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With big spending cuts eyed, lawmakers head back to Albany for fiscal dealmaking

ALBANY – A state of confusion has engulfed talks over creation of a new state budget, due this week, as officials sent conflicting signals Sunday over how much federal aid may be coming New York’s way to help with the downward spiral of tax revenues needed to pay for the essential functions of the government in Albany.

Talk of an inflation-busting increase for 700 public school districts has been replaced by the potential for deep, year-to-year actual spending cuts – thanks to the spread of coronavirus cases and its far-reaching economic hit.

State senators returned to Albany Sunday for closed-door budget talks among Democrats who control the 63-member chamber and to pass a resolution to permit remote voting by some members who can’t – for health reasons.

The Assembly will return Monday afternoon and pass its own chamber rules’ alterations to hasten the pace of voting and open the door to future voting to occur remotely during times when a state of emergency is declared.

Both houses want a new budget in place before the fiscal year starts on Wednesday, April 1.

How that will work was uncertain on Sunday.

The fiscal meltdown for Albany is for various reasons, including loss of key income and sales tax revenues by widespread layoffs and business closings. It also is due to a looming cash flow crisis because the big period for tax receipts – mid-April when income tax filings are due each year – is being delayed following the federal decision last week to postpone federal and state tax deadlines until June.

The state will face no choice but to turn to borrowing money to help temporarily cover the tax revenue falloff, state budget director Robert Mujica said Sunday.

Cuomo says spending cuts are inevitable as stakeholders push back

For his part, Gov. Andrew M. Cuomo slammed federal lawmakers, chiefly Sen. Charles Schumer, on two fronts: passing legislation that limits the state’s ability to control New York’s already spiraling Medicaid health insurance costs, and for the new $2 trillion federal stimulus bill that directs money to New York to deal with coronavirus costs but not sliding revenues that could be as much as $15 billion below the original budget plan in January.

“The problem with the budget is the numbers," Cuomo said Sunday during a coronavirus briefing at the Capitol with reporters.

“Now, we have to make drastic cuts to the budget like you have never seen," he said.

Cuomo predicts 'rolling apex' for N.Y., extends nonessential worker ban

Robert Lowry, deputy director of the New York State Council of School Superintendents, said the more than $1 billion in new, special federal aid for New York schools will not fix the education funding problem – if the dire tax revenue projections are correct – in a state where 27% of state budget expenses are for public school spending.

“A billion dollars from Washington certainly helps, but our concern is the size of the gap and the share of the budget that goes to education. … This raises concerns about what might be in store for school aid," Lowry said.

The Democratic governor suggested that the state’s health care portion of the budget could be OK because of a new infusion of federal coronavirus response funding.

“The big problem is how do you fund the schools. … That’s where we have zero dollars," Cuomo said.

Schumer over the weekend said federal efforts he pushed will end up bringing New York schools $1.2 billion from Washington. As teachers unions and some state lawmakers were praising Schumer, Cuomo didn’t appear to be banking on that money.

So how will that affect school districts, which rely on Albany to help fund operating costs? No one yet knows, leaving schools growing increasingly wary over how they will keep up with classroom costs, teachers salaries and other obligations.

“I know it’s politically hard for the Legislature. I know legislative bodies. They make friends by giving out a lot of money," Cuomo said. He added: “I’m not going to pass, or sign, a phony budget."

The day before New York’s first virus case was revealed, Cuomo and legislative leaders earlier this month agreed they had $700 million more coming in the way of revenues than first forecast. Fiscal watchdogs at the time said their actions were overly rosy given the spread already seen elsewhere in virus cases.

On Sunday, several who are close to the negotiations but spoke on condition of anonymity, said various fiscal ideas were being promoted, including:

  • A freeze or nominal increase in state aid to public schools compared with levels Cuomo and lawmakers set in April 2019. Districts will say that either scenario will lead to widespread program cuts because they have automatic spending requirements, from contractual to legal, over which they have no control.
  • A freeze in state aid to the State University of New York, and no new money for capital projects for the 64-campus system.
  • No broad-based tax hikes, such as higher income taxes on super-wealthy residents, or expansion of gambling ventures in the state.
  • A freeze in current levels, instead of considerable growth in some cases, in a number of programs, including operating aid for public transit systems and road work performed in localities across the state.

Officials cautioned that tentative deals or ideas Sunday could change by the end of the fiscal talks this week. Other things still being negotiated: opening of more charter schools and a proposed $3 billion bond act for various environmental initiatives.

Assembly Speaker Carl Heastie, a Bronx Democrat, declined comment Sunday. His house is due to go into session at 1 p.m. Monday. Four Assembly members have tested positive, and new steps are being taken to limit possible exposure risks among members and staffers.

A spokesman for Senate Majority Leader Andrea Stewart-Cousins, a Westchester County Democrat, did not immediately return a request for comment.

Democrats in charge of the Legislature over the weekend huddled in the new, closed-door ways of Albany. On Sunday, Assembly Democrats turned to Zoom for a video conference that began first thing in the morning and was set to go all afternoon. The budget was the sole subject. The Senate went into session for a couple of minutes Sunday evening with only a handful of members and staff on the floor; they quickly passed a resolution permitting remote voting by senators, such as through video conferencing, for the remainder of the year and only during times of declared state emergencies.

Lawmakers are also set to give Cuomo extraordinary new powers to adjust the budget’s spending throughout the fiscal year, depending on how revenues shape up later in the spring, summer and fall.

Nonfiscal issues, which always get tossed into budget talks as a way of getting more complicated matters linked to money deals, also were unresolved.

On Sunday, lawmakers reiterated that an effort to legalize marijuana appears to be off the table, though they cautioned anything could happen before April 1. While Cuomo has said such legalization could raise $300 million a year, it would take New York at least a year – and more likely 18 months – to get any such sales underway.

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