Governor Cuomo released his proposed 2021 State Budget this week and not surprisingly, it showed the largest deficit in state history. With the COVID-19 Pandemic now approaching the one-year mark, the far-reaching toll of its economic impacts are being felt at virtually every level of the government.
The Governor discussed two budget scenarios to close the deficit. Under the best-case scenario, Washington sends NYS $15 billion, which would then allow the Governor to fund other programs. This amount may not be realistic, although with Sen. Schumer now the Senate leader and the Democrats in full control in Washington, it isn’t a total non-starter.
The worst-case scenario is that NYS only receives $6 billion. If that occurs the state would be forced to make cuts to local governments. The Governor would only ask for the tax increase if forced to go with the worst-case scenario. The Governor has proposed a hefty income tax increase for those earning over $5 million a year if NYS receives only $6 billion.
The Governor has also proposed allowing sports betting, and legalizing marijuana all of which will boost revenues. He has also called for repeal of the SALT tax which would allow state taxpayers to deduct state and local real estate taxes from their income taxes, another decision that lies with DC.
At the Business Council we will be urging the Governor and Legislature to resist taxing their way out of the budget problem. This will only serve to drive businesses and higher income earners out of the state, a problem that is already at dangerously high levels. In addition, we do not want to see any new regulations that would hurt businesses.
We are hopeful that they will listen to the business community’s ideas of ways to stimulate the economy and create new jobs and give serious consideration to removing costly mandates like the Taylor, Scaffold and Wicks laws that make the state less competitive. The BCW has been consistent that Congress enact a strong relief bill that assists states and local government as well as creating a pandemic liability protection plan for all sectors.
The alternative to not taking such steps is drastic cuts in state aid to communities and programs, or still higher taxes at all levels of the state. Either way, this year in Albany will be challenging in ways not seen before. We’ll be watching closely and are committed to keeping all of our members up to date.
We forward to working with the new Biden Administration to help NYS reemerge from the pandemic. We have had strong, long-time working relationship with Senator Schumer, and we look forward to working with him in his new role as Majority Leader.