Goodell, Borrello Raise Issues With State Spending
Both Assemblyman Andrew Goodell and state Sen. George Borrello have a serious case of sticker shock over the 2020-21 New York state budget.
The budget, approved in the early morning hours Wednesday, totals $212 billion, a roughly 9% increase from 2020-21, and increases state-only spending by 3.8%. The budget applies $5.5 billion in federal aid, authorizes the withholding of up to 50% state aid for police departments that don’t file a police reform plan, authorizes mobile sports betting with projected revenue of about $99 million and increases aid to schools, renters and businesses.
Lawmakers used messages of necessity to vote on the bills immediately rather than wait the three days required by state law.
“As New Yorkers look forward with hope after a year dominated by the pandemic’s horrific toll on our people and our economy, our state needed a budget that would serve as the catalyst for a desperately needed recovery and economic resurgence. Unfortunately, that isn’t the budget we’ve gotten,” Borrello said in a news release at 4:10 a.m. Wednesday. “Instead, the spending and revenue plan that was negotiated and passed by the Legislature’s Democratic Majorities, with the support of a weakened and embattled Governor, is a $212 billion dollar example of what happens when government spending and policy is dictated by progressive activists.”
Goodell, speaking on the Assembly floor, noted New York’s budget now totals more than the budgets of Florida and Texas combined despite both Florida and Texas having larger populations than New York.
“What I and many of my colleagues find shocking is that the New York state budget is growing at over 9% – 6.64% on state operations, 9.08% on all state funds,” Goodell said. “We’re growing at a rate that is several times higher than the rate of inflation. It’s not like we’re playing catchup to any other state because our overall budget is projected to be about 5% less than California even though they have twice as many residents.”
STIMULUS FOR UNDOCUMENTED WORKERS
The budget creates a $2.1 billion program to provide cash payments to workers who have suffered income loss due to COVID but who are ineligible for Unemployment Insurance or related federal benefits due to their immigration status or other factors. Such workers must be low-income and provide sufficient documentation to establish work-related eligibility and residency in the state through a foreign birth certificate or a U.S. high school diploma, for example.
Sen. Jessica Ramos, a Democrat representing Queens, said New York is the first state to pass such a fund, which could reach an estimated half a million, largely undocumented workers.
“This nation’s economy has long been built on the backs of our undocumented workforce, and it is their essential labor that has kept our nation running throughout this pandemic,” she said, adding: “I am hopeful other states will begin to do the same.”
State Republicans and Conservatives on Tuesday blasted the program as a $22 billion taxpayer-funded giveaway. Borrello said he disagreed with the program in part because it is tied to the state’s unemployment insurance system that is already struggling through the pandemic.
“Much of this tax revenue will support the creation of a $2.1 billion fund that will allow individuals who were ineligible for unemployment insurance during the pandemic to receive payouts of up to $15,000 per person. This is a politically-driven item with an unacceptably high price tag, particularly with our state’s unemployment insurance fund depleted by the unprecedented demand of the pandemic. Struggling small businesses are now being hit with insurance rate increases that threaten their survival,” Borrello said. “This reckless combination of tax and spending increases will have severe and long-term consequences on our state and its future, from lost jobs and shrinking opportunities, to the continuing exodus of residents to more affordable states. New York was already number one in outmigration and that trend is now poised to accelerate.”
TAX INCREASES ON WEALTHY
New Yorkers making $1 million in annual revenue and joint filers earning more than $2 million in annual revenue would see their current state income tax rate rise from 8.82% to 9.65%. New Yorkers making between $5-25 million in annual revenue would see their tax rate increase from 8.82% to 10.3%. New Yorkers making more than $25 million would see their tax rate increase to 10.9%.
The Corporate Franchise Tax Rate will increase from 6.5% to 7.25% for three years. Companies making less than $5 million in income will see their rate stay at 6.5%. The Capital Base Test will be reinstated at a rate of 0.1875%. This will exempt coops, manufacturers and small companies.
At the same time, middle-class New Yorkers will see slight tax cuts. People filing jointly in $43,000-$161,550 income bracket will see their income tax rates lowered from 6.09% to 5.97% while people filing jointly in the $161,550-$323,200 income bracket will see their income tax rates lowered from 6.41% to 6.33%.
“The problem is when we are talking about a multi-billion dollar tax increase in one of the largest state budgets in the nation, that money comes out of people’s pockets,” Goodell said. “It comes out of New York state taxpayers’ pockets. That’s billions of dollars that our local companies do not have in their pocket to pay for more workers or to pay raises. It’s billions of dollars that our families don’t have in their pocket to buy school supplies or make mortgage payments or car payments. It’s a multi-billion dollar drag on the New York state economy, which is why when we look at national data we see that Florida and Texas, who have a tax rate that is half of ours, they are growing at a much faster pace. So when we look at the long-term impact of a huge budget, we need to recognize that as we take money out of people’s pockets we remove their ability to make their own decisions on how to best spend the money. We take that option away from them and we reallocate it based on what we think we want and not what they think they want. In the process we slow the New York economy and that hurts every resident in this state and especially hurts the working men and women who see fewer job opportunities and less money in their own pocket.”
Cuomo had said in the past two weeks that the tax hikes on high earners were no longer necessary after federal stimulus money eliminated the state’s budget gap. As recently as March 22, Cuomo and Robert Mujica, state budget director, had said the state didn’t need to raise taxes to pay for the spending in the budget at that time.
“With the $12.5 billion federal bailout allocated to New York under the American Rescue Plan and higher-than-expected revenues, our budget gap disappeared, and along with it, any justification for raising taxes. Yet, this budget has a crushing $4.3 billion in new taxes on high earners and businesses. Why? Because the radical left who lobbied long and hard for these tax increases — and would have liked even more — believe that successful individuals and businesses, our job creators, should be penalized for what they’ve earned,” Borrello said.
SCHOOL AID, OTHER INVESTMENTS
Cuomo and lawmakers said the budget would include a “record” $29.5 billion in school aid, a $3 billion increase from last year. That includes $1.4 billion in additional aid for school funding, and a $105 million expansion of full-day pre-kindergarten for 210 districts who don’t currently receive such state funding. New York is set to prevent tuition increases at state colleges and universities for the next three years and boost funding for tuition assistance and operating aid.
The budget also provides funding for “green economy investments,” child care and small business recovery. That includes $11.2 billion for transit systems and highway improvements, $2.4 billion for child care assistance and providers, a $3 billion bond to fund environmental and climate change projects, $35 million in tax credits for restaurants, and $40 million in grants for arts and cultural organizations.
“There are many positive investments and restorations in this budget that my Republican colleagues and I fought for and New Yorkers deserve,” Borrello said. “The next phase of the promised middle class tax cut has been restored, which will offer some much-needed relief to stretched family budgets. There are modest grants and tax credits for small businesses to help them recover from pandemic-driven losses. Our schools and students will benefit from increases in aid, including a $1.4 billion increase in Foundation Aid. There are restorations of local transportation aid and AIM funding for local governments. An additional $25 million was allocated for the Nourish NY program and funding for statewide agricultural programs was restored. These restorations and allocations are needed and deserved and could have been achieved without the painful tax hikes and irresponsible spending. While this is a budget for the next fiscal year, the cost to New York will go far beyond next 12 months. That is why I had to vote ‘no.'”
It also includes a requirement for every internet provider in New York to offer low-income families a $15-per-month plan.
— The Associated Press contributed to this report.