Cuomo aims to close $6.1 billion deficit; $178.6B budget plan seeks to overhaul Medicaid, rejects tax hike on wealthy

| The Buffalo News

Tom Precious

ALBANY – The state will invest in new capital programs, expand education and Medicaid by 3% apiece, and offer free public college tuition to more families – all while closing a $6.1 billion deficit that is the state’s worst in 10 years, Gov. Andrew M. Cuomo proposed Tuesday in his 2021 budget plan.

How, precisely, the deficit will be erased is being partly punted down the road.

The governor’s budget, for instance, delays to this spring explaining how $2.5 billion will be cut from a $4 billion deficit in the state’s Medicaid health insurance program; those recommendations will come later from a private panel led by a hospital executive and union leader.

Important for local property taxpayers, Cuomo railed against rising costs of Medicaid that were once borne by counties.

He said the state’s expenses have soared in six years since taking over the share of annual increases in the insurance program for seniors, low-income people and disabled individuals.

Cuomo’s plan “renews our partnership with local governments” on Medicaid but, he said, it will also hold them harmless against Medicaid cost increases.

“We’re going to have to make structural changes to this program,” Cuomo said.

One plan he wants: force counties to pay a higher Medicaid share if the program’s spending rises locally by more than 3% in a year.

Counties argue they have little control over the big increases associated with soaring Medicaid costs, such as state-imposed minimum wage hikes for health care workers.

The New York State Association of Counties said Tuesday that localities already pay $7.6 billion annually for Medicaid, which insures one-third of New Yorkers; it said it would work with Cuomo to find savings in the program.

Senate Majority Leader Andrea Stewart-Cousins, a Westchester County Democrat, said lawmakers are going to want to have a say in how Medicaid savings are achieved.

“There’s no way we won’t be involved. It’s extremely important, obviously,” she said.

Cuomo’s budget includes a host of previously announced items, such as a plan for a $3 billion bond act to fund various environmentally related items.

It would need voters’ approval in November.

The governor said his plan includes no tax increases, but it does contain about $51 million this year – doubling by next year – in a host of various fee and tax boosts.

Wealth tax rejected Cuomo has faced growing pressure from the left to avoid spending cuts and instead change state laws, including tax and economic development programs, that they say have favored wealthy people and corporations that don’t need tax incentives to do business in New York.

More than 50 organizations, including advocates for the homeless, religious groups and union-funded alliances, Tuesday urged Cuomo to raise income and real estate taxes on those making over $5 million annually.

“What he doesn’t address is our upside-down tax system and our worse in the nation income inequality,” said Ron Deutsch, executive director of the Fiscal Policy Institute, an advocacy group whose funding sources include unions.

Bail law

The 2020/21 budget proposal – for the fiscal year commencing April 1 – puts off possible solutions or changes to a new cashless bail law that is dividing moderate and liberal Democrats. Democrats control both legislative houses.

The law was passed last year, with Cuomo’s backing, as a way to bring what advocates say is a more fair system for low-income people when they are arrested for misdemeanor and certain nonviolent felonies.

But critics, led by GOP lawmakers and law enforcement officials, say the new statute has resulted in dangerous criminals being let out of jail without having to post bail.

“We need to respond to the facts and not the politics,” Cuomo said of what he said will be talks in the budget process over the bail law.

Hodgepodge of ideas

The $178.6 billion budget – $105.8 billion in the portion paid for by taxpayers – is down from the projected $185 billion it would have grown to had prior spending promises not been amended.

The Cuomo plan:

· Calls for legalizing the cultivation, sales and use of marijuana for adults over the age of 21. It would also create a tax on the products that experts say could keep the drug’s users going to the cheaper, illicit marijuana market.

· Legalizes e-scooters and e-bikes, along with Lyft-like sharing services for the devices. New safety rules would be imposed.

· Cuts payments to communities that host video lottery terminal casinos, such as those in Hamburg and Batavia. The Cuomo budget does not envision any new commercial casinos to the four upstate ones already approved in 2014; it also does not seek to legalize online sports gambling, which is now limited to in-person bets at commercial and Native American casinos.

It does seek to expand outlets offering Lottery’s Quick Draw, derided by gambling treatment experts as especially addictive, a plan worth $45 million to the state the next two years.

School aid The Cuomo plan seeks a state aid hike to the state’s 700 school districts by $826 million, up 3% but down from the 2019 growth level and far below what education officials say is needed for the coming school year.

The Foundation Aid component, which is the major funding pot that goes to school district operating budgets, will total $704 million under Cuomo’s new plan.

The school funding plan will be a major fight in Albany. A top Wall Street rating agency just Monday said that a new property tax levy cap that districts will have to live by in 2020 is a “credit negative” for districts because it reduces the opportunities to raise revenues.

Cuomo said education and Medicaid spending will both rise 3% in the coming year.

“There will be balance between Medicaid and education. They both are essential services,” he said.

The governor’s budget also keeps intact a $420 million tax incentive effort for film and television companies, which he wants to extend through 2025, but no longer makes “variety” shows qualified for the tax breaks.

Another Cuomo initiative not changing is the $750 million the state provides to 10 regional councils for local economic development projects.

The budget envisions a small drop – 1,000 – in the number of executive branch employees now at 119,000 workers.

Fiscal spin

The governor, as he has in the past, talked of running the most transparent government.

But fiscal watchdogs didn’t see it that way. E.J. McMahon of the Empire Center for Public Policy, one of the fiscal monitoring groups at the Capitol Tuesday, said the Cuomo administration’s leisurely way of releasing budget documents – including key pieces of legislation needed to pass to make up the fiscal plan’s specifics – was a show of “contempt for the public, the taxpayers and the Legislature. Every year this process gets murkier and less transparent.”

The proposal’s transit component concentrates mainly on downstate’s giant Metropolitan Transportation Authority.

But for non-MTA systems, it provides $236 million in operating support for upstate transit, a 4% increase.

It provides non-MTA transit systems with an additional $20 million in capital assistance this year, the first year of a $100 million five-year program to aid local transit agencies in the transition to electric buses.

The state proposes that five of the largest upstate and suburban transit authorities electrify 25% of their fleets by 2025 and 100% by 2035.

Total non-MTA transit capital assistance is proposed at $124.5 million.

Kimberley A. Minkel, executive director of the Niagara Frontier Transportation Authority, noted the state’s “continued support and investment,” but also pointed to pressing needs.

“Like all transit systems in the nation we are challenged with an aging infrastructure and increased demand for fixed route and paratransit service that continues to stress our system. As is the case each year, we recognize the governor’s budget is simply the starting point of the budget process. We look forward to working with the Governor and members of both the Senate and Assembly in finalizing a budget that addresses this priority and Western New York’s needs.”

The budget proposal provides a tax cut to some small businesses.

It also “enhances” the state tax credit for people with children, but one budget document released Tuesday shows it not costing the state any additional money this year or next.

Taxes will rise on tobacco companies, and $28 million will be raised by capping certain long-term care insurance credits.

The budget banks on $20 million this year, and $63 million next year, by the plan to legalize marijuana sales; lawmakers say it will take 18 months to get the program up and running – if the drug is made legal this year.

As always, through Democratic and Republican administrations, the plan envisions dipping into off-budget accounts to fund ideas promoted by the governor.

The biggest so far: $300 million from the New York Power Authority to finance improvements along the Erie Canal.

The Buffalo News