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Cuomo will raise $1 billion in 'revenue actions' for 'challenging' 2018 budget

ALBANY – Gov. Andrew M. Cuomo is slowing down spending in some areas of the proposed 2018 New York State budget, while turning to $1 billion in “revenue actions,’’ including tax hikes on health insurers and freezing breaks given to New Yorkers enrolled in the STAR property tax program.

Cuomo this afternoon also 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 effort, and said the advisory group, which will include State Police representation, is meant to get a the "facts" of the issue.

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

"This year is going to be challenging, my friends,'' Cuomo said in a speech unveiling his budget plan at a state museum near the Capitol.

The budget also punts on Cuomo’s two ideas previously unveiled to help some higher income taxpayers deal with new restrictions on the deductibility of state and local taxes on federal taxes.

Cuomo will wait until he gets a report from his tax department -- set to be released 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.

Cuomo made clear, though, that his administration will move ahead with at least one of the ideas to change the state's tax code to help some New Yorkers circumvent the intention of the new federal tax law. "We change it in a way that thwarts their attack,'' Cuomo said of Washington.

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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 tapped by schools to pay for operating costs.

The overall education number is considerably below the $1.6 billion 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 consideration of his proposals.

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The budget is due March 31. The state’s current budget is expected to end in the black, but part of that is due to a skewing of numbers brought about by a rush of New Yorkers who made 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 spends much of his time in the document characterizing his budget blaming the federal government for Albany’s fiscal problems. The deficit for the coming year is projected at $4.4 billion, which Cuomo attributes to weaknesses in tax receipts. Another $2 billion is at risk because of possible federal cuts, particularly in health care.

The state’s own spending on health care is expected to grow 3.2 percent, or by $593 million.

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Here Cuomo's proposals to raise revenues:

  • A state effort that will presumably encourage the conversion or acquisition of not-for-profit health insurance companies into for-profit companies, $500 million annually over the next four years.
  • Tapping $702 million from “new” legal settlements between the state and various corporations.
  • Creating a new tax on opioid drug sales, which is expected to total $171 million, which Cuomo said will be used to help fund anti-addiction efforts.
  • Maintain STAR property tax benefits at current levels, instead of proceeding with an expected 2 percent increase, deferral of most business tax credits through 2020 and another try at an “internet fairness conformity tax” on third party sales over the internet, such as through Amazon.
  • New inspection fees on privately operated passenger carriers, such as motor coaches, expanded tax enforcement efforts, and new consumer costs on prescription drugs by those enrolled in the American Indian Health Plan.
  • Creation of a new prelicensing course for people to get a driver's license, and by charging users $8 as a way to raise an expected $900,000.
  • Slapping a 14 percent surcharge on underwriting gains from health insurance policies. Health insurers got a 40 percent tax cut windfall under the new federal tax law while Washington is shifting more health care costs onto states like New York, he said.

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Various ideas he already floated in his recent State of the State are contained in the budget, such as relaxing bail requirements for some people accused of crimes and instituting cashless tolling throughout the state Thruway Authority system.

While the governor has sought to depict the state’s fiscal challenges as extraordinary, the actual budget document released this afternoon characterized the $4.4 billion deficit as “unremarkable’’ when compared with red ink budgets during the Great Recession.

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