Gov. Andrew Cuomo’s executive budget would dump a bigger-than-ever share of the financial responsibilities for the beleaguered MTA onto New York City, the de Blasio administration said Tuesday.

As budget hearings get under way in Albany, members of de Blasio’s administration said the city would fight legislation proposed in the budget that would require the city to pony up significantly higher funds toward subways and buses while stripping the city’s access to certain property tax revenues by directly funneling that money to the MTA.

Despite laws, budget watchdogs said that the city has historically never paid for all capital funding toward transit. Its $2.5 billion capital commitment is actually a record high.

“It’s never worked that way in the past,” said Jamison Dague, the director of infrastructure studies at the Citizens Budget Commission. “[It] would represent a huge increase in the amount of MTA capital funding that would come from the city.”

Expect a big chunk of tax law around Valentine's Day, state Budget Director Robert Mujica said Wednesday.

Gov. Andrew Cuomo's top fiscal lieutenant told a gathering of tax wonks he was optimistic lawmakers will pass legislation before the state's April 1 budget deadline and that the Democratic governor will have a proposal on the table by the second week of February — the 30-day deadline by which budget bills can be amended.

That language will also address a $1.5 billion "stealth tax hike" on New Yorkers that was the subject of a bill passed Tuesday by the state Senate, Mujica said, and a litany of other potential pitfalls.

"I have scary conversations every week with tax experts on my team who come in and say, we found this other piece in the bill that will cost us $2 billion if we don't fix it. ... There are just quirks in the bill," he said at a breakfast event hosted by the Citizens Budget Commission at CUNY's Graduate School of Journalism.

"I understand the Legislature wanted to pass a bill yesterday, but there are so many pieces here," Mujica continued. "We want to make sure it's done comprehensively and we don't miss anything. That's the point of taking a deliberative process, waiting for the 30-day period, because we want to make sure we get it right."

He also repeated that language to somehow "thwart" new federal limits on the deductibility of state and local taxes would be included, drawn from a menu of options released last week by the Department of Taxation and Finance.

"It's very realistic. We have started drafting," Mujica said. "We issued that report because we wanted to make sure that it was a public process, everyone saw what the options are. We're getting a lot of feedback."

In a question and answer session with reporters after Wednesday's board meeting, MTA Chairman Joe Lhota didn't dispute that the MTA was prioritizing less-busy stations. But he argued that was the point of the "pilot" program.

Using the [stations] with the most amount of need to see if we can get it done ... is not the right way to do a pilot," he said.
Cuomo's original January 2016 press release makes no mention of the project being a "pilot."

Jamison Dague, director of infrastructure studies at the nonpartisan Citizens Budget Commission, said it was the first he'd heard the term used in this context.

"It seems unusual to have a pilot program with so many different packages of stations that they're rolling out over time," he said

The labor leader’s assessment matched that offered in a recent report put out by the Citizens Budget Commission, a non-profit fiscal watchdog, which concluded that Dr. Katz achieved his impressive, “turnaround” of the Los Angeles system’s balance sheet not by cutting expenses but by increasing revenue while simultaneously improving efficiency and the quality of care.

“The good news was all on the revenue side. The largest source of revenue, payments for services to patients, grew 40 percent from $1.6 billion to more than $2.2 billion,” the CBC reported. “Despite the drop in volume of services, the hospitals were able to collect more money per unit of service.”

The CBC continued, “This is partially attributable to changes under Dr. Katz that both improved the fiscal health of the hospitals and enhanced the quality of care patients received. His operational reforms include re-organizing outpatient-care delivery, implementing the medical home model, partnering with social-service agencies to address social determinants of health, and implementing an electronic health-records system and e-Consult.”

Does Gov. Cuomo have a beef with the health-care industry — or does he just see it as a well of limitless cash?

It’s a fair question, because in his new budget, Cuomo repeatedly singles out the industry for tax hits. And they’re not even likely to solve New York’s budget woes.

For starters, he wants a cut of the proceeds from converting nonprofit health insurers to for-profit companies. He’s expecting $750 million annually for four years.

Yet, as Citizens Budget Commission President Carol Kellermann notes, the switch¬overs may never happen, or may not generate the hoped-for dough. Plus, the state’s using the money to cover outlays that don’t stop in four years. So the same budget hole will return then.

Gov. Andrew Cuomo calls them “revenue actions” and “revenue raisers.”

Also known as taxes and fees, the approximately $1 billion in boosters included in the Democratic governor’s state budget proposal certainly raise something else: the ire of Republicans in the Legislature who say New Yorkers are taxed enough and pay too many fees already.


One budget watchdog group, the non-partisan Citizens Budget Commission, supports some aspects of Cuomo’s budget plan, including broadening the tax on internet sales. But other “short-term fixes” could result in costs being passed to employers or individuals, the organization said.

In his executive budget, the governor did outline his plan for stabilizing the ailing transit system that serves the New York City area, but the fine print included swelling New York City’s responsibility for the MTA’s capital improvements, as first noted by Politico New York.

Citizens Budget Commission, an independent fiscal watchdog, termed the measures an “unjustified shift” of costs to the city. “The Executive Budget asserts the responsibility for funding New York City subway and bus capital improvements should rest solely with the City of New York, which would require a sevenfold increase in City capital contributions,” said CBC President Carol Kellerman, in a statement on the proposed budget. “In addition, the Metropolitan Transportation Authority (MTA) would be authorized to establish Transportation Improvement Districts within New York City that capture revenues from rising property values - without the City's approval. These proposals are an attempt to impose an onerous cost shift onto New York City residents and businesses, who already pay an estimated 72 percent of MTA dedicated taxes and subsidies.”

An unnamed state official told Politico that the state was reinforcing a 1981 law that already requires the city to fund its subways, a claim that has been called dubious by a number of experts. New York City Mayor Bill de Blasio will no doubt raise the question of MTA funding when he testifies at a legislative budget hearing in Albany on February 5.

Governor Andrew Cuomo has repeatedly extolled the virtues of design-build, a process that allows state authorities to seek combined design and construction bids for infrastructure projects from a single entity, saving billions of dollars and valuable time. Streamlining procurement and construction, it is a tool currently employed by five state agencies.

But, even as design-build is praised as a commonsense measure to ensure government savings, the state continues to deny New York City the authority to implement it. Cuomo’s $168 billion budget proposal, unveiled Tuesday, makes no mention of extending design-build to the city despite support for it from a bipartisan group of state legislators, persistent pleas from New York City Mayor Bill de Blasio, and the governor’s own repeated contention that the city should be allowed to use the process.

The Citizens Budget Commission, a city-based independent fiscal watchdog, called the exclusion of city agencies from design-build authorization “disappointing” news, in a tweet on Wednesday morning. CBC estimated in 2016 that the city could save as much as $2 billion over ten years by employing design build for city bridges.

In his budget proposal on Tuesday, Gov. Andrew Cuomo characterized the new federal tax plan as an “economic missile aimed at New York,” and suggested New York “get out of the way before it lands.” On Wednesday, the state Department of Taxation and Finance released a preliminary report providing some options for getting out of the way, such as replacing taxes with federally deductible charitable contributions to state-run funds or adopting a statewide payroll tax system in lieu of state income taxes.

The report offers five options for adopting a “statewide employer compensation expense tax,” or payroll tax. The first two options are adopting a progressive statewide payroll tax and a flat rate payroll tax while maintaining the progressive income tax system.

In a payroll tax system, instead of having an employee pay an income tax based on their wages, an employer would take a tax from an employee’s paycheck which then would be federally deductible for the employer. Thad Calabrese, a consultant with the Citizens Budget Commission and an associate professor at New York University’s Wagner Graduate School of Public Service, said a progressive payroll tax would require employers to determine different rates based on an employee’s salary. In a flat rate system, the employer would pay the same tax for all wages, regardless of an employee’s income. The flat rate is easier to implement from an administrative standpoint, but it doesn’t differentiate between employees.

It read like a maddening instruction manual for a do-it-yourself piece of furniture, with page after page of bare-bones guidance — and plenty of room for confusion.

If taxpayers and lawmakers were expecting that a new 37-page report would provide a definitive road map of how New York State might sidestep the effects of President Trump’s new federal tax plan and its sharp reduction in the deductibility of state and local taxes, they instead got a view of just how complicated this is.

The report, released this week, laid out at least a half-dozen ways New York could rewrite its tax code, with no indication of which option legislators might pursue. There was a potpourri of progressive rates, wage credits and tax-withholding schemes, with officials cautioning that all the options would require further study. No bills have been drafted.

More than anything, the report illustrated how difficult it may be to turn academic theory into real policy, serving as a cautionary guide to other states contemplating similar options. And it underscored the political challenges that lie ahead for Gov. Andrew M. Cuomo, as he seeks to sell a new payroll tax that could slightly reduce workers’ wages, even though the net payout, after taxes, would remain the same.

“I am not familiar with any rewrite this substantial,” said David Friedfel, director of state studies at the New York-based Citizens Budget Commission. “On the personal income tax side, it’s the biggest one in memory. I think a lack of precedent is the best way to think about it.”

Dave Friedfel, Director of State Studies at the Citizens Budget Commission, joined the show to make sense of all the numbers outlined in the Governor’s budget address on Tuesday.

Gov. Cuomo’s new budget proposal would put the city on the hook for 50% of the funding to address not only the current subway crisis but any future ones.

Language tucked into Cuomo’s budget plan would give the city 60 days after a declared transit emergency to appropriate an identical sum committed by the state to fund “the capital costs of repairs and construction deemed essential to ensure the continued safe and effective operation of such transit facilities.”


Some saw the language as a threat that Cuomo could seek to have the city pay for all future subway capital costs in non-emergency situations.

“The executive budget asserts the responsibility for funding New York City subway and bus capital improvements should rest solely with the City of New York, which would require a sevenfold increase in City capital contributions,” said Carol Kellerman, president of the Citizens Budget Commission.