New York is nearing a budget deal, albeit late. Taxes, casinos, school aid all at stake

Joseph Spector Jon Campbell
New York State Team

ALBANY - Do you know where your state budget is?

Gov. Andrew Cuomo and the state Legislature blew the April 1 deadline to have an on-time budget for this fiscal year as the sides work behind closed doors to hammer out a deal in the coming days on a $200 billion spending plan.

The stakes are high this year: New York was able to close most of its $15 billion budget gap over the next two years with an infusion of $12.6 billion in federal aid, but there are thorny issues still to decide.

In particular, Democratic lawmakers are pushing Cuomo to raise taxes on the wealthy and on Wall Street by as much as as $7 billion a year, despite the flux of federal stimulus money that will stave off cuts to programs and services.

The additional tax money would provide a windfall to schools, small businesses and rental assistance while giving the state a larger stream of revenue for years after the federal money is long spent, advocates said.

“A one-time cash infusion from the federal government is not sufficient to address systemic income inequality," Rep. Alexandria Ocasio Cortez, D-Bronx, who is helping an an effort among progressives to raise taxes on the rich in New York, said.

Lawmakers are also trying to figure out much additional aid to provide to schools, agree on reforms to better protect nursing homes after more than 13,000 COVID deaths there during the pandemic and decide whether to expand gambling to include mobile sports betting and add more downstate casinos.

The clock is ticking on a deal. State budgets were notoriously late in Albany, going 20 years without an on-time agreement.

Since Cuomo took office in 2011, however, budgets have been finalized in and around April 1.

Comptroller Thomas DiNapoli warned Thursday that 39,000 state workers may have a delay in their pay if a budget isn't adopted by Monday.

"Now more than ever, we need a spending plan that bolsters our economy, fights for those that are hurting and puts us on firm fiscal ground as this pandemic continues to linger," DiNapoli said in a statement.

Negotiations come amid a tense time in Albany: Cuomo is facing calls from lawmakers to resign over sexual harassment allegations against him and the underreporting of COVID deaths in nursing homes.

So across the table from Cuomo is Senate Majority Leader Andrea Stewart-Cousins, D-Yonkers, who said he should resign, and Assembly Speaker Carl Heastie, D-Bronx, who is leading an investigation into the matters that could lead to Cuomo's impeachment.

But they have appeared to put those issues aside for now to focus on the budget.

They had some immediate success: They pulled the legalization of marijuana out of the budget, and they brokered a sweeping deal signed into law Wednesday after years of disagreement.

Cuomo and lawmakers said they wouldn't let the scandals distract them from a budget deal.

"The goal of all of this? Create a New York post-COVID that is better than any New York before," Cuomo said March 24.

Here are the key issues at stake in the final budget talks:

Raising taxes on the rich

Exterior view of the New York State Capitol, Tuesday, March 30, 2021, in Albany, N.Y.

Like any household budget, there is a revenue side and spending side. 

And for the state budget this year, the spending side seems more clear due to the boost from the federal government and revenues that are about $5 billion more than expected as the economy improves.

Lawmakers are looking to spend about 6% more than Cuomo proposed in January, bringing the state budget to a record $208 billion.

But to do it, they would need more revenue, and Democrats who control the Legislature want to increase the top income tax rate from 8.82% to 9.85% for single filers earning more than $1 million and couples earning more than $2 million.

The rates would rise to 10.85% for taxpayers between $5 million and $25 million and 11.85% for taxpayers over $25 million. Only California would have higher rates if the proposed is approved.

Cuomo, however, has been leery of raising taxes, especially after the state's better-than-expected fiscal year. In January, before the federal money, Cuomo offered a more modest income tax increase on the rich, but now he has suggested it's not necessarily needed.

Robert Mujica, Cuomo's budget director, warned Wednesday about taxing people out of New York, which already has the largest outmigration of any state in the nation. 

"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," he said on NY1.

More:Will New York raise taxes on the rich? Why Cuomo says it's not needed

More:U.S. stimulus to rain $24B on NY governments. What they're getting, and what they'll do with it

Betting on casinos and mobile sports betting

Empire City Casino in Yonkers reopened after being closed due to the coronavirus shutdown Sept. 21, 2020.

One of the more contentious issues in the final days of negotiations is whether to speed up the authorization for three downstate casinos, including whether to allow Empire City in Yonkers and Resorts World in Queens to switch from video-lottery parlors to full-scale gaming operations.

Both are two of the largest gambling halls in the nation already, but do not have casino licenses to add live table games and switch to slot machines.

Some lawmakers and the gambling interests are pushing for an end to a 2023 moratorium on new casinos, saying that moving more quickly would add jobs and provide the state an economic jolt amid the pandemic.

"A full-fledged license would allow us to continue the work we are already doing on an elevated scale that could provide unparalleled long-term prosperity for the people of New York.” Michelle Stoddart, the vice president for community development at  Resorts World New York City.

But tied to a casino expansion appears to be whether to legalize mobile sports betting, a measure that has stalled in recent years as neighboring New Jersey has been the largest sports book in the nation.

In January, Cuomo proposed having the state Lottery Division run it, but casinos and sports-betting companies want a part in running it, saying they can offer more options and a better experience for players -- as well as help the struggling facilties.

Also, there is concern Cuomo's plan might leave Native American-run casinos without a sports betting option, which has drawn the ire of local leaders in central New York where the Oneidas run three casinos.

“Cutting out major parts of Upstate New York from participating in mobile betting is terrible public policy and would be unfair to these residents," Sen. Joe Griffo, R-Utica, said in a statement.

More:NY to lift 11 p.m. curfew for casinos, bowling alleys, gyms, but not for restaurants, bars

More:Full casino license push in Yonkers forms 'No-brainer' alliance for Empire City

Reforms for nursing homes

Exterior view of the New York state Executive Mansion, Sunday, March 14, 2021, in Albany, N.Y. Members of New York's congressional delegation have been calling on Gov. Andrew Cuomo to resign in the wake of mounting allegations of sexual harassment and an allegation of groping, as well as scrutiny over his administration's reporting of COVID-19 deaths among nursing home residents.

This much seems certain: The nursing home industry -- particularly those that are for profit -- are in line for new oversight and rules in New York.

What form those rules will take? That's among the major remaining issues under negotiation.

Cuomo has been facing immense pressure for his handling of COVID-19 in nursing homes, and in particular his administration's decision to withhold the true death toll for months. 

Amid that scandal, Cuomo has proposed a wide-ranging nursing home reform package, including measures that would require homes to proactively publish their rates online, increase civil penalties for violating state health law and require the homes to spend 70% of their revenue on direct patient care, including at least 40% on staff.

The Senate and Assembly, meanwhile, have passed their own, separate packages already.

The Senate plan, for example, also would require nursing homes to spend 70% of revenues on patient care, while also requiring them to publish their CMS rating prominently on their website, creating an infection control audit and expanding the state's long-term care ombudsman program.

The Assembly plan would prohibit the issuance of new licenses to for-profit nursing homes, arguing that the for-profit industry has been rapidly expanding and swallowing up the non-profit industry. It would also create a task for to reimagine long-term care in New York, along with a host of other measures.

“The COVID-19 pandemic has exposed and exacerbated so many of the issues and challenges that have long existed in our state, especially in our nursing homes,” Heastie said in a statement March 4.

Now the sides will try to coalesce on a deal in the budget.

More:How Cuomo's sexual harassment, nursing home scandals unraveled

More:COVID-19 battered NY hospitals, nursing homes over the last year. Here's what's next

Education funding also a negotiation

The New York State Education Department Building on January 17, 2021.

Education funding is always one of the biggest debates in annual state budget negotiations, and with good reasons: It's the single-largest portion of the state's portion of the spending plan.

In his original budget proposal, Cuomo proposed about $27 billion in state support for school districts, which grew to $31 billion when factoring in more than $4 billion in federal aid.

But that was before the state got $12.5 billion from the latest federal stimulus package, which has state lawmakers pushing for more.

One item to watch: Lawmakers want an additional $4.2 billion in education aid over three years, which they want pumped into the state's "foundation aid" formula, which was created to boost public schools as the result of a court settlement under then-Gov. Eliot Spitzer in 2007.

Schools and some lawmakers have long pushed for the extra aid, arguing it is owed to schools from when the funding was pulled back during the economic recession in 2008 and 2009.

Cuomo has resisted the effort, arguing the state has long been in compliance with the Campaign for Fiscal Equity court case, which was focused on school funding in New York City.

But now, Cuomo is politically weakened under the weight of multiple scandals. Lawmakers are hoping they can make it happen this year -- and increase school aid to a new record in a state where it is already has the highest per capita school spending in the U.S.

"If these proposals are reflected in the enacted budget, it would represent a major step in the right direction that would set New York’s pre-K-12 education system on a road to build back better," said Jasmine Gripper, executive director of the Alliance for Quality Education, a labor-backed group.

More:New York lawmakers pushing Albany to pay $4 billion 'debt' to schools

More:Cuomo's budget would hike taxes on wealthy if Washington doesn't pay

Joseph Spector is the Government and Politics Editor for the USA TODAY Network's Atlantic Group, overseeing coverage in New York, New Jersey, Pennsylvania, Maryland and Delaware. He can be reached at JSPECTOR@Gannett.com or followed on Twitter: @GannettAlbany

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