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Cuomo budget raises $1 billion in new taxes to pay for spending plans

ALBANY — Gov. Andrew M. Cuomo wants to spend above the rate inflation for education and health care, but make cuts in other areas, all while raising more than $1 billion in new revenues.

That would mean tax hikes on health insurers and freezing breaks for New Yorkers enrolled in the STAR property tax program.

In a relatively somber budget address Tuesday that contained few new spending initiatives, Cuomo said the state faces challenging fiscal times, brought about by lower-than-expected tax revenues and federal funding cuts. That has driven at least a $4.4 billion hole in the 2018 budget, he said, although some legislators said he was exaggerating that figure.

"This year is going to be challenging, my friends,'' Cuomo said in a speech to an audience that included state lawmakers.

Cuomo's budget speech lacked the rhetorical flourishes of many of his past fiscal presentations. One lawmaker heckled him, while others booed and hissed when he discussed his education priorities.

Some lawmakers said Cuomo, angling to keep his name in the list of potential 2020 White House challengers, is intentionally overstating the size of the fiscal problems facing New York as a way to ride to a political victory when the budget is passed later this spring. Or, in the words of Mid-Hudson Valley Republican Sen. John Bonacic, it’s all part of an effort “to make him look presidential.”

Before Cuomo returned to his office from a state museum theater where he unveiled his budget, his fiscal plan was coming attack from the left and right.  His school aid proposal was too little, some said, while his tax hikes were rejected out-of-hand by Republicans who control the Senate.

Cuomo turns to array of tax hikes to balance budget; Flanagan says 'No'

Cuomo repeatedly sought to portray a climate of fiscal gloom facing New York State. In an election year for himself and the Legislature, Cuomo acknowledged that there would be little appetite for negotiators to limit spending on state aid to public schools.

Cuomo proposed statute changes to address sexual harassment in workplaces and criminal justice ideas, including ending cash bail for some people charged with crimes.

And he called for the creation of a state panel to advise him on the possibility of legalizing marijuana for recreational use. Only a year ago, Cuomo ruled out such legalization of what he called a dangerous “gateway drug.” Cuomo did not specifically embrace a legalization, and said the advisory panel, which will include State Police representation, is meant to get at the "facts."

Cuomo considers legalizing recreational marijuana

The Cuomo administration, in one document released with the budget, described the 2018 fiscal plan like this: “Realizing the promise of progressive government.’’

The proposed budget freezes state aid to municipalities, gives a modest increase in funding for state university campuses and holds flat the amount that state agencies spend.

His budget punted on previously floated proposals to address restrictions on the deductibility of state and local taxes on federal taxes.

Cuomo will wait until he gets a preliminary report from his tax department — scheduled for release Wednesday — on whether to shift reliance on state income taxes to a new statewide payroll tax or to let taxpayers make donations to new state-run charities as a way to boost their federal deductions.

“We’re looking at all options,’’ Cuomo said.

Overall, the state’s budget will reach $168 billion, up from an estimated spending plan this year of $164 billion. The portion of the budget paid for largely by state taxpayers will rise 1.8 percent to $100 billion, according to one of the budget documents released this afternoon by the Cuomo administration.

Cuomo proposes a 3 percent increase in payments to 700 public school districts. State school aid will hit $26.4 billion under the Cuomo plan, an increase of $769 million. Of that, $338 million is dedicated to payments in Foundation Aid, which is the main account school districts tap to pay for operating costs. Nearly all school districts in Erie County  would see Foundation Aid increases of under 2 percent under the Cuomo plan.

The overall education number is considerably below the $1.6 billion that the Board of Regents and the state Department of Education sought. It is one of the areas of the Cuomo budget almost certain to grow once the Legislature completes its work. The budget is supposed to be approved no later than March 31.

Cuomo proposes 3 percent more for schools; education groups look for more

Senate Majority Leader John Flanagan, a Long Island Republican, called the 3 percent school funding hike “terrific.’’

But the GOP leader was not thrilled with other parts of the plan.

“I don’t like the revenue stuff,’’ Flanagan said of the $1 billion in various revenue raising ideas Cuomo floated.

Assembly Speaker Carl Heastie, a Bronx Democrat, called Cuomo’s overall plan “sobering’’ but added it also includes a number of “very Democratic” initiatives.

The Assembly leader has been among Cuomo’s most vocal allies on efforts for New York to try to end-run the new federal tax law and its limit on state and local taxes.

“To just sit and do nothing and have the federal government just continue to pick the pockets of New York State I think would be wrong,’’ Heastie said.

The state’s current budget is expected to end in the black, but part of the reason for that involves a skewing of numbers brought about by a rush of New Yorkers making state income tax payments in 2018 instead of waiting until their tax return filings by April 15. In all, the state said $1.9 billion came in 2017 by such pre-filing of state taxes.

Cuomo budget short on new economic development initiatives

Cuomo spent considerable time, as he has in many speeches in recent months, lashing out at Republican policies coming out of Washington, particularly on possible federal cuts especially in health care.

Much of the $4.4 billion deficit for the coming year Cuomo attributed to weaknesses in tax receipts.

Some lawmakers said that Cuomo’s deficit numbers are bloated. If state spending is kept below a 2 percent growth rate, then the more true deficit number is $1.7 billion, they said. The state’s own spending on health care is expected to grow 3.2 percent, or by $593 million.

While the governor depicted the state’s fiscal challenges as extraordinary, the actual budget document characterized the $4.4 billion deficit as “unremarkable’’ when compared with budgets during the Great Recession.

The financial plan also projected a slowdown in private sector job growth in New York to 1.3 percent in 2018, down from 1.4 percent from last year.

“Despite the pick-up in both national and global growth, New York State’s private sector labor market continued to decelerate in 2017,’’ the financial plan states.

Offering few details, Cuomo says he will continue funding free tuition plan

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