Millions of New Yorkers should expect a tax break, thanks to the upcoming state budget, but it is unclear how the state will use billions in increased tax revenue this year.
Any large spending increases will depend in part on the fine print in Governor Kathy Hochul’s budget proposal, which is due Jan. 18. And lawmakers will negotiate with Hochul, who is running for election, as they work to pass a one-year budget by April.
Tax revenue is coming in much higher than expected, to the tune of $ 7.1 billion through September alone. Governor Hochul’s budget plan will reveal whether revenues have continued to rise this winter.
Sen. Liz Krueger, who chairs the Senate finance committee, said the increase is due in part to former Gov. Andrew Cuomo’s strategy of “deliberately underestimating revenue” and then bragging about additional funds.
And New York’s economy is recovering, albeit at a slower rate than the nation’s. The statewide unemployment rate fell to 6.6% in November, down from 8.4% in November 2020.
Last year, New York also raised taxes on large businesses and high-income individuals, with plans to boost funding for K-12 education.
“We will have money to dedicate to important priorities,” said Deputy Senate Majority Leader Michael Gianaris, who noted that housing and higher education are high priorities. “It’s just a question of how it is divided.”
Hochul, a moderate Democrat, faces pressure in budget negotiations from the more liberal wing of her party ahead of the June primaries.
State Comptroller Tom DiNapoli, Democrat, and fiscal watchdog groups urge New York to set aside money to prepare for another economic catastrophe and the eventual expiration of COVID-19 relief funds.
Meanwhile, liberal advocacy groups are asking for billions more in spending to help communities reeling from the pandemic, including for workers living in the country illegally and did not qualify for federal aid and universal child care. . Senate Leader Andrea Stewart-Cousins has made universal child care one of her top goals this year.
But Hochul’s state of the state speech on Wednesday failed to mention billions in funding for such spending priorities.
Hochul said the state could spend $ 75 million to expand access to child care, absent an increase in federal funding.
That’s not enough to fully fund universal child care, Krueger noted.
And advocates for workers living illegally in the U.S. and lacking federal help for the coronavirus slammed the governor for excluding mention of her push to add $ 3 billion to the state’s Excluded Workers Fund, which quickly it used up $ 2.1 billion in state funding this fall.
“If Governor Hochul really wants to make history, she will make New York the first state in the country to open the safety net to excluded workers, forever,” said Bianca Guerrero, coordinator of the Excluded Workers Fund coalition.
This week, Hochul outlined plans to spend billions over the next several years to increase the healthcare workforce by 20%, increase offshore wind and electric infrastructure, build thousands of new affordable housing units, and expand aid for the tuition for part-time students.
Your budget proposal will specify how much spending will increase in this year’s budget alone and whether all that money will come from the federal government, the state, or the private sector.
For example, Hochul launched a new subway from Brooklyn through Queens to the Bronx, something that supporters have pushed for decades. But Krueger pointed out that the Metropolitan Transit Authority is in crisis due to inadequate financing of capital costs.
“I’m not going to tell you that that’s not a big deal,” Krueger said. “I’m going to guarantee that it’s an incredibly expensive thing to do.”
Republicans and Democrats seem to agree with Hochul’s proposals to speed up the schedule of tax cuts scheduled for the middle class and offer property tax refunds.
Assemblyman Ed Ra, a Long Island Republican and a senior minority member of the House Ways and Means Committee, said the tax break will help New Yorkers cope with rising inflation. He also asked lawmakers to consider cutting spending on economic development programs that don’t create the jobs promised.
Hochul and lawmakers can consider other ways to help the hardest hit New Yorkers, including business owners facing rising unemployment taxes. New York owed the federal government $ 9 billion in unemployment insurance loans as of September.
Krueger said lawmakers are working on legislation to delay an upcoming unemployment tax hike and increase how much New York pays in unemployment.
Another key issue is that billions in federal pandemic relief funds have helped New York balance its budget, but that money will expire in a few years.
That means New York should prepare for a potential $ 3.5 billion budget hole in 2025, according to the nonpartisan Citizens Budget Commission.
“What sits above all is the continued risk of, what if the recovery doesn’t continue apace and there is another economic shock?” said Patrick Orecki, director of state studies for the nonprofit organization
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