As the state's April 1st budget deadline approaches, here's one word to note for lawmaker and Governor Andrew Cuomo: balance.
Yes, we all want a balanced budget. However, there is more to a balanced spending plan than just matching the income and expenditure sides of the general ledger. The budget is also about setting priorities. That includes deciding whose back is balanced on a difficult budget like this one.
Mr Cuomo's approach so far has not always been encouraging. He has warned schools of cuts of up to 20 percent, and nonprofits that provide services to people with intellectual and developmental disabilities say the state cut them $ 400 million in supplies to be given during the pandemic.
Schools, local governments, and other agencies in need of state aid fear New Yorkers will only try to get the $ 1.9 trillion money they are supposed to receive under the US $ 1.9 trillion bailout deduct their state allocations. Congress attempted to short-circuit this type of shell game by including provisions in legislation to ensure that government aid to schools complements, rather than replaces, government funding. Heads of state should not look for loopholes to circumvent the spirit of the law.
Mr Cuomo was not particularly reassuring on this point and said if it was only about cuts he would see how the budget negotiations go and how the entire state is being made out of its own financial constraints. He said the state had a deficit of around $ 15 billion between the current budget and the next. The stimulus / aid bill included $ 12.5 billion for the New York state government.
It is important for the governor and lawmaker to remember that schools, local governments and nonprofits are also facing extraordinary costs due to the pandemic. Local governments have lost sales tax revenues and could experience wealth tax losses in the coming years if businesses fail to recover and commercial property values rise. The extra money they will receive from the federal government can not only help them resolve their budget problems now and later, but should also enable them to make wise investments in their communities that will accelerate their own recovery.
If the state still does not have enough money for the coming year, it shouldn't try to pass the bill on to all the schools, local governments, and service providers that depend on it for support. As some lawmakers and stakeholders have noted, the state government has a lot more flexibility in increasing revenue – for example, increasing taxes on the ultra-rich, who have done reasonably well in this crisis. Levying taxes on luxury homes; and to levy a small tax on stock transfers that has been on the books for a century, grossing billions alone and more than closing the budget gap.
If you are bothered by raising taxes on the rich or on a booming stock market, consider the alternative. Local governments only have regressive options – increasing property and sales taxes. Schools are limited to property taxes, and even these are limited under state law. Non-profit organizations have few options for reducing staff and services.
When heads of state are trying to finalize a budget, they should strike a balance between getting the numbers right and ensuring a quality of life in New York where all residents can thrive.