State legislative leaders called for raising taxes on high earners in their budget plans released Tuesday as well as increasing spending by at least $7 billion despite potential steep cuts in federal aid.
The one-house budgets released by the state Senate and Assembly served as both houses’ official responses to Hochul’s $252 billion spending plan, which will be the blueprint for negotiations ahead of the state’s April 1 deadline. The governor’s plan was itself a $9 billion increase compared to the current year’s budget — but state lawmakers want to go further, with the Assembly’s proposal clocking in at $264 billion and the Senate’s at $259 billion.
The Assembly echoed Hochul’s call to cut taxes for people earning up to $323,200, while the Senate called for expanding various tax credits for working families. However, the Senate wants to permanently raise income tax rates for people making above $5 million, while the Assembly wants a five-year extension. Both houses also called for extending or increasing the current 7.25% tax rate on businesses with over $5 million in income. (The governor had called for a limited, five-year extension of the .08% tax increase on filers earning over $2.2 million.)
Lawmakers agreed with several of Hochul’s key proposals. They accepted the governor’s plan — much derided by fiscal experts — to send $3 billion worth of one-time $300 “inflation refund” checks to most taxpayers, although the Senate called for targeting them more narrowly to senior citizens. Both also agreed to extend a pandemic-era tax credit for Broadway shows by two years through 2027 and expand its outlay to $400 million; and to extend the state’s generous film tax credit to 2036.
“The Senate Democratic majority is fighting to Keep New York affordable and provide real relief for families, workers and small businesses – especially as we face economic uncertainty and funding cuts from Washington,” Senate Majority Leader Andrea Stewart-Cousins said at a press conference in Albany.
But budget watchdogs had harsh words for Albany leaders’ reluctance to rein in spending despite expected deficits in future years and likely cuts to programs like Medicaid.
“Skyrocketing spending is cracking New York’s fiscal foundation,” said Andrew Rein, president of the Citizens Budget Commission, in a statement. “The Assembly and Senate both propose to add roughly $4 billion in recurring spending on top of the governor’s proposal. This would bring year-over-year adjusted State Operating Funds growth to a whopping 13.7 percent, more than 4 times the rate of inflation. This unsustainable and unaffordable growth will ultimately drive future cuts to services New Yorkers rely on.”
Assembly Speaker Carl Heastie, who has maintained that the state does not have the resources to make up for major cuts to federal aid, freely admitted on Tuesday that the one-house budgets do not account for future cutbacks from Washington.
“We’re not doing anything to address cuts in federal funding,” Heastie told reporters. “Potential federal cuts — y’all should be asking the Republican members of Congress that would have to allow for any of those things.”
The one-house budgets also omitted any mention of how to fund the Metropolitan Transportation Authority’s $68 billion five-year capital plan, suggesting that a final deal on that critical package will instead be struck behind closed doors.
Other highlights from the one-house budgets included:
The Assembly is rejecting Hochul’s request to extend the New York City Relocation and Employment Assistance Program — a tax break that rewards businesses that relocate to New York City from elsewhere, or from Lower Manhattan to other parts of the city.The Assembly also omitted a new credit, championed by Hochul and Mayor Eric Adams, that would incentivize out-of-state companies to lease space in city office buildings. Instead, Assembly leaders wrote that they want to create “a single business relocation tax incentive program to attract out-of-state businesses into both Lower Manhattan and New York City at-large.”Both houses want to pay $250 million to create the Housing Access Voucher Program, a rental aid system for people at risk of homelessness that has been supported for years by both tenant advocates and the real estate industry.The Assembly is turning away Hochul’s request to loosen bidding rules for public infrastructure projects by expanding the use of methods known as design-build and construction-manager build.
