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Cuomo's $162 billion budget focuses on middle class

ALBANY – The 2017 state budget, facing a multi-billion dollar deficit, will still provide at least a 4 percent hike in state aid to public schools, free public college tuition for some New Yorkers and big borrowing for infrastructure projects, Gov. Andrew M. Cuomo proposed Tuesday.

Helping to pay for all the added spending: millionaires who will see the continuation of a two-year, $4 billion income tax surcharge on their New York earnings.

At the same time Cuomo proposed giving free public college tuition for some students, he also called for giving the State University of New York authority to raise tuition levels by $250 each year for the next five years. It comes after SUNY's tuition was raised 30 percent over a recent five-year period under what Cuomo and SUNY called a "rational" tuition policy that allowed students and parents to better prepare for rising college costs.

Those were among the details of Cuomo’s $162.2 billion state budget plan rolled out during the day not by the governor, but by lawmakers who revealed the details after private meetings with Cuomo at the governor’s mansion in Albany.

Cuomo did not publicly release his budget until after 8 p.m. on Tuesday – an unusual time that left lawmakers, lobbyists and staffers scratching their heads, wondering why he broke with a long tradition of governors releasing fiscal plans during daytime hours.

Lawmakers who were briefed by Cuomo said the governor was light on details. During a brief slide show, a group of spending initiatives were lumped together on one of the slides showing "Buffalo Billion II,'' but there was no information until much later that his budget this year seeks to appropriate $400 million of the $500 million he has proposed for the next phase.

The budget reveals the money will be spent over the next five years.

On Tuesday night, Cuomo said his budget is only in balance, and can only afford such things as a big education aid hike, if the state continues a surcharge on wealthy people.

"Our prime focus this year is addressing the problems of the middle class,'' Cuomo said.

Yet the Cuomo budget includes fee hikes on everything from new auto titles, prepaid cellular devices, cigars, some business real estate transfers, online purchases and e-cigarettes. Overall motor vehicle fee revenues are expected to climb by $50 million, or 28 percent, in the coming year. He also rejected requests by municipalities for increases in state aid.

The Cuomo budget projects a lackluster 1.5 percent growth in private sector jobs in 2017.

And, although Cuomo said the amount taxpayers will spend funding borrowings by the state is "flat,'' his budget shows debt service spending will rise by 4.8 percent.

Details that trickled out during the day included:

  • A $1 billion hike in aid to public schools. Details on how the money would be directed – favoring, for instance, poorer versus wealthier districts – were not given to lawmakers. The state is spending nearly $25 billion this year on public school funding. The amount is $40 million more than what school spending was already due to go up, by statute. District-by-district spending plans were not released until late Tuesday, showing Buffalo's basic formula state aid rising 2.8 percent.
  • Extending an income tax surcharge on millionaires. The Cuomo plan is an extension of existing tax rates on individuals making over $1 million and households making over $2 million. At the same time, Cuomo would continue a program that lowered middle class income tax rates for incomes between $40,000 and $300,000.
  • Legalizing ride-hailing upstate for companies like Uber and Lyft.
  • A combination of slowing revenues and higher-than-expected spending is creating what Senator Jeff Klein, a Bronx Democrat, said is a $3.5 billion state budget deficit.
  • Permission for all movie theaters to sell wine and beer but only to adults "holding tickets to movies rated PG-13 or higher."
  • Expanding high-speed tolls, or electronic tolling, to upstate portions of the Thruway, though Cuomo did not say where or when that would happen.

The Cuomo budget would also extend a tax break program – worth $420 million a year – for the film and television industries.

“I don’t think there’s a lot of stuff in there where everyone’s going to be like ‘Oh, my goodness,' ’’ said Senate Majority Leader John Flanagan, after emerging from a lunch where Cuomo served up some fiscal details.

The portion of the budget funded mostly by state taxes and fees totals about $99 billion, up 1.9 percent. Spending from all sources of revenues would rise 3.8 percent.

Flanagan,  a Suffolk County Republican, said Cuomo’s $1 billion education aid hike features a $500 million increase in Foundation Aid, the basic operating formula category for school funding.

Flanagan said he is pleased Cuomo is proposing such a large overall number to start the negotiations. It is, however, billions of dollars less than what some advocates, including Assembly Democrats, want in school aid funding to settle what they say schools are owed from a 2007 court case.

Klein, who leads the seven-member Independent Democratic Conference, said Cuomo is proposing a “more austere budget than in the past because we have a $3.5 billion deficit.’’

The overall state-funded portion of the budget will remain below a 2 percent spending cap, though funding for its two largest portions of the budget – education and Medicaid – will grow 4 percent, Klein said.

Klein, whose group met with Cuomo and Senate Republicans, called it a “very interactive type of presentation.’’ He said many of the Cuomo ideas, including a college affordability proposal and a “Buy American” plan for state contracts, came from his independent group.

Klein said Cuomo touched on efforts to have the state pay for legal services for poor people charged in criminal cases, a program now funded by counties at more than $400 million a year. Klein said most lawmakers want to have the state pay for those rising legal services costs.

“But it doesn’t seem to be economically feasible,’’ he said after his meeting with Cuomo.

Though Republicans in Washington are pressing to repeal the Affordable Care Act, Klein said Cuomo’s budget does not assume a loss in funding for the state to help pay for the program’s costs in New York. “We really don’t know yet. We don’t know if they’re going to delay or repeal it,’’ Klein said.

The health insurance program and infrastructure spending will be discussed by President-elect Donald J. Trump during a private meeting Wednesday with Cuomo. Trump has pushed repeal of the Obamacare program and is set to announce a major federal infrastructure plan after he is sworn in as president this week.

The way the budget rolled out Tuesday afternoon – from lawmakers and not Cuomo’s office – serves as a sharp break from the way governors usually release budgets to the public.

Previous governors usually released plans in the morning, giving the public, reporters, lawmakers and watchdog groups a full day to go through spending and tax proposals.

Gov. George E. Pataki went so far as to run a "budget school,'' which gave reporters access to specialists in his budget office.

Susan Lerner, executive director of New York Common Cause, said she is "dismayed" about how Cuomo decided to make the budget available for the public.

Tuesday was the legal deadline for Cuomo to present his budget.

By mid-day, the Cuomo administration sought to get reporters to attend a private briefing with the governor at 2:30 p.m., but news outlets would have had to agree to withhold publication or broadcast about the session until 7 p.m. A group representing reporters who cover the Capitol rejected the idea.

Senate Republicans – along with their allies, the Independent Democratic Conference and one Democrat from Brooklyn – got the first private briefing at lunch.

Doing so privately was a safe way for Cuomo to meet with lawmakers, given the sour relations between the executive and legislative branches.

For Cuomo, it was a roundabout way – even if unintended – to mend fences. Lawmakers have been angered over the years if they do not get budget details before the plans are made public.

Still, a planned briefing for Assembly Democrats – which delayed the public release of the budget until after 8 p.m. – got scrubbed because the chamber's session ran long.

Sources inside the government described a messy situation Tuesday, with Cuomo's advisers still making last-minute changes to the budget during the day.

The budget will have to show what fiscal watchdog Citizens Budget Commission estimated was more than $15 billion worth of spending that Cuomo floated in his State of the State speeches last week. Cuomo sought to portray his spending ideas as an austerity budget.

Cuomo wants to spend $1.3 billion this year on economic development grants. He defended major projects that have been scuttled as part of the normal ebb and flow of economic development programs.

He did note, however, the delays in some projects because of the federal prosecution of eight individuals, including people close to Cuomo, in a pay-to-play scandal that is alleged to have occurred in programs from the Buffalo Billion to a project in Syracuse.

[What's in the Buffalo Billion Part 2]

[Cuomo seeks free SUNY tuition for those making under $125,000]

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