With the national election results still unclear, Governor Cuomo can no longer put off tough decisions on how to balance New York’s pandemic-ravaged state budget.
Believing most national polls, Cuomo was banking on Joe Biden to win the White House and Democrats to take over the U.S. Senate, which was likely to produce another stimulus bill offering New York enough new federal aid to close its current budget gap of at least $8 billion and next year’s projected budget gap of nearly $17 billion.
But in the wake of yesterday’s election, it appears the Senate majority could remain under Republican control. The outcome of a few Senate races, including one or two Georgia runoffs in January, ultimately will be even more important to Cuomo’s budget bailout hopes than the presidential race. Even if Biden ekes out a win, prospects for a big state and local bailout bill are slim if Democrats don’t control a majority in the upper house.
Senate Republicans, not President Trump, were the main obstacle to passage of a stimulus bill building on the CARES Act passed by Congress in March. In fact, as recently as mid-October, Treasury Secretary Steve Mnuchin reportedly had negotiated a deal with House Speaker Nancy Pelosi that would have included $300 billion in state and local aid, of which New York’s share would have been in the neighborhood of $10 to $15 billion. But Senate Republicans by that point were standing firm against providing any new state and local aid on top of the CARES Act’s $150 billion state and local coronavirus relief fund and $31 billion in education aid.
If Trump is re-elected, the status quo is preserved. If Biden ekes out a win, he and House Speaker Nancy Pelosi will have to squeeze a smaller aid package out of Majority Leader Mitch McConnell as part of any deal including the Republicans’ priorities, especially a liability shield protecting employers from COVID-19 exposure claims. Last week, McConnell reportedly said another stimulus bill should be considered early next year.*
*UPDATE: In a post-election news conference today, McConnell said he now favors passage of another coronavirus relief package before the end of this year.
At the bottom of the stimulus food chain, as Manhattan Institute’s Nicole Gelinas points out this morning, is the financially battered, Cuomo-controlled Metropolitan Transportation Authority (MTA), which says it needs roughly $12 billion to avoid enormous layoffs and service cuts starting at the end of the year. If Republicans maintain control of the U.S. Senate, mass transit agencies in general—and the MTA in particular—can expect minimal additional federal assistance, adding to Cuomo’s budget headaches at the state level.
Meanwhile, in New York, it appears Democrats failed to pick up the net two seats they needed to control a 42-member supermajority of the 63-member state Senate, which would have positioned both houses of the Legislature to over-ride any Cuomo budget vetoes starting next year. Depending on absentee ballot counts, Republicans may have recaptured up to four or five Senate seats, which would reduce the Democratic majority to 36-27 and ease the pressure on Cuomo to pay attention to a progressive agenda including single-payer health care and massive soak-the-rich tax hikes.
*UPDATE: Moreover, Assembly Republicans may have captured a net 11 added seats, including that of longtime Assemblyman Stephen Engelbright, D-Brookhaven, chair of the Environmental Conservation Committee. If this number holds, Republicans will have easily broken the Democratic supermajority in the Assembly.
** UPDATE: The initial apparent Republicans gains were based on in-person Election Day totals, but the final net GOP gain is expected to be much smaller, perhaps two or three, large numbers of absentee ballots in reach race are counted. In short, the Assembly Democrats’ longtime supermajority in the 150-member chamber is still secure.
How Cuomo will handle this situation remains unclear. For now, all we have to go on is Budget Director Robert Mujica’s statement last Friday:
“The Federal government must live up to promises that funding will be provided to states. The only alternatives to federal funding are spending reductions – a devastating impact on schools, hospitals, police and fire departments, along with other critical services – long-term debt and revenue raisers that may impact our competitiveness and weaken New York State’s ability to lead the national economic recovery as producer of 8% of national GDP.”
In reality, no funding “promises” were made by Republicans in Washington—and if Mitch McConnell still has any decisive say in the matter, New York will be fortunate to receive any significant budgetary relief from the next stimulus bill.
This much is clear: every month of added delay by Cuomo in mapping out a clear plan for actually reducing the budget gap will only make the problem even larger in the long run.