Senate leader defends need for state wealth tax

Senate Majority Leader Andrea Stewart-Cousins, D-Yonkers defended the priority in her chamber’s budget to raise taxes on millionaires and the wealthiest New Yorkers. File photo

ALBANY — The leader of the state Senate doubled down Tuesday on proposed revenue raisers such as raising taxes on state millionaires after Gov. Andrew Cuomo announced New York has enough money to forgo the proposed cuts in his initial 2021-22 executive budget.

Cuomo and executive staff identified more than $5 billion to evade the governor’s initial proposed cuts to state programs and departments. About $3.7 billion can be restored to date, including $1.9 billion in funding for public school districts, 5% across-the-board reductions for programs and local governments amounting to about $1.2 billion and $580 million for wage increases for state workers, state Budget Division spokesman Freeman Klopott said Tuesday.

“On the remaining $1.3 billion,” Klopott said, “funding would be available for one-time, COVID-related investments and will be discussed with the Legislature.”

Assembly and Senate Democrats proposed tax hikes on the wealthy in their one-house budget proposals passed last week, including a 1% tax on income from capital gains. Both chambers seek to increase the top income tax rate from 8.82% to 9.85% for single filers who earn more than $1 million, couples who file jointly earning more than $2 million and adding additional tax brackets for higher earners.

Canceling the cuts could have influenced legislative leaders to also forego their proposed revenue raisers, but Senate Majority Leader Andrea Stewart-Cousins, D-Yonkers, said Tuesday during a virtual press conference the Legislature’s intent to increase taxes and revenue are still necessary.

“We are still looking at revenue raisers,” Stewart-Cousins said. “We put a number of them on the table. We are looking at a way to sustain our ability to pay for the things we know are important and we know New Yorkers need to really prosper. We’re looking at equity, we’re looking at how to make sure we will be able to keep the funding going.”

Assembly Speaker Carl-Heastie, D-Bronx, and Stewart-Cousins continue to speak regularly throughout the budget negotiation process. The budget is due by April 1.

Stewart-Cousins was one of first leading state Democrats earlier this month to call for Gov. Cuomo to resign after several women accused of him of sexual harassment and misconduct in addition to other reports he and his administration underreported the state’s number of COVID-19 fatalities in congregate facilities.

The Senate leader and the governor have spoken about the budget since, but the separate investigations were not discussed.

Stewart-Cousins declined to say Tuesday if the governor’s involvement in two state investigations and a federal probe have prevented Cuomo from being as involved in the process as with past budget talks.

“I don’t want to assess that,” she said. “I know our staffs are working around the clock and talking and I’m focused. That’s all I can really account for.”

“I continue to be focused on getting the budget done and working to make sure that we have a good budget and a timely budget.”

Both chambers included policies in their budgets to increase state revenue, including a measure to legalize mobile sports betting.

The chambers are drawing close to legalizing recreational adult-use marijuana, but the deal is slated to pass in the coming days outside the budget agreement.

The state had a roughly $15 billion deficit due to the COVID-19 pandemic, with a $6.1 budget gap before the public health crisis began.

“We have an additional $2.5 billion in revenue from the consensus revenue forecast, which is really that there has been a recovery faster than we had anticipated,” state Budget Director Robert Mujica said Monday. “We haven’t quite recovered completely but the projection adds another $2.5 billion which were previously announced, and then we have additional federal aid.

“Together, those provide us with over $5 billion, which is enough to restore all of the reductions that were proposed in the Executive Budget. So as of right now we have the resources necessary so that there would be no cuts in the governor’s budget so you wouldn’t require any significant level of tax increases to pay for the restorations.”

New York is set to receive about $12.5 billion from the federal $1.9 trillion American Rescue Plan. Cuomo’s Executive Budget released Jan. 19 included a minimum of $6 billion in federal aid spent over two years.

The new federal funding for the state can be spread over four years, and includes $2.5 billion from tax revenue coming above projections $1.5 billion in eFMAP, or enhanced federal Medicaid funding and $1 billion in federal aid, Klopott said.

“Between the additional revenues that have come in and the federal revenues, we can restore all those cuts,” Cuomo said Monday.

The governor categorized other expenses outside the COVID response funding as additional, or new spending items.

“As Speaker Heastie has said, the cuts proposed in the budget are unacceptable,” Michael Whyland, a spokesman for Heastie, posted on Twitter on Monday. “Our families and neighbors demand sustainable solutions to problems that existed long before COVID struck, and that will require additional revenue which our Assembly budget proposal supports. We need a budget that doesn’t rely on one-shots and austerity and prepares New York for the future when this federal aid runs out. We look forward to adopting a budget that meets New York’s significant needs.”

Assembly and Senate Democrats have criticized the governor’s reluctance to tax the wealthiest New Yorkers and depend on a one-time payout from the federal government to foot the bill.

The Senate’s proposal would also increase state school aid $5.7 billion or 20.5%, including a $1.37 billion, or 7.4%, Foundation Aid increase and $3.85 billion in federal Coronavirus Response and Relief Supplemental Appropriations Act funding.

The Senate provides $3.5 billion more school aid than Gov. Andrew Cuomo’s executive budget, and uses federal aid to supplement, not supplant, state funding. State-funded school aid would increase to a total of $29.5 billion — a year-to-year increase of 6.6%. The Senate plan would also fund universal pre-K.

“[The federal relief] takes care of what happened to us during COVID — it does not account for the deficit we had before and our ability to make sure we have the funding for education and health care and the things we really care about,” Stewart-Cousins said Tuesday. “We will be looking at making sure we have an equitable return for a great economy to New York.”

Mujica said legislative leaders and executive staff will work 18 hours a day to reach an agreement about financing any additions and budgetary priorities for the $5 billion.

“We also have one-time resources,” Mujica said. “Those are recurring resources largely and then we’re also identifying one-time resources to fund one-time expenses that are specifically related to COVID and part of the recovery.”

Hundreds of business leaders recently sent Cuomo, Stewart-Cousins and Speaker Heastie a letter urging them to not increase taxes on state millionaires and wealthier residents.

The Senate leader said she has had conversations with the business community since.

“I understand why they think the way they think,” Stewart-Cousins said. “I think we’ve made it very clear that they know that New York is going to make a great comeback. We know that every single aspect of New York’s economy can work together to benefit everyone and how important the business community is in that. We also know that we as a community have to make investments ... that will make us all stronger. We’re asking those who have a little more to do a little more so we’re not looking at the same inequities year after year and not the same austerity going into the future.”

Conversations with business and legislative leaders about the proposed tax hike will continue, Stewart-Cousins said.

“Sometimes we agree, sometimes we don’t,” she added. “I think we all are trying to get to the same end — a recovery that lifts everyone in an equitable way.”

Stewart-Cousins said she expects the Legislature’s spending plan will be passed on time.

“We all have different positions — we know what the governor’s position was when he put out his budget in January,” Stewart-Cousins said. “The Assembly and the Senate both share priorities — we made that clear in our one-house responses. Hopefully, we will be able to resolve this obviously sooner than later we always do and I have no reason to think we shouldn’t this time.”

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