Cuomo proposes new taxes, tax restructuring in new budget
Governor Andrew Cuomo unveiled a $168 billion dollar budget plan that would close an over $4 billion dollar gap by reducing some spending and imposing tax increases on health insurers, big businesses, and prescription opioid users, among others. Cuomo says he also wants to look into legalizing marijuana in New York.
“This is going to be challenging, my friends,” Cuomo told lawmakers gathered at the state museum for the budget presentation.
He says he’s holding the line on state agency spending, and he’s eyeing additional revenues by taxing health insurance plans and deferring corporate tax credits. He says both received big tax breaks in the federal tax overhaul, so can afford it. Cuomo also wants to impose a fee on prescription opioid drugs, and products related to electronic cigarettes, and make a better effort to collect sales taxes on products purchased online.
Cuomo would also close the carried interest loophole, which benefits hedge funds, but only if neighboring states of New Jersey and Connecticut also change their laws. And he’d reign in increases planned for the property tax rebate program known as STAR. The governor says the budget gap, combined with uncertainties in funding from Washington, leaves him with little choice than to raise some taxes.
“You can’t possibly get anywhere near where you want to be on education and health care unless you raise revenues,” Cuomo said. “It’s just too big a deficit.”
Cuomo is proposing a $769 million dollar increase for school aid, about half of the increase schools received last year. He is not making any cuts to health care, but his budget does assume that President Trump and Congress will eventually refund the Child Health Plus program as well as the Disproportionate Share Hospital program. The two programs have been held up in wrangling over the federal budget.
The governor is also relying on some one time revenues from bank settlements after the financial crisis, to pay for improving the New York City subways, funding hospitals, and other healthcare providers, and paying for some day to day state operating expenses.
Cuomo also outlined plans to deal with the federal tax changes that result in the loss of the state and local tax deductions, which hits New York and other relatively high tax states hard. He says a study will be released soon that explores converting the state income tax to a payroll tax and substituting charitable donations for local property taxes.
“We’re doing everything we can to thwart the effects of the federal plan,” the governor said.
The governor’s presentation was interrupted briefly by Assemblyman Charles Barron, who heckled the governor for the second time since 2016. Barron shouted that more money is needed for schools in poor neighborhoods.
Cuomo asked Barron to “listen” to the presentation first, and then offer his views.
Barron was escorted from the auditorium, as other lawmakers applauded to drown him out.
Others who disagreed with some of the governor’s proposals expressed themselves in a more polite manner.
Senate Deputy Majority Leader John DeFrancisco, who is considering a run for governor against Cuomo, says the governor spent too much time making the federal government “the whipping boy” for the state’s problems, and he called the payroll tax proposal a “gimmick”.
“There’s another concept, and that is cut spending and cut taxes,” DeFrancisco said. “That was the problem even before the federal tax code was changed.”
The State’s Education Commissioner, Mary Ellen Elia says she knows it’s a tough year, but is disappointed that Cuomo did not agree with the State Board of Regents recommendation to add $1.6 billion in funding for schools.
“I am concerned about the governor’s budget, there’s no question,” Elia said. “The issue is, how do we work together to address what’s necessary for our students.”
Governor Cuomo is also, for the first time, proposing a study on making marijuana legal in New York. Cuomo has previously backed only a limited medical marijuana program.