New York City’s agreement to split $836 million in subway upgrades with the Metropolitan Transportation Authority will jumpstart the state’s Subway Action Plan, but all sides still recognize the need to find a steady new revenue stream for the trains.

But what Gov. Cuomo is calling phase one of a congestion pricing plan for Midtown and Downtown Manhattan does not go far enough for many transportation and environmental advocacy groups, and is being pilloried by the taxi industry as going way too far.

The Citizens Budget Commission’s statement also said the plan falls short.

“New surcharges will be placed on trips made by taxis and for-hire vehicles in New York City’s central business district, but the can will be kicked down the road on a fuller congestion pricing plan to reduce traffic and provide a significant long-term revenue source,” the group wrote. “Instead, to increase short-term revenues, the City of New York will be forced to provide $418 million for the Subway Action Plan or have its sales tax revenues withheld — even though New York City taxpayers pay the overwhelming majority of MTA taxes and subsidies.

Gov. Cuomo’s proposal to “protect” state taxpayers from the federal tax overhaul signed into law last year was included in the $168 billion budget agreed to by New York lawmakers last Friday into Saturday.

Employers can opt into a plan in which taxes will be shifted from the worker to employer and a 5 percent tax will be placed on all annual payroll expenses in excess of $40,000 per employee, which will be phased in over three years beginning on Jan. 1. The move was devised as a workaround to the new $10,000 cap on state and local tax deductions that was included in the tax bill.

The Citizens Budget Commission said state lawmakers “deserve credit” for the move, and estimated another state initiative, to “decouple” from the federal tax code in certain areas, will eliminate a $1 billion tax increase, “but may present new challenges in this administration.”

— New York’s first-in-the-nation response to the new federal tax package and its cap on the deductibility of state and local taxes is now law, but the impact of the measure remains uncertain, experts say.

The state budget adopted Saturday includes Gov. Andrew. M. Cuomo’s proposal for a voluntary state payroll tax and the creation of charitable entities aimed at preserving the deductibility of state and local taxes on federal income tax returns.

The New Yorkers who may benefit most from the state’s plan are big earners who are important to state finances.

“The state needed to respond to the SALT cap in order to help preserve the state’s competitiveness,” said David J. Friedfel, director of state studies for the independent Citizens Budget Commission. “Given that the top 1 percent of taxpayers pay 40 percent of state personal income taxes, flight of wealthy New Yorkers would damage state’s overall finances.”

Gov. Andrew Cuomo announced details of the fiscal year 2019 state budget with a message that tightened oversight of City Hall and stood defiant against the administration in Washington.

With increased sway over public schools under mayoral control, increased funding for NYCHA housing, plans for the eventual closure of Rikers Island and a middle- class tax cut designed to shield New Yorkers from the effects of the federal tax plan, the $168.3 billion state budget placed a heavy emphasis on improvements in the city.

The governor included a $4.2 billion middle-class tax cut to 6 million residents across the state, which should save an annual $700 per household in Phase I of the plan and will eventually save $4.2 billion for residents by 2025.

The Citizens Budget Commission said it was a good start, with more precautions needed further down the road.
“State lawmakers deserve credit for making changes to the state’s tax code in response to the Tax Cuts and Jobs Act,” a commission statement said. “Creation of an Employer Compensation Expense Tax, state and local funds for charitable contributions, and other technical fixes are changes needed to blunt the impact of the federal tax law, particularly for taxpayers that will be adversely affected by the cap on state and local deductions (SALT cap). The state’s decoupling from the federal tax code will also eliminate a $1 billion unplanned tax increase, but may present new challenges in administration.”

Over the weekend, Gov. Andrew Cuomo and New York's Legislature agreed on a $168.3 billion budget for the 2019 fiscal year. Before Albany moves on to the next thing - which could be nothing in an election year - let's revisit what it just did and what it means.

We won't mince words about the budget process itself. It's a joke.

The Legislature also approved $600 million for economic development without any new demands for transparency or accountability, even after the Joe Percoco corruption trial showed how lobbyists and developers game the system. We join the Citizens Budget Commission and other watchdogs who clamor for a "database of deals" showing all recipients of state money; for more scrutiny of contracts by the state Comptroller; and for requiring developers to put more of their own money at risk before taxpayers are asked to kick in.

These open-ended appropriations are just an open invitation to corruption. Stop doing it this way

A $168.3 billion New York State budget approved over the weekend fails to address long-term fiscal challenges, according to analysts.

The 2019 fiscal year spending plan closed a $4 billion budget gap largely by using bank settlement funds along with a new plan to collect revenue from fees earned by nonprofit health insurance companies. Democratic Gov. Andrew Cuomo initially sought $1 billion of new taxes and fees that met with resistance by many Republican lawmakers.

“The budget is not going to improve the state’s long-term position,” said David Friedfel, director of state studies for the Citizens Budget Commission. “They added close to a billion in education funding without changing the funding formula that drives too much to wealthy districts.”

The “big ugly” was, as New York City Mayor Bill de Blasio put it, “a mixed bag.”

“Was it the kind of process that I would have done, if I were working with a partner and actually talked it through and tried to figure out what would work? No, it was not that process,” de Blasio said of the monitor, on NY1 news Monday.

Maria Doulis, vice president of the nonpartisan, business-backed Citizens Budget Commission, said the city continues to send more to Albany than the state give backs.

“The worst was averted,” she said, but “there was still pain inflicted.”

Numerous key fiscal and policy items were stripped from the $168 billion state budget adopted last week by Gov. Andrew Cuomo and the Legislature.

Here is a list of budget items, big and small, that wound up on the cutting room floor.

1. Ethics reform. In his State of the State, the governor initially proposed a robust ethics agenda, including closure of the LLC loophole, expansion of the Freedom of Information Law, campaign finance reform -- including publicly financed elections -- automatic voter registration, and early voting.
While most of the measures are proposed every year, electoral reform advocates like League of Women Voters, were buoyed when Cuomo included funding for early voting in his budget proposal. Senate Republicans, who hold a slim majority in the chamber, remain steadfastly opposed to any expansion of voter access -- which could put their ruling status at risk -- so the measure was not included in the final bills.

2. Database of Deals. Government watchdogs have long advocated for a "database of deals," to track the progress and efficacy of the state's economic development spending, which is expected to grow by at least $570 million in fiscal year 2019. Both the Senate and the Assembly included versions of the legislation in their one-house budget proposals this year, but it did not make it into the enacted spending plan.

3. Closing the budget gap. While the state's 4.4 billion gap was successfully bridged in the enacted budget, budget analysts at Citizens Budget Commission say the solutions are comprised of short-term measures such as settlement funds and revenue from health insurance companies, instead of reeling in spending commitments.

The conviction of a former close aide to Governor Andrew Cuomo last month did not lead to any response in the approved state budget -- much to the chagrin of good-government advocates and fiscal watchdogs.

Joe Percoco was convicted of taking bribes and using his influence to direct government contracts to politically connected developers. Reformers have been pushing legislation that would restore oversight power to the state comptroller and create an online database tracking economic development spending.

"The database would have provided some oversight so that individuals could see how exactly specific projects were progressing and whether taxpayers were getting a good return on that investment," said David Friedfel of the Citizens Budget Commission. "As far as oversight, any additional oversight would reduce the likelihood of malfeasance in the future."

Gov. Andrew Cuomo calls the $168.4 billion budget Albany passed Saturday a “bold blueprint,” and it is — for anyone who puts political goals over fiscal responsibility.

Recall that Cuomo faced a $4 billion hole this year, plus more pressure to lower state taxes in the wake of federal reforms. Yet instead of trimming fat, he and his legislative co-conspirators hiked spending further.

True, he claims the $100 billion state-funded part of the budget falls within his 2 percent growth cap. But that’s only thanks to accounting gimmicks that mask the true jump, which a Citizens Budget Commission analyst suspects is over 4 percent. Meanwhile, inflation has been just 1.7 percent.

In his January budget address, Gov. Andrew Cuomo warned about the impending budget deficit with dramatic effect.

“In many ways, this is going to be the most challenging budget that we've had to do,” he said, thanks to a $4.4 billion deficit and the threat of funding cuts from the federal government.


According to David Friedfel, director of state studies at the Citizens Budget Commission, they concluded that there would be $750 million in additional funding coming through pre-existing revenue streams such as personal income tax receipts. This extra $750 million cut down the deficit before the budget was even negotiated. Friedfel also said that funding to close the deficit came from spending reductions, settlement funds from agreements, primarily with financial industry operators, and revenue increases.

Tax experts said two plans Gov. Andrew M. Cuomo pushed for in the budget face certain challenges. One, which in effect converts local property taxes into charitable contributions, will most likely be questioned by the Internal Revenue Service. And the other — a complicated option to convert the state income tax to a payroll tax — may prove difficult to sell to businesses and employees. That plan would lower the gross salary for workers but seek to keep their net pay equal to what it was before the federal cap went into effect.

Carol Kellermann, president of the Citizens Budget Commission, a fiscal watchdog group, said the plans are worth trying.

“A lot of people are criticizing the provisions, saying they won’t work,” Ms. Kellermann said. “It’s worth trying. There’s no downside to creating the vehicles to try these out.”