Legislature closes in on overdue $212B budget

The New York State Capitol in Albany. Matthew Cavanaugh/Getty Images

ALBANY — Senators and members of the Assembly on Tuesday persisted with hours of debate about taxing the rich, requiring nursing homes to spend 70% of revenue on patient care and other budget policies with the intent of passing the 2021-22 state spending plan nearly a week late.

The state’s historic $212 billion spending plan includes a provision to legalize mobile sports betting; a new program to map the state’s availability and cost of high-speed internet services; $29.5 billion in school aid; $29 billion to grow the state’s green infrastructure and economy; a $105 million expansion for full-day pre-Kindergarten in all public school districts; and $2.1 billion for benefits for excluded essential workers such as undocumented immigrants and people recently released from prison.

The 2021-22 budget — one of the largest in history — uses about $112 billion from state operating funds and reflects a $23 billion increase in spending, with $5 billion earmarked for future budgets. The budget deadlined at midnight April 1, making Wednesday’s expected passage hours shy of a week overdue.

“Budgets are a statement of values, and in my two decades of service to the people of New York, I can’t think of a more far-reaching and impactful budget than this,” said Assembly Speaker Carl Heastie, D-Bronx. “It meets long-standing goals of our Assembly Majority and addresses the historic inequities that have existed for too long. My colleagues and I have worked tirelessly to deliver a budget that will help New York rise from this health crisis and recover from its devastating economic impacts while upholding our commitment to putting New York families first.”

The budget will close the state’s roughly $15 billion deficit with a combination of increased state revenue and federal aid.

New increased taxes on millionaires and billionaires will amount for $3.5 billion of the $8.5 billion spending increase in state funds.

The state will net $2.75 billion from increases on personal income tax this year, and $3.25 billion next year.

Republicans largely spoke out against the tax increases, which start for people with an income of $1 million for a single person and $2 million for a couple. The tax rates continue to increase from 8.82% to 9.65% at $5 million and 10.9% at $25 million, and are expected to affect about 50,000 of 19.4 million New Yorkers.

The tax increases sunset after 2027, said Senate Finance Committee Chair Liz Krueger, D-Manhattan.

“I was always taught that in this town, Democrats, when they needed to spend, tax to raise revenue and Republicans borrowed to spend,” Krueger said. “I think of the two choices, I would pick the tax to spend than go into a deficit to spend, but that’s just me.

“To clarify ... this is not a tax increase on the vast, vast majority of New Yorkers,” Krueger continued. “It’s a relatively small, about 50,000 taxpayers on the wealthiest end of the scale even during the pandemic and economic meltdown. It’s an interesting question of what’s biggest when, but it’s also who are you taxing?”

The budget also includes early retirement incentives in the revenue bill released Tuesday night for New York City employees.

Assemblyman Mark Walczyk, R-Watertown, was the sole members of the Assembly to vote against a two-day emergency extender resolution, in effect through April 8, to ensure state employees get paid and unemployment benefits can be spent until the final budget is adopted. The resolution authorizes up to $6.7 billion.

About 39,000 state workers did not receive a paycheck Monday because of the late budget.

“There is no excuse for interrupting their pay in the first place — they deserve an on-time budget on April 1,” Walczyk said, adding the need for a budget extender under one-party Democratic rule signifies issues with the process.

“This sets a dangerous precedent,” Walczyk continued. “Contracts can have problems, and I just want to make sure with this vote in the negative we’re not setting the dangerous precedent in future budgets and we have an on-time budget for New York citizens.”

Under the budget, private and public nursing homes will be required to reinvest at least 70% of revenue, excluding capital costs, on direct resident care, including 40% on resident-facing staff.

Several lawmakers in both chambers questioned the provision and the process where facilities will need to request a waiver from the state Health Department to spend outside the new regulatory threshold. The Health Department is not required to respond within a specific time frame, but the facility cannot be penalized for spending decisions until the department responds.

The change is part of ongoing nursing home reform in the wake of the state’s controversial number of COVID-19 deaths in nursing homes and issues wrought by congregate facility owners who maximize profits at the expense of quality care, according to a statement from 1199SEIU United Healthcare Workers East.

Gov. Andrew Cuomo is authorized to close any state prison with 90-day notice — waiving the one-year requirement mandated under state Correction Law — for the next two years in the 2021-22 fiscal plan. The provision was included in Cuomo’s initial executive budget released in January.

The additional closures are budgeted to reduce 1,500 inmate beds, saving $30 million, Krueger said. The senator and other representatives said several times Tuesday they do not know how many facilities, or which, the governor intends to close over the next two years.

The state reports 448 municipalities with police agencies have satisfied Cuomo’s executive order signed last June requiring all local law enforcement departments to update their code of conduct with their presiding local government. The 49 remaining departments must satisfy the order by having the appropriate county, city, town or village adopt the plan into local law, or else they risk the state Budget Division withholding 50% of allocated state funds and the state putting a monitor in place to oversee the department.

“I’m not sure what the qualifications or ability of said monitors are,” Krueger said in response to a colleague’s question. She did not know the time frame of when police department monitors would be put in place.

Lawmakers on both sides of the political aisle praised the budget’s $538 million in Consolidated Highway Improvement Program funding for municipalities to fix or maintain highways, bridges and highway-railroad crossings — a $100 million, or 23%, increase. The program has remained flat at $438 million since 2013.

The PAVE NY program to maintain roads will see a 50% increase on top of its $100 million received since 2017.

Lawmakers rejected proposed State University of New York and the City University of New York tuition increases and restores $46.6 million in operating aid to SUNY and $26.2 million for City University of New York, as well as $100 million for each university system for expansion projects.

The budget includes $13.7 billion total for higher education.

The Senate Finance Committee was set to meet to move the remaining bills at 11:25 Tuesday. The chamber resumed session just before midnight and senators debated, voted and completed passing the 10-bill budget before 4 a.m. Wednesday.

The Assembly was expected to finish debate and adopt the budget Wednesday evening. The chamber adjourned just before 2 a.m., resumed around 11 a.m. and continued debate as of press time in the late afternoon.

The Senate passed its health and mental hygiene spending bill with a vote of 42-21 and 93-55 in the Assembly. Transportation, Economic Development and Environmental Conservation passed with a vote of 106-43 in the Assembly and 43-20 in the Senate. Senators passed the capital project bill with a vote of 38-25 with 114-35 votes in the Assembly.

Cuomo, Heastie and Senate Majority Leader Andrea Stewart-Cousins, D-Yonkers, announced their final three-way agreement on the budget Tuesday as lawmakers continued to debate on the floor.

Stewart-Cousins commended legislative leaders for reaching an agreement with the ongoing challenges posed by the COVID-19 pandemic.

“However, driven by a commitment to long-term equity and prosperity for all, we have accomplished a great deal,” she said Tuesday. “I am proud of the strides we have made in funding our schools, helping businesses rebuild, and protecting New York’s most vulnerable. Working and middle-class taxpayers will receive the relief they desperately need, while the wealthiest New Yorkers will help their neighbors. This budget makes New York better for all. In the remaining months of session, the Senate Majority will continue to deliver results that are reflective of our progressive values and priorities.”

The governor highlighted that the budget continues to fund the state’s $311 billion infrastructure plan.

The budget legalizes mobile sports wagering, and is expected to bring in $99 million this year and more than $350 million next year. Over time, revenue will grow to about $500 million. The bill also reserves $6 million annually for problem gambling services and $5 million for youth sports in underserved areas, according to the Assembly Majority Conference. The remainder of the revenue will supplement education funding.

“New York was ambushed early and hit hardest by COVID, devastating our economy and requiring urgent and unprecedented emergency spending to manage the pandemic,” Cuomo said. “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.”

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