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Taking A Different Approach

Cuomo Pitches Changes To Quarterly Budget Amid Virus Worries

The federal COVID-19 bill, expected to be signed into law could temporarily help individual families’ budgets while helping wreak havoc with local municipal budgets.

During his daily news briefing Thursday, Gov. Andrew Cuomo discussed his reaction to the federal stimulus bill. While the bill provides checks for families throughout the country, additional unemployment payments and help for small businesses, Cuomo said it does not address the needs of local or state governments. The governor said he expects the total loss of state revenue from the COVID-19 business shutdowns to be between $10 and $15 billion.

“It did not help local governments or state governments and it did not address the governmental loss,” Cuomo said. “And the federal officials, the ones who are being honest, will admit that. New York state receives $5 billion from the stimulus, New York state government. And it’s earmarked only for COVID virus expenses. Which means it does absolutely nothing for us in terms of lost revenue to the state. The only thing it’s doing is helping us on the COVID virus expenses, which is nice, but the bigger problem is on the lost revenues.”

New York’s state budget is due to be approved by April 1, though that is a difficult proposition with businesses shut down, no idea what the state’s revenues will actually be and the state Legislature largely shut down. That led Cuomo to propose passing a budget that includes the possibility of quarterly budget changes once revenues begin trickling in.

“But you have to do a budget with all those unknowns,” Cuomo said. “Address them realistically. And how do you address them realistically? First, we’re going to adjust down our revenue projections for the initial budget and then what we’re going to do, which is something we’ve never done before, is we’re going to adjust the budget through the year to reflect the actual revenue, meaning will say on day one, ‘Okay we intended to give you $100 we don’t have $100 so we’re going to give you $95. But I can only give you $95 if I get $95 and I let you know quarterly, whatever the period of time is how much money I’m getting and how much I can give you of the 95 and therefore you can plan accordingly.'”

And that’s frankly the only way that you can do this budget. When you have so many unknowns. So adjust the initial number down and then have periods through the course of the year where you say to school districts, local governments et cetera, ‘This is how much we actually received. This is what the federal government did. This is what the federal government didn’t do. The economy is coming back faster. The economy’s coming back slower. But these are the actual numbers so you can adjust your budget accordingly.'”

School district officials throughout the state are often critical of the fact that local school districts have to put together their budgets with state aid, most school districts’ largest revenue source, largely unknown until the budget is finished. That is especially true in years when the state budget is approved after the April 1 deadline. Schools would likely have to rely even further on their fund balances or face large cuts if they see less state aid than was included in Cuomo’s January budget proposal.

Jamestown, meanwhile, counted on another $1 million from the state to balance its 2020 budget. The city has a tenuous surplus now, but that could quickly evaporate if the city has to balance its budget with the fund balance rather than the additional state aid it has planned.

The New York State Association of Counties, meanwhile, quickly voiced its disapproval of Cuomo’s proposal to unilaterally reduce reimbursements to governments based on monthly state revenue reports. One of the reasons for concern, according to Jack Marren, NYSAC president, is that counties are already seeing massive revenue decreases of their own through lost sales taxes and other tax revenues. Making changes based on state revenues and reimbursement levels to local governments would need to come with flexibility to manage the cost of state-related programs — and even then Marren feared the counties would be unable to balance their books.

“The vast majority of expenses incurred by county governments, which is local government, are the services mandated by the state to be delivered locally,” said Jack Marren, NYSAC president. “These, primarily, are state health and social welfare programs — areas being called upon now at extremely high levels. Allowing the state to alter statutory reimbursement for these state services in any given quarter by double digit percentages simply places these state costs on the backs of homeowners, small businesses across the state, and local taxpayers. … Even with broad flexibility to change state rules, most counties would not be able to sustain the loss of state reimbursement for even one quarter on top of intensified spending needs to deal with the pandemic and the precipitous loss of local revenues due to quarantines and the shutting down of economic activity. The state must rethink this proposal and ensure counties have the resources on the front lines to manage the current crisis.”

Andy Pallotta, New York State United Teachers president, is advocating for increased taxation of the state’s wealthiest residents to balance the budget rather than cutting aid to schools.

“The economic crisis brought on by this pandemic has already left millions unemployed and has caused issues with the state’s budget,” Pallotta said in a news release. “But let’s be clear about something: Cuts to education in any form will hurt the students and families who need the supports our public schools and colleges provide now more than ever. The inequality that already existed in our education system has only been exacerbated by this crisis. Cutting funding now will widen the gap even further. Our public education students and families shouldn’t be the ones to foot the bill for the crisis. New York’s ultrawealthy can afford to step up and pay their fair share to help us preserve the high-quality education our dedicated educators work so hard to provide.”

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