Now that the state has enacted its biggest personal income tax cut since the mid-1990s, a prime task facing Governor Andrew Cuomo and the Legislature next year will be figuring out how to accommodate the tax cut in future budgets.
The change from a credit to a rebate check is more aimed at helping the state's ledger to pay for new spending in the state budget, such as a $1 billion income-tax cut, said E.J. McMahon, president of the Empire Center, an Albany-based conservative think tank.
"Every year, it’s actually going to steadily erode the apparent cost of STAR because every year, as houses change hands, more and more of STAR will shift from the spending side to the revenue side of the budget," he said.
The state budget will fund other projects that members of the Legislature undoubtedly will tout at some point. The Empire Center, a fiscally conservative Albany think tank, highlighted on Friday a $385 million increase to the State and Municipal Facilities Program, a pot of general capital project funding that is derided by critics as being opaque and overly broad in terms of the types of projects can be funded.
"When you say what's the local impact? My answer is I have no idea," the Empire Center's E.J. McMahon said. "It's not programmed. It's capital pork."
The budget adopted by New York’s Legislature last week was described by Gov. Cuomo as “the best plan that the state has produced . . . in decades, literally.”
If this is truly the “best” New York can do, we’re in even more trouble than we thought.
E.J. McMahon, director of the conservative think tank Empire Center for Public Policy, criticized the budget for pledging millions in discretionary funds, something he called “one of the many deals reached behind closed doors.”
Critics complained of a “slush fund” for pols’ favored projects.
“The program is essentially a $1.5 billion credit card that lawmakers and the governor use to pay for pet projects,” said Ken Girardin, policy analyst for the Empire Center, a government watchdog.
New York's budget for fiscal 2017 includes the state's biggest and broadest personal income tax cut since the mid-1990s.
Equally significant, the income tax section (Part TT) of the budget's revenue bill decouples the previously temporary cuts in middle-income brackets, which will now be expanded and extended permanently, from the state's "millionaire tax," which is still due to expire at the end of 2017.
The new state budget will fund a 35 percent expansion of a murky $1.1 billion pork-barrel slush fund controlled by Governor Andrew Cuomo and state lawmakers.