New York state budget: 9 issues to watch for as the deadline looms for an on-time deal
ALBANY - The state Legislature and Gov. Andrew Cuomo will be racing to get an on-time budget in advance of the fiscal year that starts Wednesday as they continue to deal with an unprecedented crisis that has wrecked state finances.
When Cuomo proposed his $178 billion budget for the 2020-21 fiscal year in January, no one predicted the coronavirus pandemic would be centered in New York and upend the state's books so much that even he can't estimate how much revenue the state will be down.
The state came into the fiscal year facing a $6 billion budget gap, the worst since 2011, and that could grow to $10 billion to $15 billion by the time the coronavirus runs its course — which could be months.
"Revenues just stopped," Cuomo said Friday.
Both the state and federal governments have delayed the income-tax filing dates until July 15, and though money will still come in, it will be a trickle compared to typically knowing by the April 15 deadline what the state's fiscal picture looks like.
Couple that with the human, fiscal and economic toll of coronavirus in New York, and the sides entered the final days of budget negotiations with uncertainty.
That also includes a whole social agenda that was originally under consideration in the budget -- such as whether to legalize marijuana and make changes to controversial bail reforms approved last year.
Here's nine issues to watch for this week during budget negotiations:
Closing a massive budget gap
New York hasn't faced this big a budget problem since the recession a decade ago, when then-Gov. David Paterson had to close a $17 billion gap.
And who knows how deep the state's budget hole will be when the coronavirus ends its havoc on New York, where the coronavirus death count topped 1,200 as of Monday morning.
The state's economy has basically ground to a halt after Cuomo shuttered all nonessential businesses on March 20. Plus, Wall Street has struggled, and the financial sector in New York City makes up about 13% of all state revenue.
"This is not going to be a quick down, quick up," Cuomo said Sunday of the economic picture. "I don’t know how quick the recovery (will be), and the recovery is going to be complicated."
Addressing the cost of coronavirus in New York
The Democrat-led Legislature and Cuomo have been hoping for a bailout from the federal government, and New York is getting about $40 billion of a $2 trillion stimulus package approved by Congress last week.
While New York's congressional delegation praised the package, saying it will provide money for hospital, schools, state government and municipalities, Cuomo said the roughly $5 billion headed to the state's coffers can't be used to close its budget deficit — only for coronavirus matters.
That's fine, but it won't balance the books, he continued.
"We have to deal with the numbers as they are presented," the governor said Sunday. "I’m not going to pass or sign a phony budget."
Funding schools in New York amid a budget gap
In January, Cuomo proposed a 3% increase in school aid, or by about $826 million to $28.5 billion overall — by far the most per capita of any state in the nation.
School groups wanted a $2 billion boost. Now they face the prospect of cuts as districts prepare their budget for a public vote May 19, which itself might be imperiled due to coronavirus safety concerns.
The federal stimulus package did include about $1.2 billion for New York schools and higher-education institutions, but it may not be enough to fill the gap.
"A state budget that cuts funding to schools would devastate educational opportunities for New York’s 2 million children," the advocacy group, Alliance for a Quality Education, said.
Pocketbook issues at stake in state budget
Cuomo's initial state-budget proposal continued income-tax cuts for the middle class, as well give a tax break for businesses.
There has been no indication that would change in the final deal, but other fiscal measures Cuomo wants to take that lawmakers have expressed reservations about might now be harder for them to beat back.
That includes not re-upping a $1.3 billion property tax rebate check program and further altering STAR, the other school tax relief program. Cuomo wants all homeowners who earn $200,000 a year or above to get a check each fall for STAR instead of the exemption upfront on their school tax bills.
Right now, the check goes to those households earning between $250,000 and $500,000. Checks help the state's books, moving the expense from the spending side to the revenue side.
Some lawmakers want to increase taxes on the rich, but most Senate Democrats and Cuomo have shown no interest in doing so.
Will New York legalize marijuana in the budget deal?
Last year, supporters of legalizing marijuana in New York couldn't get a deal in the state budget, then failed to get a bill passed last June before the six-month legislative ended.
This year, there was renewed hope that Cuomo and Democratic lawmakers could broker an agreement in the budget to address how marijuana crimes have disproportionately impacted communities of color and to give the state a revenue boost.
But whether the complex deal can be reached during such a hectic time and with just a few days before an on-time budget deal is needed is uncertain.
“We’re grateful for our elected leaders who are working tirelessly to navigate these uncertain times and continue their efforts on proposed legislation that will also have lasting implications for New York," the pro-pot group Start SMART Coalition said.
Addressing the controversy over bail reform in New York
Last year, lawmakers and Cuomo agreed to end cash bail for most misdemeanor and nonviolent felonies in New York, saying keeping people in jail solely because they didn't have money was an unjust system that largely impacted minorities.
But when the law took effect Jan. 1, it set off a maelstrom across New York, with law enforcement railing against it as thousands of inmates went free and others who were charged let go without bail until their cases are settled.
Police and prosecutors want the law to be scaled back to exclude some serious charges and to give judges discretion over whether cash bail should be set.
But some Democratic lawmakers say the law should stay as is —particularly now, as jails have become more unsafe because of the coronavirus.
"This crisis further highlights the need for us to protect the laws we worked so hard to pass last year in order to address mass incarceration and safeguard the presumption of innocence," 40 Democratic lawmakers wrote last week to Cuomo and legislative leaders.
Funding Medicaid and hospitals
Cuomo in January was looking to trim $2.5 billion of the state's $6 billion budget gap by cutting spending for Medicaid, the health insurance for the poor and disabled in New York that is used by about 20% of the state's population and has ballooned to more than $60 billion a year.
But now that task is more complicated as more New Yorkers head to Medicaid because of job losses and as hospitals struggle to keep up with the influx of coronavirus patients.
Moreoever, Cuomo wanted to make counties, including New York City, pay for any Medicaid cost increases that exceed 3% each year.
Yet Congress passed a package earlier this month that linked $6.7 billion in federal aid for Medicaid to not moving costs onto local governments in New York — a deal Cuomo has refused to take.
Will Cuomo get more control in the budget process?
The uncertainty over the state's finances led Cuomo on Thursday to suggest his administration should have greater control over the books for the coming fiscal year.
Cuomo said he needs the flexibility through the year to provide aid to schools and programs because it is simply unclear how much money the state will have.
He said the state will "have periods through the course of the year where you say to school districts, local governments, etc., 'This is how much we actually received.'"
The suggestion, and taking control away from the Legislature, sent shock waves across school districts and local governments, fearing they would be left at the whim of the powerful governor each quarter.
Whether the Legislature goes along with it this week or not is unclear.
"Allowing the state to alter statutory reimbursement for these state services in any given quarter by double-digit percentages simply places these state costs on the backs of homeowners, small businesses across the state and local taxpayers," the state Association of Counties said.
Lawmakers working in Albany during budget negotiations
What lawmakers will do with Cuomo's various proposals are uncertain — so too is how many of them will even convene at the Capitol for what will certainly be late-night budget votes.
Coronavirus has already stricken five lawmakers, and legislative leaders are working toward ways to have some limited remote voting.
The Legislature voted Sunday and Monday to approve remote-voting measures that will allow lawmakers to vote without having to be physically present in the legislative chambers.
So the virus' impact on budget negotiations, even simply from a logistics standpoint, is an obstacle the sides have to deal with.
"During these unprecedented times, our state government requires continuity, and New Yorkers deserve leadership and action," Senate Majority Leader Andrea Stewart-Cousins, D-Yonkers, said.
Joseph Spector is the New York state editor for the USA TODAY Network. He can be reached at JSPECTOR@Gannett.com or followed on Twitter: @GannettAlbany.
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