Gov. Andrew Cuomo and his budget director are hoping for $15 billion in federal aid from the Biden Administration by April 1 in order to avoid higher taxes and service cuts in the fiscal year 2022 budget, which was unveiled on Jan. 19.
Cuomo and Budget Director Robert Mujica essentially prepared two budgets — one that assumes $15 billion in “fair funding” from Washington, and another that assumes $6 billion in aid under a “worst case scenario.”
Cuomo said getting $6 billion in federal aid would be the 2021 equivalent of President Gerald Ford telling New York to “drop dead” during New York City’s 1975 financial crisis.
“If the federal government doesn’t fund state and local governments it’s going to hurt all New Yorkers,” said Cuomo during his budget presentation on Tuesday. “It doesn’t help if the federal government gives with one hand and then takes away with the other.”
Biden’s current relief package proposal sets aside $350 billion to assist state and local governments across the country which bore the brunt of the costs associated with the pandemic – from purchasing masks and ventilators to dealing with lost sales taxes and other revenues from shutdowns.
“The budget is about reconciling the actions and the costs for the COVID battle thus far and determining now fiscal liability and responsibility,” said Cuomo. “We did what we had to do last year. When the battle begins your response is almost instinctive. People rise to the occasion and do what they have to do.
“Now the bill for the battle has come due and the question is, who is responsible for the fiscal liability and responsibility?”
Gov. Cuomo stressed the need for the federal government to provide $15 billion of President Joe Biden’s proposed $1.9 trillion COVID relief package to New York to ensure a successful recovery, and not the $6 billion that the state is currently planning on receiving.
“We don’t know, in short, what level of aid we will get. The budget is dependent on that number. What we’ve done with this budget is we’ve constructed it under two options. One, New York State receives $6 billion from the $350 billion. Two, New York State receives $15 billion from the $350 billion. We constructed the budget with contingent federal appropriations. Contingent on that appropriation from the federal government. Then we have two scenarios.”
As drafted, without knowing how much federal assistance New York will receive from Washington, the state’s “All Funds” budget for the next fiscal year currently stands at $192.9 billion, with the state funds portion standing at $103.4 billion.
COVID reconstruction is a big part of the new budget. Cuomo is looking to advance telehealth services, expand testing capacity, continue the COVID response and vaccine distribution as well as create a New York Public Health Corps.
The budget also includes a $100 million program to eliminate healthcare co-payments for low-income residents and $40 million to launch a New York State Infectious Diseases Resiliency Commercialization Fund to fast track innovations in technologies to combat infectious diseases.
The governor also plans to put aside $130 million in the form of a tax credit for smaller businesses in the restaurant, arts and entertainment and theatre industries that have been hit especially hard by the pandemic.
“The story of COVID has many chapters – we launched the battle last year and now we must not only finish it, but begin an aggressive post-COVID reconstruction,” said Cuomo. “We are in a different time and a different world than just one year ago and we shouldn’t be surprised that this budget will look different. We have a plan in place, a strength that we have not had before and I believe our future is bright, but Washington must act fairly if we are to emerge on the other side of this crisis.”
With the “fair funding,” as Cuomo put it, of $15 billion, New York is looking to advance a $306 billion infrastructure plan and provide $29 billion in green investments as well as restore reductions in various social services and programs, continue to support Medicaid for 1.6 million New Yorkers and institute a $15 cap on broadband internet access for low-income families.
Regardless of how much federal aid is received, it seems Gov. Cuomo is counting on revenue from mobile sports betting and the legalization of cannabis, which is calculated to bring in a combined $800 million.
Under the “worst case scenario” of receiving $6 billion in aid, funding for schools could be cut by $2 billion while Medicaid services could be cut by $600 million. This would also include 5% cuts across the board for all services and local governments which could amount to $900 million.
Cuomo also discussed a possible tax increase for the highest earners if New York does not receive the larger relief. The tax hike would increase the top rate from 8.82% to 10.86%, but would only raise $1.5 billion. If the state receives $15 billion in federal funding, no tax increases would be necessary.
Cuomo concluded by threatening litigation if the state’s funding demand was not met. Cuomo stated that the current fiscal crisis is Washington’s liability and that federal negligence was the cause of the spread and damage done by the COVID-19 pandemic, noting that three million travelers brought COVID from Europe to New York.
“New York has been assaulted by the federal government in multiple ways and there’s a cost to that also that has come due,” said Cuomo, summarizing that the state has been used as a “political piñata.”