Lawmakers react to spending limits set by State Comptroller
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The state Comptroller came out with revenue projections that will limit the ability to spend more money in the state budget. Under the law, the governor and legislature have to abide by those numbers, but that hasn’t stopped interest groups, and some lawmakers, from saying that they will increase spending.   

Comptroller Tom DiNapoli issued his report on state revenues after the governor and legislature failed to agree on their own estimates by the March 1 deadline. The Senate and Assembly said there is around half a billion more dollars available in revenues than the governor predicts, to spend on programs like education and health care.  DiNapoli, in a letter to lawmakers, essentially split the difference between the legislature and the governor, determining that the state has $190 million more dollars than Cuomo originally estimated.

The governor’s budget director, Robert Mujica, immediately said the extra money should be saved in the state’s rainy day fund because economists are warning of a downturn later next year.  

The budget watchdog group Citizens Budget Commission, says that’s a wise idea. The group’s David   Friedfel says given the economic instabilities, lawmakers should go even further.

“What they could do, which would be an even better idea is to curtail spending even more,” Friedfel said. “And deposit those extra funds into the rainy day reserves as well.”

But he admits that would be difficult in the current political climate. Numerous advocacy groups and many Democratic lawmakers, who are in control of both houses of the legislature for the first time in years, want to give at least one billion dollars more in funds to public schools, and the state and city university systems.

Assemblyman Harvey Epstein, who was at a press conference, along with other lawmakers and education funding advocates, says legislators will need to find a way to help schools, even within the current spending constraints.

“We can agree on the income number based on existing tax structure, but that doesn’t mean we’re stuck with any formula going forward,” Epstein said. “We have opportunities to raise taxes, to change the tax structure, there are lots of people who can afford to pay more.”

The state already imposes an income tax surcharge on those making over a million dollars a year.  Epstein is among a number of Democratic lawmakers who support creating additional, higher income tax brackets for those making over $10 million dollars, $100 million dollars, and a billion dollars a year.

Friedfel, with Citizens Budget Commission, says it’s risky, though, in an economic downturn, to bank on the wealthiest taxpayers to bail the state out.

“Very wealthy people also have very volatile incomes,” he said. “So when you do face a recession or even a slowdown those people’s incomes decline very rapidly and significantly and then the state has a commensurate decrease in tax revenues.”  

He says lawmakers who relied on those taxes in the last recession of 2008 and 2009 were forced to slash school funding by $10 billion dollars over the following six years.

Other lawmakers say they can find money by reducing some of the governor’s spending programs. Assemblywoman Deborah Glick, Chair of the Higher Education Committee, says there’s money in the governor’s economic development budget could be shifted to shore up the state and city public university systems. She says that’s a better use of economic development funds.

“I would like the governor to finally recognize that the reason big companies are attracted to New York are because of its people,” said Glick. “And the way you invest in the future is to invest in your student body.”

Late in the day, the leader of the Senate Democrats, Andrea Stewart-Cousins, addressed the revenue numbers. Stewart-Cousins saying Senate Democrats “can live with” the estimates.

“We are obviously going to work within the fiscal realities of the state,” Stewart-Cousins said.

But she would not say whether she agrees with the governor’s budget director that the additional $190 million dollars should be saved in a rainy day fund, saying it will all be part of budget talks taking place over the next few weeks.