Winter break is over, which suggests politicos are beginning to eye the April 1 New York state budget deadline. But don’t soar forward too rapidly. There are nonetheless a couple of objects to verify off the to-do checklist earlier than any severe horse buying and selling begins.
Tuesday is the scheduled “Economic & Revenue Consensus Forecasting Conference Meeting,” which is a gathering of the Legislature’s monetary management. Members of each majorities and the minorities of every home will attend, in addition to the state budget director and the state comptroller. The assembled will hear from a number of economists, and earlier than March, decide how a lot the state should spend over the following yr.
Not that the events come to any exact settlement.
Once they’ve normal spending tips in place, lawmakers will use the governor’s government budget as a template from which to construct their very own budgets. These are known as one-house budget payments as a result of they replicate the priorities of every home. According to each the Assembly and Senate majorities, one-house budgets will likely be launched the week of March 13.
It’s at this level that negotiations get down and soiled.
While there may be a lot for the Legislature to love in Hochul’s proposal, together with full funding of Foundation Aid for faculties and the most important state contribution to the Medicaid budget ever, in line with lobbyist Jack O’Donnell of O’Donnell & Associates, the governor’s budget units up showdowns with the Assembly and Senate on:
- training (lifting the constitution cap)
- housing (help for a brand new 421-a and a proposal to permit Albany to override native zoning)
- Medicaid (the pharmacy carve out)
- native governments (slicing enhanced Medicaid)
“The LOB and district offices are full of constituents advocating on these and other issues while Gov. Hochul comes into the budget process with the upper hand in negotiations and her own determination so don’t make any travel plans in April,” O’Donnell cautioned.
Here are 4 issues that it’s best to look ahead to:
Will the budget elevate taxes on the wealthiest New Yorkers?
It’s a perpetual query in Albany. This yr, Gov. Hochul has, on one hand, mentioned she wouldn’t improve private revenue taxes on the state’s wealthiest New Yorkers. On the opposite, she has proposed mountain climbing the cigarette tax. She’s additionally pushing for an MTA Payroll tax which is considered by many as an extra price on small enterprise and employees.
An argument could be made that the state doesn’t want to boost taxes – and it was made by E.J. McMahon, founding senior fellow of the Empire Center for Public Policy, throughout testimony earlier than the Joint Legislative Fiscal Committee.
“New York’s revenues quickly recovered from the pandemic because the state government does, in fact, ‘tax the rich’ to a far greater extent than almost any other state. However, there are clear signs that the state’s heavy reliance on its highest earners, already at record levels before 2020, is both unstable and unsustainable,” McMahon said.
Indeed, the governor is so comfy with the state’s funds that she has proposed socking away about $8 billion right into a rainy-day fund, whereas predicting a three-year-long recession.
It’s a place {that a} coalition of teams and a few lawmakers take concern with.
“There are no budget gaps on the horizon,” mentioned Michael Kink of Stronger for All, which is part of the Invest in Our NY Coalition. “The only budget gaps in her financial plan are created by her assumption that we are going to have a three-year long recession.”
The companion “Invest In Our New York Act” contains a number of items of laws that will elevate $40 billion in new public funds by mountain climbing taxes solely on the wealthiest folks and companies. The payments embrace a progressive company tax in addition to a proposed state capital beneficial properties tax.
“I think the Legislature will take some of those reserves that she’s proposing, to spend on things like building affordable housing…a more robust transition on climate and affordable clean energy. And, potentially, to support the public cost of things like Medicaid and things like the minimum wage,” Kink informed Capital Tonight.
How will the minimal wage be hiked?
This is an space the place there may be substantial settlement, and never simply amongst lawmakers.
The newest Siena College ballot reveals that by 70% to 26%, voters, together with 59% of Republican voters, help the governor’s thought of tying minimum-wage hike to inflation.
But there are particulars within the governor’s proposal that progressives need to cast off.
“She has this quote-unquote indexing proposal that’s not in any way meeting cost of living needs. It locks in a poverty-level wage. A $15 wage with bad inflation has been eroded to about $12.50,” Kink mentioned.
Hochul’s minimal wage proposal additionally comes with a 3% cap, and off-ramps in case of an financial downturn.
“My conception of indexing for inflation is indexing for inflation. Like, if there’s 5% inflation, you get a 5% increase in wages,” Kink mentioned.
According to Blair Horner, government director of the New York Public Interest Group (NYPIRG), the one query appears to be the flavour of minimal wage hike the legislature prefers.
“I think on the minimum wage, there seems to be a growing consensus to increase it,” mentioned Horner. “Whether or not they follow the governor’s proposal, or the Legislature raises the floor first, I think that’s the only relevant question.”
One key legislative proposal is a “Raise the Wage” invoice sponsored by Sen. Jessica Ramos and Assemblymember Latoya Joyner. It would improve the state’s minimal wage and index it to inflation and employee productiveness inside 5 years, in line with Russell Weaver of Cornell.
If the Legislature decides to link the wage to inflation the best way that Ramos and Joyner are proposing, there will likely be some further public prices in areas together with Medicaid and residential care.
There are different arguments as nicely towards a minimal wage hike coming so quickly after the state’s different, current will increase. As the New York Post states, “New York’s already facing an exodus of residents and businesses, and progressives only want to speed up the departures.”
Will localities catch a break?
If there are any actual losers in Hochul’s in any other case beneficiant spending plan, it’s acquired to be the state’s localities.
There are three points confronting them: Cities, cities and villages will, for the 14th yr in a row, see flat AIM (Aid & Incentives for Municipalities) Aid. Hochul is proposing to override native zoning to perform her imaginative and prescient of constructing 800,000 new housing items over 10 years. And the ultimate insult, in line with counties, is her proposal to shift tens of millions of recent Medicaid prices to counties.
“It is difficult to fathom that an executive budget with a $7 billion increase in spending, proposed by a governor with an oft-stated strong belief in local governments, fails to invest one additional dime in our cities, villages, counties and towns,” Peter Baynes, government director of the New York Conference of Mayors wrote in a press release dated Feb. 7.
Baynes is proposing a totally new funding stream for localities tentatively known as “Municipal Operation Aid” (MOA), which is tied to the companies they supply and the variety of residents they serve. NYCOM is asking for $100 million for the brand new funding.
On native zoning, Onondaga County Executive Ryan McMahon argues that whereas bigger communities could not have issues assembly Hochul’s housing targets, rural areas possible will.
“For many of my towns, especially in my rural communities, to meet any goal with this, you’re going to have to expand services, which the county controls, right? We control all the sewers and the wastewater system,” McMahon mentioned. “I have questions regarding who is going to pay for that sewer expansion.”
Members of the New York State Association of Counties (NYSAC), which is holding its legislative convention this week, weren’t shy in expressing how they really feel about Hochul’s determination to cost-shift Medicaid prices onto counties.
“The governor is looking to intercept almost $300 million in federal funds earmarked for local taxpayers,” mentioned Stephen Acquario, NYSAC’s government director.
According to NYPIRG’s Blair Horner, localities are simpler to focus on than “political King Kongs” like unions.
“The power of politics is not the same with local governments as it is with, say, unions, or businesses or other advocacy groups,” mentioned Horner. “They are creatures of the state.”
How will New York fund the local weather transition?
Ever since Gov. Andrew Cuomo signed the Climate Leadership and Community Protection Act (CLCPA) in July 2019, lawmakers have been conscious that the time would ultimately come when the state’s dedication to reducing greenhouse fuel emissions would must be supported by a hefty public funding.
That time has come.
“There’s definitely a big need to fund the transition,” Conor Brambrick, director of coverage at Environmental Advocates NY, informed Capital Tonight. “NYSERDA and the Climate Action Council, when they did their analysis, identified a need of an additional $10 billion of spending year over year if we’re going to meet the mandates of the climate law.”
While that’s not essentially all state cash, a hefty portion of it’s.
“Thinking of how we’re going to pay for all these things. I think it’s really going to be a combination of what is the government doing directly, and where are they providing incentives and carrots and sticks for private sector dollars to be directed,” mentioned Julie Tighe, president of the New York League of Conservation Voters. “The governor certainly started off with a lightly detailed but strong concept of a Cap & Invest program.”
Gov. Hochul adopted Cap & Invest instantly from the Climate Action Council’s scoping plan, and included it into her government budget.
“That, for what it’s worth, is the vehicle that everyone is looking at, in terms of generating funds,” EANY’s Brambrick defined.
Cap & Invest has the potential to boost billions of {dollars}, however after seeing the way it has performed out in different states, together with California, EANY is advocating for guardrails that will guarantee deprived communities can be protected.
“We would have preferred a…fee or tax on polluters. Cap & Invest will function that way, but it doesn’t offer the price stability. Under a tax or fee option, the state can decide exactly how much money it’s raising. Under Cap & Invest, the prices will fluctuate based on the market,” Bambrick mentioned. “But we are supportive of the concept.”
Tighe is supportive of Cap & Invest, however like Bambrick, is searching for extra element.
“I think it’s a really strong start, having this conceptually out there. It’s clear we need a lot more details on how they would implement that program,” Tighe mentioned.
Under Hochul’s plan, 33% of the funds raised by Cap & Invest would go to households and companies to offset a possible improve in vitality prices. The different 66% is open-ended.
Bambrick and Tighe are additionally watching a number of different payments that can help Cap & Invest.
For instance, EANY is backing a invoice known as the “Climate and Community Protection Fund” (CCPF). While it has but to be launched, it should possible be sponsored by Sen. Pete Harkham. It is modeled on the Environmental Protection Fund. The CCPF would create a devoted income stream for quite a lot of applications together with giant scale transmission distribution tasks or smaller applications like warmth pump help.
Tighe is carefully watching a invoice being carried by Sen. Liz Krueger known as the New York Heat Bill that will eradicate a number of the obligations that bind utilities to offer sure fuels. She can also be advocating for a statewide clear gasoline normal.
“We need a clean fuel standard that sets specific reductions for the transportation sector,” Tighe mentioned.
On the opposite finish of the political spectrum are some Republicans who assume the governor is just spending an excessive amount of.
“How much more are the majorities going to add when it’s all said and done? New Yorkers came out of COVID shutdowns straight into record-high inflation. Common sense says that this year’s budget can’t impose more costs on residents, localities and businesses,” Assembly Minority Leader Will Barclay mentioned to Capital Tonight. “But that’s where things seem to be headed.”