NYAPRS Note: NYS Governor Andrew Cuomo’s response to a Senate GOP ‘HEALS’ COVID relief package that contained no money for hard pressed states and localities (https://www.nyaprs.org/e-news-bulletins/2020/7/28/senate-gop-covid-package-fails-state-and-localities-and-the-unemployed) included a letter sent yesterday to our US Senators, Minority Leader Chuck Schumer and Kristin Gillibrand that made clear the potentially devastating impact that HEALS would have on NY’s economy, reemphasizing the 20% in cuts to local aid that would follow, e.g. the current ‘withholds’ could turn to budget cuts if federal dollars aren’t’ forthcoming.
The Governor’s comments came a day after a coalition of advocates for mental health and addiction recovery providers blasted the Senate’s failure to address the states’ fiscal crises and possible would heavily fall on vulnerable New Yorkers (https://www.nyaprs.org/e-news-bulletins/2020/7/29/ny-mh-addiction-service-providers-in-ny-say-senate-bill-wont-help)
In the letter, he also makes clear that if he’s prohibited from cutting education per the NYS Senate’s proposal, the cuts to the behavioral health and other sectors will be even greater:
Here are some experts:
As you know, New York State has a $14 billion revenue shortfall in the current fiscal year and $16 billion in 2022 as a direct result of the pandemic and without additional federal aid we will need to reduce funding for hospitals, schools and local governments by 20%. To the extent the federal legislation provides the state with funding, will be the extent of the reduction in that 20% cut. For example, if the state receives the $14 billion requested, we could fully fund the budget for one year (2021).
Likewise, if the state receives $7 billion, schools, hospitals and local governments will be cut 10%. The current Republican Senate bill requires full funding for education. If New York State does not receive at least the $14 billion for 2021 and $16 billion for 2022, but must fully fund education, there will be a greater cut to hospitals and local governments.
It is zero sum game. In the absence of full funding for the revenue shortfall, full funding for education will require additional cuts above the 20% for hospitals, local governments and not-for-profits.
In response, groups Strong Economy for All Coalition and New Yorkers for Fiscal Fairness have countered with a message of “We Can’t Cut Our Way Out Of The Crisis. We Need To Reassess. And Invest. When asked about this, the Governor’s budget director Robert Mujica as responded “There is no way to tax that much money without doing a staggering amount of revenue-raisers that nowhere in the country has and no one has ever seen before,” “The only alternative is really to have the federal government provide the assistance (see below).
Our advocacy groups are meeting regularly to look at next steps. Look for more information later today.
Cuomo: Taxing Wealthiest New Yorkers Won’t Cover COVID-Related Deficit
State, Local Leaders Continue To Call On Federal Government For Financial Relief
By Amanda Fries Albany Times Union July 30, 2020
ALBANY — The economic shutdown to slow the spread of the coronavirus has left New York facing a $30 billion deficit over the next two years, and hiking taxes on the wealthiest New Yorkers won’t cover the gap, state officials said Wednesday.
Gov. Andrew M. Cuomo said the fiscal needs for New York far exceed what could be generated through increasing taxes on the wealthy.
The governor said New York is grappling with a $14 billion deficit this budget cycle and a $16 billion gap expected in the next fiscal year. Then there’s the Metropolitan Transportation Authority (MTA) facing an expected $12 billion gap, the Port Authority of New York and New Jersey’s looking at a $3 billion shortfall, and New York City dealing with a $9 billion hole, Cuomo said during a press call.
“You’re at about $50 billion (in total deficits). You have 100 billionaires,” he said. “You will have to tax every billionaire half a billion dollars to make it up. You know what that means? That means you would have no billionaires.”
State Budget Director Robert Mujica also dismissed the notion of making up the lost revenue through tax increases on the wealthy, noting that New York already has some of the highest, and most progressive, wealth taxes — including the second-highest tax on wealthy residents in the nation.
“There is no way to tax that much money without doing a staggering amount of revenue-raisers that nowhere in the country has and no one has ever seen before,” Mujica said. “The only alternative is really to have the federal government provide the assistance. There’s not a way to tax us out of this problem.”
The Citizens Budget Commission has also reported New York City residents are subject to the second-highest personal income tax in the country at nearly 12.7 percent. New York also imposes an 8.8 percent personal income tax statewide on married couples filing jointly with incomes greater than $2.2 million annually; only New Jersey and California impose higher wealth taxes, the CBC’s report shows.
Even before the COVID-19 pandemic threw state and local budgets into disarray, state legislators and labor unions were pushing for tax increases on the wealthy to help fund critical services and programs such as expanding affordable housing and ending homelessness in New York.
The advocates called for bumping up the tax brackets for New Yorkers who make $1 million or more annually, implementing a “pied-a-terre” tax on second homes in New York City and a new capital gains tax on the state’s resident billionaires.
A poll conducted by labor unions in February showed broad public support for increasing taxes on the very wealthy.
Michael Kink, executive director of the progressive Strong Economy for All Coalition, blasted Cuomo’s stance and accused the governor of wanting to protect the billionaires, of which there are 118 in New York with a combined net worth of $600 billion.
“Gov. Cuomo cares more about keeping billionaires happy than keeping millions of New Yorkers from going hungry,” Kink said in a statement. “As countless New Yorkers struggle to put food on the table or pay their rent, the governor is choosing to cut funding for schools, hospitals and housing instead of raising taxes on the rich.”
The latest figures on the state’s deficit come as Cuomo and local elected officials renewed their calls for Congress to include financial relief to state and local governments in the next legislative package to address the economic hits delivered by the pandemic. The U.S. Senate’s Republican majority this week released a plan, dubbed the HEALS Act, that does not include funding for those entities.
Cuomo, who sent a letter to congressional leaders on the need for funding, said it will be up to the federal government to provide appropriate revenue to localities to address the deficits.
“I don’t see additional revenue coming — that’s why I’m pushing so hard for the federal government just to have a responsible bill,” he said. “The future for revenues is basic fairness by the federal government.”
Senate Majority Leader Andrea Stewart-Cousins agreed that additional federal aid is necessary, but said major revenue efforts must also come from the state. The Democrat noted that the chamber earlier this year developed a “revenue working group” to explore legislative options.
“We are all hurting and this crisis calls for multimillionaires and billionaires to help our state shoulder this extraordinary burden,” Stewart-Cousins said in a statement. “While there is no single action that will solve all our problems, we shouldn’t be looking to the already overburdened working and middle class to solve the crisis.”