workers shut out of financial assistance during the pandemic. 

Buoyed by a $12.6 billion infusion from the stimulus package Congress passed in March, the budget is New York’s largest financial plan to date. New York’s second pandemic budget arrived nearly a week past the April 1 start of the state’s fiscal year, after an embattled Cuomo and Democratic lawmakers disagreed on a multitude of issues.

Among the most contentious: billions in aid for workers excluded from unemployment benefits and federal pandemic stimulus payments, billions more for financially distressed renters and homeowners, and another $1 billion-plus to jumpstart Cuomo’s Penn Station overhaul.

Bills detailing the intricacies of the proposals were introduced Tuesday evening. 

“Thanks to the state’s strong fiscal management and relentless pursuit to secure the federal support that the pandemic demanded, we not only balanced our budget, we are also making historic investments to reimagine, rebuild and renew New York in the aftermath of the worst health and economic crisis in a century,” Cuomo said in a joint statement with Assembly Speaker Carl Heastie and Senate Majority Leader Andrea Stewart-Cousins.

The massive spending plan will also raise taxes on the state’s million-dollar-plus earners — spurring concerns from fiscal watchdogs who say it risks driving high-earning taxpayers to leave New York. And the deal will legalize online sports betting, adding a projected $99 million in revenue this fiscal year and up to $500 million annually in years to come, lawmakers estimate. 

‘Urgently Needed Relief’

Spending highlights outlined by Cuomo, Stewart-Cousins and Heastie include:

• $2.1 billion for the so-called Excluded Workers Fund 
• $2.4 billion in assistance to renters
• $600 million in aid to homeowners
• $1.3 billion for the Empire Station project at Penn Station
• $29.5 billion in schools spending — a $3 billion increase

Left-leaning organizations lauded the budget deal. 

It delivers “urgently needed relief to communities that have been in dire straits throughout this pandemic,” said Jose Lopez, co-executive director of Make the Road New York, an immigration advocacy group. 

“While the budget is far from perfect, it includes bold relief measures that will help meet the needs of the most vulnerable New Yorkers,” Lopez said in a statement. 

Meanwhile, the Citizens Budget Commission raised alarms over the new tax increase, calling it “unnecessary and economically risky.” The group also expressed concern about New York intends to spend the bounty of federal cash.

“Unfortunately, the state’s leaders did not appropriately leverage the opportunity provided by the infusion of funds to stabilize New York’s fiscal picture and maintain its economic competitiveness, which would best sustain the State’s ability to help all New Yorkers over time,” said CBC President Andrew Rein. 

Pushback on Immigrant Aid

The Excluded Workers Fund will be the largest such aid program by far in the nation, providing a lifeline to undocumented immigrants and others working outside formal employment. The campaign to pass it included a hunger strike to call attention to desperate need.

Strongly supported by progressive city lawmakers, the proposal faced opposition despite the Democrats’ supermajority in both houses of the Legislature.

Late last week, some suburban and upstate lawmakers in the Senate and Assembly privately began voicing concerns over the Excluded Workers Fund, according to WCNY and confirmed by THE CITY. 

Among their worries, legislative sources told THE CITY, were the optics of creating a $2.1 billion fund for undocumented workers while small businesses in their districts are ailing from the pandemic — potentially giving fuel to future election opponents.

Tensions came to a boiling point Monday as lawmakers accused each other — and the other house — for not being supportive of such a fund. 

The fund would be two-tiered, providing financial assistance up to $15,600 to New Yorkers  who filed taxes in recent years or can prove their identification and can demonstrate loss of income caused by the pandemic. The measure would also offer smaller relief, $3,200, to those in a second tier who may not have adequate documentation. 

Budget language specifies a host of documents applicants can use to prove identify, establish residency in New York and prove eligibility — such as drivers license or state-issued ID, a birth certificate, or school transcripts, as well as a bank statements, utility bill, pay stubs or other documents that show “a pattern of employment.”

Difficulties proving eligibility under strict New York rules stymied many tenants who sought federally funded relief last year, with only a portion of the $100 million going to struggling tenants. With a much bigger pot of money, a new rent relief program included in the budget package aims to distribute about $2.4 billion in federal aid to tenants who fell behind on rent.

The funds would pay up to 12 months of owed rent for households with an income of less than 80% of the area median income who have experienced financial hardship and housing instability during the pandemic. The bill also includes an extra $100 million of state money on top of the federal funds to cover arrears for some tenants with higher incomes.

Tenants would be able to apply directly for aid, as could landlords with a tenant’s consent. The funds would go directly to landlords.

Tax Hikes for the Richest

As he contends with investigations over sexual harassment allegations and using his office to undercount nursing home deaths — as well as new revelations about getting relatives priority COVID-19 testing and using state staff to help land a $4 million book deal — Cuomo’s usual stronghold over the budget dissipated. 

After years of warning that raising taxes on New York’s wealthy risked driving away a pillar of the state’s tax base, Cuomo caved into demands from progressives to increase taxes on wealthy New Yorkers. 

The new plan reportedly raises the personal income tax rate from 8.82% to 9.65% on New Yorkers who earn more than $1 million and couples earning more than $2 million. 

The measure would also temporarily add two new tax brackets for some of the highest earners. Income over $5 million would be taxed at 10.3% and those reporting more than $25 million would be taxed at 10.9%. 

The new income taxes, coupled with new corporate taxes, are expected to generate $4.3 billion a year for the state. That’s less than the $7 billion revenue raising measures Democrats in both houses had hoped to enact, but beneficial nonetheless, said State Sen. Liz Krueger (D-Manhattan) during a debate on the Senate floor. 

“This is not a tax increase on the vast, vast majority of New Yorkers. It’s a relatively small — approximately 50,000 taxpayers — who are on the wealthiest end of the scale even during a pandemic and economic meltdown,” she said. 

Penn on Track

Although Cuomo’s influence over budgetary discussions is less robust this year than at any point in his three terms as governor, it hasn’t fully waned. 

Lawmakers acquiesced to Cuomo’s demand for $1.3 billion in funding for a bond issue for the proposed Empire Station Complex — a sprawling real estate deal in Midtown Manhattan that would eventually fund renovation and the expansion of the beleaguered Penn Station. The governor has been pursuing the project for the past five years and was thwarted in a past attempt to insert it into the budget. 

Citing scarce details over how anticipated real estate developments on surrounding blocks would fund the Penn Station overhaul — including one tower dubbed PENN15 that would rival the height of the Empire State Building — Manhattan lawmakers unsuccessfully attempted to remove the measure from the state budget. 

But lawmakers in both houses tamped down on the governor’s original request, limiting the use of the $1.3 billion to the “furtherance of the Empire Penn Expansion or other transportation improvement projects” and barring it for real estate development, according to bill language.  

Interviewed on NY1 Monday night, Mayor Bill de Blasio cast doubt on Cuomo’s Penn Station plan, saying it’s “very friendly to developers, not so friendly to communities.” 

“I don’t think that’s the right way to go about things. I think we want to really respect the fact that the plans have to be about the larger public good, not about the enrichment of a few developers,” de Blasio said. 

“I want to see the right kind of development with lots of checks and balances, with lots of public benefits involved, with community voices involved. Unfortunately, the governor’s plan is not that,” he added. 

The head of Vornado Realty Trust — which controls a majority of the eight sites and plans to develop that area — and his wife have contributed at least $384,000 to Cuomo’s campaigns since 2005, state Board of Election records show. Vornado Chair Steven Roth’s two children have also contributed at least $145,000 to Cuomo since 2011, bringing the family total to at least $529,000. 

Officials at the Empire State Development, the state’s economic development arm, had previously told THE CITY that there’s no correlation between the donations and Vornado’s involvement in the project. 

State Sen. Brad Hoylman — a Democrat whose Manhattan district includes the planned development site — voted against the budget bill that included the $1.3 billion, calling it a “down payment on a huge commercial real estate complex,” with no “master plan” in place for Penn Station.

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