Gotham Gazette http://www.gothamgazette.com/component/tags/tag/535 Thu, 18 Apr 2019 20:50:40 +0000 en-gb webmaster@gothamgazette.com (Webmaster) Federal Tax Reform is Shaking Up New York’s Finances But Flow of Bank Settlement Money is Bailing Out the State Budget http://www.gothamgazette.com/130-opinion/8444-federal-tax-reform-shaking-up-new-york-bank-settlement-bailing-out-state-budget http://www.gothamgazette.com/130-opinion/8444-federal-tax-reform-shaking-up-new-york-bank-settlement-bailing-out-state-budget cuomo salt weather

(photo: governor's office)


The federal tax law overhaul enacted at the end of 2017 capped state and local income and property tax deductions on federal income tax returns at $10,000, damaging millions of New Yorkers’(and tens of millions of other Americans’) ability to itemize deductions on their federal tax returns. The change also resulted in sudden shifts in New Yorkers’ behavior toward their own New York tax payments. Over the past two budget cycles the changes have destabilized New York State’s tax revenue collection patterns and caused considerable uncertainty in the state’s budget and funding for the services New Yorkers rely upon.

A recent report by Moody’s Investors Service indicates the fears of Governor Cuomo and other New York leaders that the federal tax deductions cap will cause New Yorkers to flee the State may be exaggerated. But that report only reviewed New York outmigration patterns through 2017 -- this analysis focuses on immediate changes in New Yorkers’ behavior as New York taxpayers and how those changes have affected the past two budgets and the one just adopted. How many New Yorkers will leave the state remains unknown.

In December 2017, following Congress and Trump’s tax reform, the state government experienced a sudden spike in tax payments as New Yorkers chose to make tax payments in 2017 rather than 2018 so they could still deduct in excess of $10,000 in New York taxes from their federal returns, and avoid, at least briefly, the coming limits on deductions to the extent that they could.

According to a 2018 State Comptroller report, the State Division of the Budget estimated that $1.9 billion came into the New York treasury that represented an acceleration of 2018 tax payments into 2017 to take final advantage of full state and local tax (SALT) deductibility. As a result, New York’s tax revenue rose more than 6% in 2017-18 over 2016-17. But, of course, it was anticipated that these 2017 payments would affect 2018 payments and that tax collections would correspondingly fall in 2018. At the time of budget adoption in 2018, the state predicted tax revenue would fall 2% in 2018.

In December 2018 and January 2019, however, tax collections fell precipitously, resulting in a $3 billion drop below estimates made at the time of the April 2018 budget enactment, for a total drop of $ 4.4 billion, or 6.4% below the 2017-2018 budget, not 2%.

Many wealthier taxpayers, with large incomes from capital gains, pay significant portions of their New York State taxes in quarterly estimated payments, including a regular January quarterly payment, rather than in withholding taxes, which are usually related to wages and salaries. Before the federal tax overhaul, New York taxpayers had an incentive to make their January estimated payment in December to assure they could take their tax deductions for that year on their next federal return. But with itemization nearly wiped out, the incentive to make the estimated tax quarterly payment early disappeared. The loss of this incentive is believed to be the main factor in the dramatic revenue declines this past December and January.

The State Division of the Budget believes that some of the money might be recouped in estimated payments in the first quarter of this year following January, but since the state adopted its budget for the April 1 start of the fiscal year, there was no way to know yet how much of the money might be recouped. So the governor and the Legislature chose caution and limited spending increases this year.

New York is not going broke, and the economy and tax revenue are still anticipated to grow, but the shock from the billions in lower revenue informed a cautious approach. The 2018 stock market decline also affected New York’s tax revenue from capital gains. For the first time in many years the governor and the Legislature added to the rainy-day reserve funds rather than add a lot of new spending.

Shoring up the state’s financial situation has been an extraordinarily fortunate additional development over the past few years. Litigation against the financial industry for wrongdoing that occurred during the Great Recession has resulted in many banks and financial companies agreeing to settle lawsuits for fraud and other problems with New York State for almost $12 billion(!) since 2015. New York spent much of the first of these settlement dollars on economic development to help the stagnant economy in Upstate New York , but in 2017 and 2018 $2 billion more has come in from new financial settlements, and the state has simply used the money to bail out the state budget and fund the MTA.

In the 2018 fiscal year the state put $461 million from over $800 million in new settlement funds that year into the state budget, and set aside $155 million to cover future labor contract increases. In the adopted fiscal year 2019 budget (for the fiscal year beginning April 1, 2018), the state put another $383 million from financial settlement into the budget, and took $194 million of additional settlement funds to help pay for the one-time 2018 cost of the MTA Subway Action Plan (2019 and beyond was covered from a tax).

But as 2018 progressed, an extra $1.2 billion more in financial settlement funds came into the state treasury that had not been booked by the state in the April budget adoption! In the budget just adopted a week ago, Governor Cuomo and the Legislature took $336 million of the new money to cover the early 2019 winter shortfalls related to apparent taxpayer behavior changes, and have set aside more than $600 million from the financial settlement funds in reserves to reduce future risks in the case of economic downturn, federal cutbacks, or other problems.

The combination of rainy-day funds and financial settlement reserves now totals $5 billion for the 2019-2020 fiscal year, which began April 1 and has a total state budget of $175.5 billion.

In an important revenue action, the state again renewed the higher rate for taxpayers with incomes over $2.2 million at 8.82%, yielding $770 million this year and an extra $4 billion next year, for five full years.

School aid was increased 3.7% (New York City got 3.4% more). The Legislature restored $550 million for the Medicaid program that the governor tried to cut after the shortfalls appeared.

The minimum wage increase that took place on December 31 to $15 per hour for New York City necessitated $700 million in additional Medicaid spending to cover the cost of raising the pay of workers in hospitals, nursing homes, and home care agencies who made less than $15 an hour in the city, as well as somewhat lower raises outside the city.

The state anticipates tax revenue will recover from the decline this past December and January, although overall it will be lower than had been hoped last year.

The challenges to fund the MTA will continue, since the tax and fee increases to assure $25 billion for its 2020-24 Capital Plan don’t approach the $40 billion estimated to be needed for that plan or the $7 billion for the current 2-15-2019 plan that remains unfunded. But don’t expect more tax increases for the MTA in an election year in 2020.

***
Jim Brennan was a member of the New York State Assembly for 32 years, where he chaired four committees. On Twitter @JimBrennanNY.

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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Federal Tax Reform is Shaking Up New York’s Finances But Flow of Bank Settlement Money is Bailing Out the State Budget Thu, 11 Apr 2019 04:00:00 +0000
Report Undercuts Cuomo and DiNapoli Claims of Outmigration Because of Federal Tax Law http://www.gothamgazette.com/state/8440-report-undercuts-cuomo-and-dinapoli-claims-of-outmigration-because-of-federal-tax-law http://www.gothamgazette.com/state/8440-report-undercuts-cuomo-and-dinapoli-claims-of-outmigration-because-of-federal-tax-law governor and cuomo salt rev

Gov. Cuomo, middle, and Comptroller DiNapoli, right (photo: Governor's office)


In the last few months, Governor Andrew Cuomo and State Comptroller Tom DiNapoli have raised red flags about the impact of the 2017 federal tax overhaul ushered through by President Trump and Republicans in Congress. Chiefly, they said that a new $10,000 cap on the State and Local Tax (SALT) deduction has led to a massive drop in revenue and is likely being accompanied by increased outmigration of high-earning New Yorkers to states with lower taxes.

But Cuomo and DiNapoli never provided concrete proof of the alleged trend and a new report undercuts their claim, to an extent, showing that New Yorkers have not been leaving the state because of the SALT cap but rather as part of continuing demographic trends and shifts in job markets.

Moody’s Investors Service, a leading ratings agency, released a report on Monday that said there are “no discernible signs” that the change in the SALT deduction is leading to people moving out of high-tax states, and notes that the impact of the new cap “will be felt widely for the first time this tax season and possibly spur some out-migration, but jobs and demographic trends will continue to influence relocation patterns more than tax burdens.”

The initial findings, based on 2017 data, fly in the face of the governor’s more definitive claims that the federal tax reforms -- which largely benefited corporations and wealthy individuals -- were leading to outmigration from high-tax Democratic states like New York, Connecticut, and New Jersey, where high-income earners make up a large part of the revenue base.

“We hope Moody’s is right, but with the first filing deadline post-SALT still upcoming, we are in the first inning of a long game,” said Freeman Klopott, a spokesperson for the state Division of the Budget, which is under Cuomo. “By the federal government’s own calculation, the cap on SALT is a more than $600 billion tax hike that will be borne overwhelmingly by New York and similarly situated states, making it an attack on the work we have done to strengthen New York State’ economy with a 2 percent limit on annual State spending growth, a cap on local property taxes, and a tax cut for every New Yorker.”

Brian Butry, a spokesperson for DiNapoli, said in an email, “As New Yorkers finalize their taxes, some are learning for the first time the impact of the SALT cap. The jury remains out on what the long-term effect will be.”

At a February 4 news conference, Cuomo and DiNapoli made a dire announcement that personal income taxes had come in $2.3 billion lower in December and January than the prior year, warning that even a small amount of outmigration of high-income residents would have a significant impact on state revenue. The SALT cap, they said, cost the state $14.3 billion in total.  

“SALT encourages high-income New Yorkers to move to other states,” Cuomo said, using his typical and misleading shorthand of “SALT” to mean the new cap on SALT deductions (the governor also regularly says that SALT was ended, when it has been capped). “And what you have to remember is even if a small number of high-income taxpayers leave, it has a dramatic effect on this tax space.”

He continued, “Taxpayers are adjusting in response to SALT....We have been hearing all along from the major accounting firms, to major individuals, that this is going to be the tipping point and that people now will be making a decision to make a geographic location change. And the SALT provision, remember, did not go into effect yesterday. It had over one year to adjust, so you didn't have to move on 24 hours' notice. You had one year to start to plan a move. And it goes into effect this April, so if you had to move or decided to move, now is the time that you would do it.”

DiNapoli was less forceful in making that argument that day. “We certainly have all heard anecdotally, as the Governor pointed out, people who say they're going to change their legal address, and I think these numbers show that in fact that is probably a big part of the picture,” he said, while acknowledging that several other factors, including volatility in the financial markets were to blame for the recent revenue decrease.

In a March 13 interview on WBAI radio with Gotham Gazette’s Ben Max and City Limits’ Jarrett Murphy, DiNapoli continued that line of reasoning while maintaining that he would need to examine months of data from the Department of Taxation and Finance before coming to a firm conclusion. “I do think that is a piece and probably a very significant piece, of what’s happening,” he said of the alleged SALT cap impact on taxpayer behavior and state revenue. “We’re gonna need more months of data....My instinct tells me the governor was on the right track, that the biggest piece of the shortfall was the response to the adjustment in federal tax reform.”

[LISTEN: Max & Murphy Podcast: Comptroller Tom DiNapoli (March 2019)]

The Moody’s report, however, points out using Census Bureau data that migration rates between 2012 and 2017 in the five states where “the SALT deduction represents the largest share of total federal adjusted gross income” -- California, Connecticut, Maryland, New Jersey and New York -- “are below pre-recession levels and generally follow the US as a whole.” The report notes that it is too early to gauge if the federal tax law has affected migration, contrary to what Cuomo and, to a lesser degree, DiNapoli have said. The report also said that people are generally moving from one high-tax state to another.

“In 2017, 25%-30% of people who moved out of New York, Connecticut and New Jersey moved to another one of the five high-tax states,” the report reads. “The most popular destination for people moving out of New Jersey and Connecticut was New York.”

The report does confirm long-running concerns from Cuomo and others about migration of New Yorkers to Florida, a state with far lower taxes. Moody’s noted that 14% of people who moved out of New York in 2017 went to the Sunshine State. But, those who moved were not primarily driven by lower taxes but rather by job opportunities, climate, and housing costs, the report said. The trend of New Yorkers moving to Florida is nothing new, however. Overall, New Yorkers have consistently been leaving the state since at least 1961, according to the Empire Center, a think tank, and the state saw a net loss of more than 1 million people between 2010 and July 2017.

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.

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Report Undercuts Cuomo and DiNapoli Claims of Outmigration Because of Federal Tax Law Tue, 09 Apr 2019 04:00:00 +0000
Cuomo's Budget Priority Balancing Act http://www.gothamgazette.com/state/8397-cuomo-s-balancing-act-on-budget-priorities-congestion-pricing http://www.gothamgazette.com/state/8397-cuomo-s-balancing-act-on-budget-priorities-congestion-pricing gov cuomo long island no tax

Gov. Cuomo on Long Island (photo: governor's office)


Before Democrats reclaimed the state Senate last year, Governor Andrew Cuomo spent years triangulating with the Democratic-controlled Assembly, two factions of Senate Democrats, and the Republican Senate majority. The arrangement allowed him a heavy hand over the legislative and budget agendas in Albany and gave him the ability to claim credit and deflect blame as he saw fit (though critics didn’t always buy his explanations). Progressive legislation regularly withered on the vine unless it had Cuomo’s imprimatur, usually accompanied by some form of mutually beneficial compromise with rogue Democrats and Republicans.

If this year’s budget negotiations have proved anything it’s that old habits die hard and Cuomo is unwilling to ease his stranglehold on state government, even when dealing with members of his own party. He’s continued to strongly, and perhaps shrewdly, set the foundation for negotiations. But some of the policies he has prioritized have long been wedge issues between lawmakers representing New York City on the one hand and upstate and suburban districts on the other.

On a few of the governor’s topline agenda items -- congestion pricing, recreational marijuana legalization, criminal justice reforms, and a property tax cap -- that divide has seemed most apparent this year, at times apparently stoked by Cuomo himself, and the governor has sought to leverage the budget deadline to push for their passage. Notably, he has said he’s willing to allow a late budget to accomplish his goals, which would mean that legislators could lose out on pay raises that are contingent on the budget passing on time, giving the governor additional leverage over the process.

While Cuomo has said he finds himself “liberated” by full Democratic control of the state Legislature and the ability to pass legislation that stalled for years, he’s also been overtly antagonistic to his colleagues in the Legislature, particularly in the state Senate, for what he says is them failing to grasp the necessities of governing, sabotaging the deal to bring an Amazon campus to Queens, and hesitating to follow through on several policies that Republicans opposed for years.

Senate Majority Leader Andrea Stewart-Cousins half-jokingly attributed it to “Senate Democratic derangement syndrome,” but many Democratic legislators have been taken aback by Cuomo’s approach, even if most have not been surprised. After an initial sprint of legislative activity that smacked of Democratic bonhomie, the Legislature slowed down as fault lines and a less rosy picture emerged amid negotiations over complex topics and some apparent backtracking.

With news articles and political commentary pointing to the close bond between Heastie and Stewart-Cousins, and the power of the all-Democratic Legislature vis-a-vis the governor, Cuomo appeared to seek to increase his leverage, by having certain Democratic candidates sign policy pledges during last year’s campaign, setting out his “first 100 days” agenda in December, casting blame on Long Island Democrats for not doing enough to keep the Amazon deal on track, and more.

Of late, he’s focused his top priorities on issues that alternately appeal more to New York City Democrats (congestion pricing, criminal justice reform) and suburban Democrats (property tax cap). He’s rallied on Long Island and in the Hudson Valley with Democratic senators, declaring he would not approve a state budget without the annual tax cap made permanent, even though, as Heastie has said, the current cap doesn’t even expire until next year. Meanwhile, he’s publicly told those same Democratic senators, who may be hesitant about criminal justice reform, to pass it in the budget and “blame me.”

It may all, or mostly, work out for Cuomo by the April 1 budget deadline, a major test for all the parties involved, but certainly an opportunity for Cuomo to both deliver on progressive promises and still show he’s in charge.

“This isn't a game of risk, this is real life,” said Rich Azzopardi, senior advisor to Cuomo, of the budget process in a statement responding to Gotham Gazette’s inquiry about the governor’s budget negotiation tactics and whether they were intended to divide Democrats as some have suggested. “If you excuse us, we're going to concentrate on developing a budget that works for all New Yorkers and I believe our partners in the legislature are doing the same.”

“I think for the governor, his decisions about priorities in the state budget are about how can he get things done that he can brag about later and that continue to advance the narrative that he wants,” said Evan Thies, co-founder of Pythia, a political strategy firm, “which is that he is still very much the most powerful person in the state and also on a national level a Democrat that can get things done and who seems to have moved his state to the left.”

Overwhelmingly reelected for a third term in November, Cuomo was emboldened and quick to show how he would approach the newly elected Senate Democratic majority. He rallied with newly elected and returning members of the state Senate on Long Island shortly after the election, pledging to ensure that New York City pays its “fair share” of funding for the Metropolitan Transportation Authority (MTA) even as legislators within the city were hammering him for starving the agency of funding, meddling with its affairs, and letting the city’s subways slide into chaos.

Cuomo pitched congestion pricing as the chief remedy to MTA problems, insisting it must be done in the budget but offering few details of how it would be implemented. For lawmakers in suburban areas outside New York City and even for those in the outer boroughs, it proved divisive and it appears that any proposal that will be included in the budget will include several key carve-outs and funding set asides for the Long Island Rail Road and the Metro North Railroad. The governor has also called for making it state law that the city and state must split 50-50 any MTA capital plan shortfall not covered by dedicating funding streams like that from congestion pricing.

Cuomo has also launched a campaign to make the state’s 2 percent cap on annual property tax increases permanent, which is currently in place everywhere outside New York City. The cap has been a crowning Cuomo achievement, winning praise from members of both political parties, and renewed multiple times. He’s rallied on Long Island three times in two weeks to push for it and has said he will not sign a spending plan without it, even saying that he’s willing to let the budget be late.

Even the governor’s proposal to legalize recreational marijuana seemed destined to create divisions along regional lines. It gave counties the ability to opt out of allowing sales, and several county executives -- including both on Long Island -- have already expressed intent to do so (something Cuomo said was not helpful in getting legalization passed in Albany). Meanwhile in New York City, which accounts for about a third of all regular marijuana users in the state and would make up an overwhelming part of any legal market, Mayor Bill de Blasio has already taken steps to reduce enforcement and has embraced legalization.

There are several key aspects of legalization to work out, and It’s hardly a surprise that the governor said last week it appeared unlikely legalization would be in the budget, even though he was hoping to tap the revenue from it to fund the MTA. But even Cuomo’s characterization of negotiations was disputed by lawmakers, such as Senator Liz Krueger, lead sponsor of legalization legislation, who said the parties aren’t that far apart. (Cuomo shifted to embracing a pied-a-terre tax for New York City luxury apartments that would replace marijuana funding for the MTA, though that has also hit some roadblocks.)

“You’ll notice a trend in the things that are actually getting done in the budget, which is that suburban Democrats agree with all of them,” Thies said. “They are clearly the new pivotal block in Albany and that is well represented” in the marijuana bill’s opt-out provision, the fact that congestion pricing will pay for commuter railroads and that issues like the tax cap “which may not have universal support within the Democratic caucus, are still being advanced aggressively.”

Criminal justice reform, including banning cash bail and instituting speedy trial and open discovery reform, may be one of the governor’s remaining priorities that does not necessarily have a substantial budget impact. But Cuomo has nonetheless insisted it must pass with the budget -- citing it as an important decision deadline -- despite various concerns being raised by district attorneys and lawmakers from more conservative districts outside the city, and by more progressive lawmakers and advocate who have certain prerequisites for new pretrial incarercation rules.

“I've had 7 years, 8 years with a Republican Senate with half a loaf, half a loaf, half a loaf—and getting these controversial issues and having to compromise everything,” he said in a Monday interview on WAMC radio with host Alan Chartock. “So having a Democratic Senate is most liberating for me because I don't have to take half a loaf and criminal justice is one of those issues.”

On issues like marijuana legalization and the broader criminal justice reform package, Heastie and Stewart-Cousins have not said anything is off the table; rather, they have indicated that both can be successfully approved after the budget and need not be rushed through by April 1. But the budget is where the governor enjoys maximum leverage and he has said that lawmakers can assign him the blame for passing controversial bills because there is no guarantee they will follow through in the post-budget session.

“I'll take the blame,” he said at a March 11 news conference, when asked about the criminal justice reform package and whether it would lead to a backlash for suburban legislators. “When it's in the budget, it allows everybody to say, ‘It wasn't me, it was the governor.’ Let's be honest, right? That's what the budget allows you to do. They all go and they say, ‘Yeah, I didn't support that, but the governor insisted on it.’ And by the way, it will be true. It will be true. Blame me.”

Dr. Jeanne Zaino, professor of political science at Iona College, described the governor’s strategy as “a masterclass in terms of managing Albany,” which she said has practically become a “one-party city” with Republicans out of power. “It’s brand new territory for [Cuomo], having the Democrats in control and in the past, he was able to triangulate with Republicans,” she said. “In my mind, he’s trying to do a similar sort of dance, if you will, but in this way playing the suburban, upstate Democrats off the more urban downstate on a variety of issues...I think congestion pricing in my mind and the property tax cap are two of the biggest [issues] because they so glaringly pit the two against each other.”

For advocates who have seen the type of horse-trading typified by the state budget process, the governor’s push has raised some concerns. Nick Malinowski of VOCAL-NY noted that legislators from the Hudson Valley and Long Island haven’t been supportive of criminal justice reforms, for instance. “We are very concerned as this moves into budget negotiations that issues like bail, like discovery reform, will be negotiated against other issues like property taxes and pay raises and all these other things,” he said. “That is definitely something we’ve seen in the past with Republicans, Democrats, and Cuomo...From a democracy standpoint, it’s a bad way of doing government.”

Nick Sifuentes, executive director of the Tri-State Transportation Campaign, however, disagreed that the governor’s efforts have been divisive, and credited him for bringing together a “fractious conference” on congestion pricing at least. “It’s the single largest and difficult thing they’ve taken up this year,” he said. “I really feel like the governor has actually generally played a helpful role in trying to get this thing to the finish line….I don’t think this has been a year that the governor has very aggressively played sides off against each other to try and win something.”

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.

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Cuomo's Budget Priority Balancing Act Wed, 27 Mar 2019 04:00:00 +0000
State Leaders Must Follow Through on Their Promise of a More Fair New York http://www.gothamgazette.com/130-opinion/8390-state-leaders-must-follow-through-on-their-promise-of-a-more-fair-new-york http://www.gothamgazette.com/130-opinion/8390-state-leaders-must-follow-through-on-their-promise-of-a-more-fair-new-york got ga si gov

(photo: Governor's office)


As we near the final days of state budget negotiations, a familiar anxiety is growing as advocacy groups and everyday New Yorkers await the fate of critical policy and funding decisions.

Despite a fast start to the legislative session and optimism abounding from a Democratic trifecta that seemed focused and committed to delivering on campaign promises, the realities of the same-old behind-closed-doors budget process are setting in ahead of the April 1 deadline.

For far too long, the state budget has contributed to growing inequality and deteriorating services across the state. While state budgets tread water or move us backwards, the continuing “strength” of the economy has further tipped to the wealthiest among us.

The recently re-elected Governor and newly-elected members of the Assembly and the Senate ran on the promise to chart a new course.

Make no mistake: It is THAT vision of a fairer, cleaner, kinder, and more equitable New York that helped take down the Independent Democratic Conference, strengthen the Democratic majority in the Assembly, and elect 39 Democratic Senators for a new majority that voted to put Senator Andrea Stewart-Cousins into her rightful place as the leader of the Senate.

Grassroots organizations like ours, Empire State Indivisible, have spent the first three months of 2019 in the streets organizing in support of that vision. But strangely it’s now many of these same elected officials who are pushing back against the fight for fairness and democracy.

Exhibit A: the continued resistance from many members of the Assembly to finally pass through both houses legislation for publicly-funded elections.

For years, the Assembly championed this issue: 88 current members are on the record for past support. Yet, now that there’s a viable path to passage, many of those former champions now claim there are too many open questions.

Grassroots organizers across the state have reported consistent questioning from many of their electeds like “how would the program be implemented?”, “what would be the model of oversight?”, and “where would the funds come from?”  

It turns out these reasonable questions already have incredibly thoughtful and effective answers. Organizations like Citizen Action and the Brennan Center for Justice have been bending over backwards to work with the conferences in the Senate and the Assembly to answer the questions and make the legislation as effective as possible. It’s disingenuous to claim that last-minute questions are the reason support for the measure is lacking.  

The fact is that our elected officials are sent to Albany to solve complicated problems with conviction.

They are the ones responsible to design policies that solve the challenges New York faces.  The irony of elected officials refusing to participate in the process of crafting the details of policy they claim to support is lost on no one.

Exhibit B: skittishness among many lawmakers on establishing fair tax and fiscal policies.

Governor Cuomo’s budget proposals consistently create a battle for funds amongst the most critical services. His penchant for “horse trading” (as many insiders refer to it) pits public school funding against healthcare spending, support of clean energy and municipal infrastructure projects against investments in affordable housing, and so on and so on.

We and many other New Yorkers have been asking legislators about increasing revenue through new fair-share tax proposals like the “ultra millionaires tax,” which extends the current millionaires tax and adds brackets for people whose annual income exceeds $5million, $10 million, and $100 million.  

Too often, the answers have been truly dismissive and patronizing -- particularly from the new Senate majority and the Governor. The pushback is a status-quo run-around: lawmakers fear that raising taxes -- even on multimillionaires and billionaires who got huge new tax breaks from President Trump --  might cause them to lose elections in 2020.

The numbers and the polling suggests otherwise.

Insisting that the ultra-rich pay their fair share of a burden that has for too long been shouldered by the poor, the middle class, and the upper middle class will in fact be answering to the will of the people. It will allow all the members of the Democratic majorities in both the Assembly and the Senate and the Governor to deliver on the promises that galvanized voters to elect such a strong slate of Democrats in the first place -- and will inspire us to do so again.

The ask is simple: No more excuses. We simply can’t afford them.

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Ricky Silver is co-lead organizer of Empire State Indivisible. On Twitter @es_indivisible.

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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State Leaders Must Follow Through on Their Promise of a More Fair New York Mon, 25 Mar 2019 04:00:00 +0000
Pied-à-Terre Tax Should Be Just The Start http://www.gothamgazette.com/130-opinion/8353-pied-a-terre-tax-should-be-just-the-start http://www.gothamgazette.com/130-opinion/8353-pied-a-terre-tax-should-be-just-the-start adaptny mayors

(image: mayor's office)


Governor Andrew Cuomo, Senate Leader Andrea Stewart-Cousins, and Assembly Speaker Carl Heastie have all signaled their support for funding the long overdue MTA overhaul with a pied-à-terre tax. Cuomo has said it’s the “only agreed-to new money” for the upcoming state budget. But the challenges facing struggling families in New York demand more than just a pied-à-terre tax. We need an entire reimagining of New York’s upside-down tax system.

There are over 75,000 apartments in New York City owned by people who don’t live there year-round. Some of these are second, third, or fourth homes. Earlier this year billionaire hedge-funder Ken Griffin made headlines for purchasing the most expensive home in the country: a $238 million penthouse overlooking Central Park. Griffin already owns multi-million-dollar properties in Chicago, Miami, and London.

The pied-à-terre tax, sponsored by Senator Brad Hoylman, would institute a surcharge on non-primary residences worth $5 million or more. The surcharge would start at 0.5% and rise to 4% for homes worth more than $25 million. For people like Griffin, it’s pocket change. State Budget Director Robert Mujica estimates the new tax would generate $9 billion in new revenue over the next decade.

New York’s billionaire class has been let off the hook by a regressive tax structure that puts the burden on working families in the form of higher sales and property taxes. These times call for us to have the courage to demand that the wealthiest New Yorkers pay their fair share. New York is already the most unequal state in the country, with the top 1% taking home 45 times more than the bottom 99%. The Trump tax scam has only made the problem worse, as billionaires are now benefiting from some of the lowest tax rates in decades.

Austerity measures, fueled by the false narrative that there just isn’t enough money to go around, have wreaked havoc on our communities. In cities like Rochester and Schenectady, half of all children live in poverty. A state as affluent as ours should not have young children going to sleep hungry or elderly people unable to afford their rent.

The entire tax system in New York is rigged to benefit the super wealthy. Taxing the rich shouldn’t be a last resort for our Governor and Legislature. New York needs a pied-à-terre tax, an expanded millionaires’ tax, the elimination of the carried interest loophole, and an end to the billion-dollar giveaways to giant corporations.

This restructuring of our tax system would allow for investments in our struggling communities. It would mean we could fully fund our public schools, repair our crumbling infrastructure, and expand access to affordable health care and child care.

Corporate-backed think tanks like the Empire Center will wave their arms and cry “tax flight,” but this has proven to be a myth. The people who move the most frequently are young people and low-income families seeking good-paying jobs and a better quality of life. And what will improve quality of life in New York and make young families want to live here? Quality public schools, affordable housing, and reliable transportation.

The self-imposed shortfalls and spending cuts continue to hurt our communities. The Governor needs to stop kowtowing to CEOs and big developers and insist that the people with the most contribute the most.

***
Jessica Wisneski is Co-Executive Director of Citizen Action of New York. Michael Kink is Executive Director of Strong Economy for All. On Twitter @jesswisneski & @citizenactionny.

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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Pied-à-Terre Tax Should Be Just The Start Wed, 13 Mar 2019 04:00:00 +0000
What's The [Data] Point? 18.6%, New York's Inequality & Social Safety Net http://www.gothamgazette.com/city/8113-what-s-the-data-point-18-6-new-york-s-inequality-social-safety-net http://www.gothamgazette.com/city/8113-what-s-the-data-point-18-6-new-york-s-inequality-social-safety-net whats the data point


What's The [Data] Point? Episode 60 -- 18.6%, Inequality and the Social Safety Net, with Greg David and Cara Eisenpress [You can download What's The [Data] Point? wherever you get your podcasts, including on iTunes]

gregdavid caraepress amazon18.6% is the poverty rate in New York City. Greg David and Cara Eisenpress, both from Crain's New York Business and the Craig Newmark Graduate School of Journalism at CUNY, discuss their recent reporting exploring New York City's safety net, how it's funded, and how it compares to other places, while showing that the city's robust safety net is made possible by the city's vast inequality and tax structure.

Listen to the conversation and let us know what you think: Ben Max of GG (@TweetBenMax), Maria Doulis of CBC (@MariaDoulis). Listen below or download wherever you get your podcasts!

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by Ben Max, Gotham Gazette
     

Read more by this writer.

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What's The [Data] Point? 18.6%, New York's Inequality & Social Safety Net Fri, 30 Nov 2018 05:00:00 +0000
A Closer Look at the Tax Incentives in the Amazon Deal http://www.gothamgazette.com/state/8110-a-closer-look-at-the-tax-incentives-in-the-amazon-deal http://www.gothamgazette.com/state/8110-a-closer-look-at-the-tax-incentives-in-the-amazon-deal govcoumo realestate

Cuomo, de Blasio & an Amazon rep celebrate (photo: Kevin P. Coughlin/Governor's Office)


Amazon’s decision to put a corporate campus in Long Island City after a year-long, somewhat-public search for a host city and a series of incentives from New York City and State has drawn skepticism and outrage in Queens and beyond for a number of reasons.

Some activists and elected officials oppose the secretive process by which Amazon got its land, tax breaks and grant, others feel like the company isn’t a corporate entity the city and state should be welcoming because of labor, political and other practices. But all of the opponents to the Amazon deal seem to agree that that package of roughly $3 billion in incentives the trillion-dollar corporation is getting from New York is out of bounds, an inappropriate giveaway based on old economics, in the midst of both a strong overall city economy with low unemployment on one hand and affordable housing, public housing, and transportation crises on the other.

And while a look at the programs in question reveals that Amazon doesn’t appear to be getting tax incentives or breaks that wouldn’t be available to other large employers who set up shop in New York, economists and budget watchdogs suggest the outrage over the tax break package Amazon is getting presents an opportunity to reexamine New York’s use of subsidies to entice companies. (Note: there is one discretionary capital grant in the deal for roughly $500 million that is separate from the $2.5 billion in city and state tax incentives.)

Where does the money come from?
The three largest incentives Amazon is getting from New York come from three as-of-right (that is, incentives available to any company that meets the requirements) programs: the Excelsior Jobs Credit Tax Program, the Relocation and Expansion Assistance Program (REAP) and the Industrial and Commercial Abatement Program (ICAP). The latter two tax breaks are incentives established by the state government that affect the city tax rolls, while the former program affects state tax rolls.

“They’re state created, like 421-a,” John Kaehny, the Executive Director of Reinvent Albany, told Gotham Gazette about ICAP and REAP, with reference to the tax break known as 421-a that seeks to incent housing development with some affordability included. “So the New York City Department of Finance administers them, but they have to, they're made to by state law. Basically it's money that the state is directing be taken out of the city's tax revenue.”

Along with their as-of-right nature, all three programs require a company actually delivers jobs in order to take advantage of the breaks. In that sense, Amazon is no different from a hotel company or mobile phone infrastructure company or real estate company in applying for the programs. In the case of the Excelsior program, Amazon is taking advantage of a refundable tax credit equal to 6.85 percent of the total wages per new full-time job they create, and a capital investment credit equal to 2 percent of a company’s total qualified investments that result in new jobs.

For the city tax breaks, ICAP is a tax abatement program that may last up to 25 years, available to companies who undertake new commercial construction in areas outside of some exempted sections of Manhattan. It appears Amazon will be eligible for a 15-year ICAP that begins to decline in year 12. REAP is a per-job tax credit in which companies from either outside New York City or below 96th Street in Manhattan get a $3,000 per employee credit for 12 years for each employee that moves into the new office outside the REAP area.

In addition to the above programs, Amazon is also getting a cash grant from the state called an Empire State Development Capital Grant that’s potentially worth $505 million and is supposed to help defray some of the costs from building the new corporate campus. And because New York State is taking over the land where the office will be located and making it tax-exempt, Amazon will make payments in lieu of taxes (PILOTs) that the city has said will be equal to the property tax bill the company would pay on the land otherwise. Half of the money from the PILOT will go to the city’s general fund, and half of it will go towards infrastructure improvements around Long Island City.

All told, the tax breaks from the jobs credit, ICAP and REAP and the capital grant could wind up adding up to $3 billion in incentives to Amazon, if the company delivers the 25,000 jobs it’s promised over the course of 10 years.

What’s the problem exactly?
In his media appearances and statements to defend the incentive package, Governor Cuomo has suggested that these kinds of tax breaks are just the cost of doing business in America. But some economists, like James Parrott, the Director of Economic and Fiscal Policies at the Center for New York Affairs, say the programs are working off of a somewhat dated economic model, especially since he found that the city gave up almost $6 billion in tax revenue in Fiscal Year 2018 thanks to a stew of incentive programs like ICAP and REAP.

The predecessors to ICAP and REAP arrived in “a different historical economic context, coming on the heels of the 1970s when there was a lot of corporate headquarters movement out of New York City,” Parrott told Gotham Gazette. “With the loss of 600,000 jobs between 1973 and 1979, it was a really difficult economic period for the city. So in the 1980s the city put in place, and ramped up its commitment to subsidize corporations to stay in New York City, to relocate to New York City and to add employment.” But these days, Parrott says the city’s economy is healthy enough to function without massive incentives.

“We're now at a point where the total employment level in New York City is 4.3 million, almost 700,000 to 800,000 higher than it's ever been before,” he said. “Arguably New York City doesn't need to do anything to subsidize new economic development investments, given the very rapid employment growth we've had in recent years.”

Though he continues to stress that his administration refuses cash grants to companies, de Blasio also continues to defend the Amazon deal, including the use of the subsidies involved, again doing both during his weekly NY1 appearance on Monday. “[W[hat we need to move towards is a society where it’s not about cities competing” over companies, the mayor told host Errol Louis. “The specific incentives were automatic and part of state law,” was also part of his defense, and he suggested that if people want to see an end to the as-of-right programs, people should debate that in the future.

Parrott said he could understand the use of the Excelsior programs upstate, given the region’s struggling economy and what he said was a better oversight process than the program’s predecessor, the extremely troubled and criticized Empire Zone program. But the entire program also has an annual cap ($183 million in 2019 and steadily decreasing to $36 million in 2024 per the Citizens Budget Commission) that will have to be raised by the state Legislature if Amazon creates all of the jobs it’s promised, leaving Parrott to wonder, “why on Earth, if you have these limited tax credit resources, you spend those in New York City? The one place in the state that that least needs economic development subsidies?”

Kaehny sees some self-promotion as a motivating factor in giving state money to Amazon, specifically on the part of the governor. “Cuomo wants to create a narrative that shows that he had some agency, that he was the one that closed this deal with Amazon, that he did something that caused this deal to happen,” Kaehny said. “If Amazon says, ‘Well we don't care about the subsidies at all, we really just wanted New York City and this terrific dynamic place with a huge job market of talented people, the kind that we want working for Amazon and we don't really need subsidies,’ well then what's Cuomo’s role in landing the deal?”

It’s an especially pertinent question according to Kaehny and others who insist that Amazon was probably going to come to New York anyway. Both before and after identifying Long Island City as one of its landing spots, Amazon officials said that the ease of recruiting tech talent was the key ingredient in their search. A request for information that Amazon sent to Somerville, Massachusetts included one question about the incentive package the city could offer, but multiple questions about quality of life and the area’s working populations.

That in turn raises the issue of where New York should actually invest, in businesses or in infrastructure, according to Jonas Shaende, the chief economist at the Fiscal Policy Institute. “Should we just give [companies] tax subsidies outright or should we invest in what makes New York so attractive and so vibrant and so great? In the things that that are the real factors in in their decision making, things like the transportation system, the affordable housing the access to to labor, to education facilities those kinds of things.”

Shaende wasn’t alone in that line of thinking, as redirecting state subsidies from corporations towards local infrastructure was a centerpiece of the Marc Molinaro and Stephanie Miner campaigns for governor.

It’s real money
Another one of the governor’s defenses of the incentive package is that New York isn’t actually paying Amazon anything at all, but rather is letting the company pay slightly less in taxes than it would otherwise. In his “op-ed” published to the governor’s official website, Cuomo writes:

“Our proposal offered that, when and if those revenues are realized, the government would effectively reduce their $1 billion payment by about $100 million for a net to New York of approximately $900 million. New York doesn't give Amazon $100 million. Amazon gives New York $900 million.”

It’s a rhetorical sleight of hand that doesn’t pass muster with any expert Gotham Gazette spoke to. “I mean, that's just fundamentally wrong because essentially all economists left, right, wherever agree that a tax abatement or tax credit is a form of expenditure by government and is rightly called a subsidy,” Kaehny said, pointing out that the Governmental Accounting Standards Board (which sets the rules for financial reporting by government entities) now has a rule that counts subsidies as expenditures.

And in the case of the capital grant Amazon is getting, the cash is very much real. “It's clearly a case where it's a budget choice [Cuomo's] making, here's $500 million in taxpayer resources we're going to give to Amazon rather than use it for something else,” Parrott said.

“[Cuomo] happens to have a reserve of resources, out of which it’s very likely that this money is going to come,” Parrott said, talking about New York settlements reached with banks who are alleged to have committed mortgage securities and other financial fraud. “Although there wasn't anything said in the memorandum of understanding with [Empire State Development] and the state and the city that said where the capital monies are going to come from, my guess is it will come out of the reserve,” he said. Cuomo has indicated he does not need legislative approval for the capital grant, but legislators, especially those opposing the deal like Queens state Senator Michael Gianaris, are exploring all their options to block or change the deal.

The Citizens Budget Commission was measured in its critique of the grant, comparing the reimbursement-style payments as better than upfront costs the state has taken on with, for instance, the $750 million solar panel plant it built in Buffalo. But CBC still criticized the ongoing lack of oversight for where the money would come from. The grant has also been criticized in multiple corners as a sop to Cuomo-friendly construction unions, with critics charging the state is essentially paying Amazon to use union labor.

And the subsidies also open New York up to the double whammy of even more companies asking for the kinds of tax breaks Amazon is set to receive while at the same time trying to provide services and pay for them in a state budget operating under the governor’s self-imposed 2 percent cap on annual spending increases.

“It’s not a fiscally responsible way of running government,” Shaende said. “It could be potentially highly problematic for the state, because the state still relies on taxes. And we have the 2 percent spending growth cap, we have all sorts of measures that that the governor adopted to show that he's running a very fiscally responsible shop. He saves money, let's say, by cutting services, by finding efficiencies, in joint services between municipalities. So he saves, you know, a couple of nickels here a couple of dimes over there, and then he just splurges like this.”

Could this spur change?
As lawmakers scramble to find a way to stop or change Amazon’s incentive package, there’s at least some hope among reformers that the publicity surrounding the deal can lead to a change in how the state and city use tax incentives. The incentives all going towards one company has already brought more attention to the ways New York uses them than their use for the Hudson Yards development, Parrott said, despite the fact that “the total cost of the Hudson Yards tax breaks rival the amount of the city and state subsidy to Amazon.”

The surrounding outrage may also give new life to the proposed subsidy tracker known as the “Database of Deals,” an idea that Reinvent Albany’s Alex Camarda pointed out “is not rocket science” in Assembly testimony for more accountability in the state’s economic development funds last year. It is a transparency measure Comptroller Tom DiNapoli has called for but Cuomo has opposed; it passed the Republican-led state Senate earlier this year, but was not given a vote in the Democrat-led Assembly.

According to Shonede, the database not only could provide transparency to what’s going on in the state, but a better template for future spending.

“As a community of experts, we need to stress some basic accountability, how many jobs we get per dollar spent, and what kind of jobs they are,” Shoende told Gotham Gazette. “And if we do that, in a consistent and serious way, a basic accounting of these efforts, it’s going to be obvious that the best way to improve the situation with income inequality, and lack of good jobs in vulnerable communities and improving the business climate have to do with what the traditional role of the government is supposed to be. And that is making sure that people are safe, that they are well prepared for the market, and that the infrastructure is such that it minimizes the business costs for the businesses that you see operate in the neighborhoods,” he said.

And so in his own way, despite resisting intensive oversight of the state’s economic development initiatives, the governor may have inadvertently dragged the state’s subsidy programs further towards daylight. “This is kind of a like peeling the onion of Albany dysfunction and scurviness in a microcosm, this deal,” said Kaehny. “Because there's all this stuff baked in here that's been going on for a long time time. But it's like for the first time people in New York City were like ‘Oh s***,’ but reality is they've been doing this for many, many years.”

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by Dave Colon, Gotham Gazette
     

Read more by this writer.

Note: this article has been updated with more clear description of Amazon's eligibility for ICAP.

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A Closer Look at the Tax Incentives in the Amazon Deal Wed, 28 Nov 2018 05:00:00 +0000
Tax Issues at Center of State Elections, Albany Year to Come http://www.gothamgazette.com/state/8047-tax-issues-at-center-of-new-york-elections-albany-year-to-come http://www.gothamgazette.com/state/8047-tax-issues-at-center-of-new-york-elections-albany-year-to-come Cuomo taxes

Gov. Cuomo (photo: Don Pollard/Governor's Office)


When the dust settles on the 2018 elections, whoever is governing the state will be faced with problems like what to do about NYCHA and the MTA, and how New York should respond to climate change, among many others. Another pressing issue that has been an area of focus in many campaigns around the state, from the governor’s race through those for the state Senate, is taxes, and what the next governor and Legislature will or won’t do about them in a number of ways, including the ongoing question of how New York must adjust to the new federal tax code.

Though proposals and arguments have often been hazy, the issue of taxes has been among the most discussed this election season and will be a topic of significant debate when the new state government starts doing business in January. The contours of those discussions and the actual proposals put forward will vary greatly depending on the outcomes of the governor’s race and which party controls the state Senate (the Assembly is home to an overwhelming Democratic majority).

Marc Molinaro, the Republican nominee for governor, has pitched his candidacy largely based on a plan that he says will lead to a 30 percent reduction in property taxes for New Yorkers over five years, but the party’s state Senate conference, hoping to cling to a one-seat majority during a promising year for the opposition, has mostly stuck to arguing that Democrats will increase taxes to previously unseen levels if given full control of state government.

For their part, Democrats have been quieter on taxes, with Governor Andrew Cuomo promising to extend the state’s property tax cap and keep state spending to two percent annual increases, even as some members of his party’s Senate slate push for things like state-run single-payer healthcare and a polluter’s tax -- neither of which Cuomo supports. Running for a third term, Cuomo has said little else about taxes, despite the fact that his attempts to thwart the impact of the federal tax reform have thus far not panned out, the state’s current millionaires tax is set to expire next year, the state is facing upcoming budget gaps, and the state-run MTA is in need of tens of billions of dollars to get the New York City subway system functioning properly.

Molinaro has made broad tax reform one of the centerpieces of his campaign, along with restoring trust in government and generally being a governor who isn’t followed by corruption investigations. His tax plan proposes reductions across the board, from the end of the millionaires tax to an expansion of the earned income tax credit to childless workers and noncustodial parents and the indexing the state’s income tax brackets, standard deduction and dependent exemptions to inflation (a move that Molinaro says prevents a filer’s tax bracket increasing due to inflation without any real change in their earning power).

Molinaro wants to limit annual state spending increases to three percent, but wants that cap codified into state law, unlike Cuomo’s two percent cap, which is self-imposed and the governor, despite his claims to the contrary, has not completely kept to.

The Dutchess county executive’s plan has “a lot of good elements in it and establishes some very worthy and desirable goals,” according to E.J. McMahon, the founder and research director of the conservative Empire Center of New York, although McMahon said he didn’t think the math behind the plan added up to the promised 30 percent reduction in property taxes. Asked repeatedly throughout the campaign, Molinaro has not laid out exactly how he would get there, only promising in broad terms to modernize state government, find efficiencies, and more effectively deliver services.

On the Democratic side, clarity also doesn’t come easy. Cuomo’s priorities on socially liberal but fiscally moderate governance can be seen most clearly in something like his Long Island Senate Democratic Agenda, but even that plan lacks specifics and has seemingly competing priorities. On the one hand, the agenda lays out a promise to keep the two percent property tax cap and the two percent spending cap going, while also promising “historic tax cuts.” On the other hand, there are promises to include Long Island in increased infrastructure, education, and economic development funding.

Cuomo has resisted calls for a New York City-based addition to the millionaires tax, recently pitting his philosophy against Mayor Bill de Blasio in sarcastic terms, saying, “'[W]ell, ideally we would like to have a millionaires tax.' Yes, I wish I could be an elected official who lived in the ideal,” at a gathering of the Association for A Better New York, a business group. He also explicitly cast himself as a different kind of politician than legislators and local politicians “who like to spend” at a speech in front of the Business Council of New York, boasting that he has overseen lower year-over-year state spending increases than previous governors including Republicans and his father.

Part of the lack of clarity on the Democratic side has to do with the uncertainty of where the party will be after the general election. A newly won Senate majority may rely on seats outside New York City, which would require a collaboration of city, suburban, and upstate interests that don’t always align perfectly. And even as Democrats in swing districts run on platforms that include single-payer healthcare in New York, they are pledging not to increase the taxes that would fund it, and many are seeking to represent high-tax Long Island and north-of-the-city areas very sensitive to any additional tax increases and another election right around the corner in 2020, when all the seats in the Legislature will again be on the ballot.

“I think out of the gate you're gonna see a Senate Democratic Conference that's gonna correct some of the wrongs, the missed opportunities by the Senate Republicans like voting reform and gun control, women's health,” Democratic state Senate spokesperson Mike Murphy told Gotham Gazette, suggesting the party would focus on progressive social issues at the beginning of the 2019 session if in the majority. And even as the New York Health Act that would establish state single-payer health care emerged as a hot issue for New York City progressives, among other Democrats, they will have the state’s expiring laws around rent control to deal with next year, and candidates outside of the city, like the Hudson Valley’s Pete Harckham, want much of a full two-year term to work out how a single-payer program would look, or to craft a universal health insurance program compromise with Cuomo.

On the issues of the new federal limitations on state and local tax (SALT) deductions, which dramatically affects high-tax states like New York, the state has joined with other Democratic states to sue the federal government over the $10,000 cap that was included in federal tax reform efforts, in part on the grounds that they were targeted after not voting for Donald Trump for president. At the same time, the IRS has blocked efforts by New York and other states to get around the deduction cap by limiting the federal tax credit taxpayers would get by “donating” their property tax payments to charitable organizations designed to accept the taxes.

Cuomo has been otherwise quiet about how he would solve the issue of the SALT deduction problem, which is likely to most acutely hurt high earners as well as suburban middle and upper middle class property owners, though he has said one goal is for Democrats to recapture control of the federal government and repeal the deduction cap.

The governor has been silent on the question of whether the millionaires tax will be allowed to sunset next year as it's currently designed to -- it has been extended multiple times under Cuomo, in partnership with a split Legislature, and there is a significant question around how the state would make up for the revenue if it is not extended. On the other hand, it affects many individuals and families that will be paying higher taxes given the new SALT cap, and Cuomo and others have expressed concern about high-income individuals leaving the state. Cuomo’s campaign did not provide an answer to multiple Gotham Gazette inquiries about the governor’s stance on the millionaires tax.

Molinaro has said he would let the millionaires tax expire.

His plan on the SALT deduction cap is to get rid of New York’s “tax benefit recapture” policy, a practice that charges the highest marginal tax rate for taxpayers above a certain income band, for New Yorkers making between $107,650 and $323,200, thus addressing some of the lost deductions for those earners.

Tax shifts rather than cuts or increases are the most common kinds of plans on the table from both parties. On the Democratic side, Long Island’s John Brooks, running for reelection in a swing district, has offered up a plan that he says would allow areas like Long Island to get out from under high property tax bills related to education spending by capping the amount of school funding coming from property taxes at 50 percent, with any budget needs above 50 percent picked up by the state.

“What Brooks is saying is we need to lower your taxes by finding someone else to pay them. But if you're in Long Island, there is no ‘someone else,’ it's you, you have the higher average incomes,” McMahon said in reaction to the proposal.

For Republicans, requiring the state government to pick up Medicaid costs from local governments is something that Molinaro and state Senate Republicans are running on (to the delight of local editorial boards). It would cost $7 to $8 billion, and require either new or higher taxes or a reduction in the actual delivered services according to a Citizens Budget Commission study on the shift (Cuomo has mocked it as an unserious proposal). But the state Senate conference has also endorsed the idea of exempting seniors from paying property taxes, arguing that since they don’t make use of the schools, they shouldn’t pay to keep them running. It’s a proposition McMahon has panned before and he compared it unfavorably to Brooks’ plan as irresponsible and unfeasible. “How is that fair to a working couple with three or four kids living paycheck to paycheck, and the retired couple next door get to pay no property tax? Are you kidding?”

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by Dave Colon, Gotham Gazette
     

Read more by this writer.

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Tax Issues at Center of State Elections, Albany Year to Come Sun, 04 Nov 2018 04:00:00 +0000
Federal Corporate Tax Cuts Just Gave New Billions to New York Businesses - What About the MTA? http://www.gothamgazette.com/130-opinion/7859-federal-corporate-tax-cuts-just-gave-new-billions-to-new-york-businesses-what-about-the-mta http://www.gothamgazette.com/130-opinion/7859-federal-corporate-tax-cuts-just-gave-new-billions-to-new-york-businesses-what-about-the-mta govcuomo mta transit

(Photo: Don Pollard/Office of Governor Andrew M. Cuomo)


There is a sudden new source of money in New York that is getting little attention in the debate about where the MTA will get resources to fund the ambitious plans to solve its problems, let alone just manage to keep the mass transit system going. That source is the big corporate income tax cuts just enacted by the federal government that have put billions - yes, billions - of dollars into the hands of New York businesses and their owners.

There are several reasons why tapping this resource makes sense. First, the size of the cash savings to New York businesses is so large that utilizing even a billion dollars a year would just be a portion of the money newly sitting in corporate pockets, even if restricted to businesses in the New York City area. Second, unlike individual income and property taxes, business taxes remain fully deductible at the federal level. Third, the mass transit systems that deliver millions of workers to these businesses are the lifeline for that wealth, and the state’s businesses should participate in a responsible effort to address this issue, as they did in 2008 when New York business leadership supported a payroll tax.

Still, Congestion Pricing Must Stay on The Table
Consideration of this revenue source is by no means intended to exclude congestion pricing, which will return to the table early in 2019, during state budget negotiations. The truth is that the MTA needs twice as much, or more, than the revenue congestion pricing can deliver. The congestion pricing plan developed by the “Fix NYC” panel put together by Governor Cuomo includes a Manhattan business district entry fee that would total about $1 billion a year (excluding the new taxi/app-vehicle tax, which was enacted). But to pay for the MTA’s current capital plan, and then pay for the new “Fast Forward” plan put forth by MTA New York City Transit President Andy Byford on top of it, will require double the size of the congestion pricing fee, and more.

The MTA itself made the case at its end-of-July board meeting. The presentation of the July 2018 MTA Financial Plan update and the 2019 Preliminary Budget began with this overriding statement: “As stated in the November and February plans, the MTA requires new sources of sustainable revenue for operations and capital.”

The board heard the dry numbers that predicted growing operating deficits from 2020 to 2022 despite 4% fare and toll hikes in 2019 and 2021. The deficit is projected to be $200 million in 2020, $400 million in 2021, and $600 million in 2022. A few weeks before the board meeting, Governor Cuomo reiterated his support for congestion pricing and said the MTA needed $37 billion, the necessary portion of which he proposed the state split with New York City. This is political rhetoric. Neither Cuomo nor de Blasio wants to divert resources from their budgets to provide steep new revenue sources to the MTA. New sources of money are required.

The MTA’s Problem
The main problem with paying for mass transit is the MTA capital budget. The MTA can manage to cover the expenses of its operating budget within the constraints of fares, tolls, and dedicated taxes, but not its capital budget.

The money needed to replace track, stations, rolling stock, legacy signals, advanced signals, the expansion projects, and more requires external funding sources. The capital budget needs government grants and/or borrowed funds. Borrowed funds means paying interest, and that is a major, growing issue. When you need $37 billion, and most of it won’t come from grants, that’s a lot of borrowing and a lot of interest to pay. Congestion pricing is a necessary and essential step - but the billion dollars a year from it can pay interest on only $12 to $15 billion worth of borrowed funds. That means you’re not even halfway to $37 billion.

How much new cash is businesses in New York saving from the federal income tax cuts? The New York State Tax Department knows the answer because New York’s corporate income tax is computed using the federal corporate income tax as the starting point in a business’ own New York tax filing.  It will take some time to get that answer, so some back-of-the-envelope calculations are in order.

How Much New Money Is Available?
The New York State economy is 8% of the nation’s Gross Domestic Product. Federal corporate income tax receipts in fiscal year 2017 (before the Trump-led cut) were approximately $300 billion. New York’s contribution to the federal receipts can be simply computed at 8% of that, or $24 billion. The federal corporate income tax just got cut 40%, going from 35% to 21%, 14 full percentage points. Federal tax savings have therefore put about $9.6 billion in new cash annually into the pockets of New York corporations, not adjusting for year-to-year fluctuations. How much of that is in the MTA region -- New York City and its suburbs?

A  study of New York’s regional tax and spending distribution was conducted by the Rockefeller Institute in 2011 using the state’s 2009-2010 fiscal year. That study showed that 89% of the bank income tax, and 79% of the corporate franchise tax, came from New York City and its suburbs. The figures are higher now because economic activity has become even more concentrated downstate since 2009. An estimate that close to 85% of the corporate profits taxes come from downstate is reasonable, meaning roughly $8 billion a year in new money to the region’s businesses from the federal reduction.

Some of this money is not New York taxable income -- New York tax law counts out profits from sales of products and services outside New York pursuant to a formula -- but a very large proportion is New York profit. Maybe half? The New York Tax Department knows the answer.

A surcharge on corporate tax liability related to New York corporate taxable income has been in place since the first MTA bailout put together by Governor Carey and the Legislature in 1982. Today it yields $1.2 billion in dedicated tax revenue to the MTA as part of the Metropolitan Mass Transit Operating Assistance Account (MMTOA). This is New York’s own tax, not related to the new cash from the federal tax cut. But the fact is that New York State has been taxing corporate profits for the MTA for 35 years.

New York business leadership proposed a payroll tax in the MTA district in 2008 and it was enacted in 2009. The tax was unpopular, especially in the New York City suburbs. Governor Cuomo later scaled back the payroll tax in 2011 to exempt smaller businesses and organizations. It is still a major source of money for the MTA, but a separate New York 2014 corporate tax cut resulted in unexpected revenue losses for the state as a whole.

New York’s Own Corporate Tax Cut Problem
In 2014 Governor Cuomo proposed cutting the state corporate income tax from 7.1% to 6.5%, as well as merging the corporate franchise and bank income taxes. The merger was supposed to be revenue neutral. The Legislature approved the proposal and added a repeal of the corporate income tax on New York manufacturing. Something has since gone wrong from this change. New York’s corporate income tax revenue has declined precipitously since 2015.

(in billions) FY 2013 2014 2015 2016 2017 2018
Corporate Franchise Tax 3.009 3.812 3.548 4.527 3.166 3.08
Bank Tax 1.912 1.05 1.536 121 389 467
Total 4.921 4.862 5.084 4.406 3.555 3.547

The State Division of the Budget explained the sharp drop off in revenue from the combined corporate franchise and bank taxes from overpayments in 2015. But the drop off is steep: $1.3 billion, or 28%, for 2018 compared to back five years ago in 2013, before the reforms were enacted. The result of the reform was serious revenue losses.

Regardless, mass transit is in crisis and there are many, many billions of new dollars from the federal corporate tax cuts. And some New York profits that had been taxable seem to have fallen off the table since a flawed reform in 2014 as well. These corporate tax savings ought to contribute to the mass transit solution.

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Jim Brennan was a member of the New York State Assembly for 32 years, where he chaired four committees. On Twitter @JimBrennanNY.

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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Federal Corporate Tax Cuts Just Gave New Billions to New York Businesses - What About the MTA? Sun, 12 Aug 2018 04:00:00 +0000
Molinaro Starts Campaign on Attack, Policy Plans to Come http://www.gothamgazette.com/state/7771-molinaro-starts-campaign-on-attack-policy-plans-to-come http://www.gothamgazette.com/state/7771-molinaro-starts-campaign-on-attack-policy-plans-to-come marc molinaro twit

Marc Molinaro, left (photo via @marcmolinaro)


Nearly three months after launching his campaign for governor, presumptive Republican nominee Marc Molinaro has spent most of his time hammering incumbent Andrew Cuomo, a two-term Democrat, on ethics scandals, economic development spending, and other issues. But key questions remain about Molinaro’s own policy stances.

“I know that campaigns are marathons, not sprints,” he recently told Gotham Gazette, after participating in a rally in support of keeping the single-test admission system to New York City’s specialized high schools, when asked for more detail about his education platform.

Molinaro, the Dutchess County executive, talked broadly about investing in communities, empowering teachers, and focusing on early interventions, but said New Yorkers would have to wait for more specifics.

“I can” go into more detail, he said with a half-laugh, “but I won’t.”

That sums up the state of the Molinaro campaign. He has offered a handful of policy planks, mostly around government ethics, and promised “bold” plans that will challenge entrenched interests and help make New York more affordable for homeowners.

As July approaches, the candidate certainly has time to roll out his policy agenda, given he has no primary to worry about and needs to earn votes for November, when he will appear on the ballot on three party lines: Republican, Conservative, and Reform. But what policies will he run on? What does Molinaro need to do to rally the GOP base while also appealing to independents and moderate Democrats? And, how can he overcome the Democratic enrollment advantage in New York in an election that will be, in part, a referendum on President Donald Trump?

Fiscal conservative
Like any Republican candidate for statewide office, Molinaro faces major obstacles from the outset. There were more than twice as many Democrats as Republicans in New York as of April, with Democrats also outpacing Republicans in registering new voters. And Cuomo’s record, which includes some centrist and crossover legislative and budgetary achievements, makes it hard in some cases for any Republican to carve out turf that’s right of the two-term incumbent, but not so far to the right that he or she alienates too many New Yorkers.

Thus far in the race, Molinaro has focused on traditional Republican themes of cutting taxes and reducing government spending.

“If taxing and spending were the best way to lift families out of poverty, we’d have the best government in the country and I wouldn’t be running for governor,” he said in his May 23 Republican nomination acceptance speech. “Overtaxing and overspending -- it’s a dream-killer, a job-depriver. It robs working people from the ability to save.”

Molinaro has come out in favor of extending the state’s property tax cap, instituted under Cuomo, and recently called for the so-called “millionaires’ tax” to be phased out.

Since 2012, the governor and legislature have limited increases to property taxes levied by localities and school districts to 2 percent of the previous year’s rate or the rate of inflation, whichever is lower. Bigger hikes to bolster school districts can be made if 60 percent of voters in those districts approve of them; there’s also a provision for localities to make bigger hikes. New York City is exempt from the cap, something Republicans from the city and beyond have criticized.

As for the income tax rate for the top bracket -- 8.82 percent for individuals making $1 million or more and couples earning $2 million or more per year -- Molinaro wants “to have it expire over time.” The rate went up, from 6.85 percent, in 2009. Molinaro declined to state what rate he would seek for the state’s highest earners.

On sports betting, legislation to legalize that form of gambling has stalled in Albany as lawmakers debate fees. But Molinaro has called for an 8.5-percent tax on sports betting if it does become legal.

E.J. McMahon, research director of the Empire Center for Public Policy, pointed out questions Molinaro needs to address about his tax plan.

McMahon said making the property tax cap permanent could hinge on just how Molinaro would phase out the millionaires’ tax.

“You’ve gotta decide what you’re going to do with that before you decide anything else that has financial impact,” McMahon said.

There’s also the question of how much political capital Molinaro would invest in perpetuating the property tax cap. McMahon noted that Cuomo and Republicans who control the state Senate say they support the move, but have not yet made it a top priority. The cap is set to expire in the 2019-2020 fiscal year.

McMahon said Molinaro could signal his support for the property tax cap by making it his sine qua non for passing the state budget.

“Will he say…this is going to be a condition for a budget or any extension of rent regulation?” McMahon said, referring to a top priority for Democrats who control the Assembly by a wide margin dominated by New York City members. “The question is, what is going to be your priority, what are you going to do to make it happen?”

Trimming the fat
Along with criticizing state taxes in his Republican Party nomination acceptance speech, Molinaro promised a new approach to budgeting for government agencies. He said he would recruit “the best and brightest” from colleges and businesses to audit state government, and promised “zero-based budgeting” in which “no agency gets a dime until it can show we’re getting what we pay for.”

“What we have now is an outmoded, outdated, and antiquated 20th-century state government at its worst,” Molinaro exclaimed.

Erie County Republican Committee Chair Nick Langworthy, who has met with Molinaro to strategize on the election, suggested that cutting government spending could resonate with voters.

“He needs to address the out-of-control spending of the state and the out-of-control taxes. How does he make it better?” Langworthy said.

“I think he will have some bold proposals, from some of our private conversations, coming forward that probably will shake some of the vested interests to their core,” he added.

The devil is in the details, of course.

“He basically talked about waste and fraud,” McMahon said. “Until you know what he’s talking about, you don’t know whether there’s anything there or not.”

McMahon pointed to the state police barracks in New York City as an example of the kind of expenditure that Molinaro could target for cuts.

“There’s a few million bucks,” McMahon said. “A few million here, a few million there -- next thing you know, we’re talking real money.”

In a recent phone interview with Gotham Gazette, Molinaro shied away from specifying how he would trim the now-$168 billion state budget.

Political scientist Richard Flanagan said the candidate could make waves by completely scrapping state investment in economic development.

“He might say, ‘I’m a free market conservative and I can’t pick winners and losers. Markets pick winners and losers,’” said Flanagan, who chairs the College of Staten Island’s political science department. “That would be a bold break from the New York way. It might appeal to New Yorkers.

“It’s a different approach from what Cuomo’s been doing,” Flanagan said.

Indeed, Molinaro recently pledged that if he is elected governor, there will be no direct subsidies paid by government to private businesses, though he stopped short of saying he would end economic development programs. Those can include measures such as tax breaks, tax credits, space allocation, and public-private partnerships.

Action on ethics
Often in the same breath Molinaro has criticized state spending, he’s blasted Cuomo for alleged ethical improprieties, connecting the two through an alleged pay-to-play culture, where donors to the governor’s campaign are rewarded by government action. Both Molinaro and Democratic primary challenger Cynthia Nixon are trying to persuade voters that the corruption trials of members of Cuomo’s inner circle make the incumbent unfit for office. The governor’s former top aide, Joseph Percoco, was convicted of fraud and soliciting bribes in March; and Alain Kaloyeros, the mastermind behind many of Cuomo’s biggest development projects, is now on trial for corruption-related charges.

“What’s out? Cuomo’s multibillion-dollar pay-for-play giveaways -- gone, yesterday!” Molinaro said in his GOP nomination acceptance speech. “Corporate welfare -- gone, yesterday! We’re going to make New York attractive to all businesses.”

Molinaro, a former state Assemblymember, has proposed a two-term limit for governor, lieutenant governor, state attorney general and state comptroller -- a rebuke of Cuomo as the incumbent seeks a third term. Molinaro says term limits would mark “a long-overdue start to restore honesty and integrity to state government.” He has pledged to serve only two terms if elected, even without a law in place.

The Republican challenger has also called for a ban on campaign contributions from people and organizations with business before the state; and supports closing the so-called LLC loophole, which lets companies or individuals make virtually unlimited campaign contributions through limited liability corporations, but saying it must be done as part of comprehensive reform, indicating he favors limits on other entities like labor unions. Cuomo has voiced support for closing the loophole in the past -- notwithstanding the fact he is the state’s largest beneficiary of donations from LLCs. Cuomo has neither advanced the legislation nor voluntarily shut down his campaign’s access for LLCs, something Nixon has done.

Recently, Molinaro said the Joint Commission on Public Ethics had “no integrity” as it cleared former Cuomo administration official Sam Hoyt of sexual harassment and assault. Molinaro and others pointed to the fact that JCOPE’s executive director, Seth Agata, is the third consecutive person with close ties to Cuomo to head the commission.

Molinaro is making his case for reforms as 46 percent of voters statewide say corruption is a “very serious” problem, according to a February Quinnipiac University poll. But skepticism of reform proposals seems high; 62 percent of voters thought ethics laws included in the 2015 state budget would have no effect on reducing corruption.

“I don’t think he’s going to win the election on ethics reform,” Republican political consultant John William Schiffbauer said of Molinaro. “New York voters are so desensitized to the idea of political corruption, unfortunately, that it’s just not the single issue that I think it should be.”

Schiffbauer added that many upstate voters already view Cuomo as ethically compromised. He said Molinaro’s challenge will be persuading residents of New York City, Westchester County, and parts of Long Island.

“Those are always historically areas that have high numbers of registered Democrats, who generally just always vote Democrat,” Schiffbauer said. “That’s where he’s going to need to be selling that most. Or selling it like: Cuomo has dropped the ball, he’s let you down.”

People living with disabilities
Other than talking tough on budgeting and corruption, Molinaro regularly brings up his experience as the father of an autistic daughter on the campaign trail, a campaign he launched as county executive, and the notion that New York must become a more compassionate, inclusive place.

“We are going to reset New York’s priorities,” he said in his nomination acceptance speech. “Children and adults with disabilities, seniors without savings, classroom funding and special education, opioid addiction, safe drinking water, signal switches in subway tunnels -- those are the kinds of things that’ll move New York forward.”

He told Gotham Gazette he would push every executive agency to update its policies for people with intellectual and developmental disabilities, though he declined to provide details.

Molinaro pointed to a program he created in Dutchess County, called ThinkDIFFERENTLY, as an example of his approach.

The program, marked by a resolution of inclusive principles, has hosted free movie events and annual picnics where service providers can connect with people with disabilities. The county’s related “Think Ahead” program, a partnership with Dutchess Community College, has provided job preparation and life skills training for people with intellectual and developmental disabilities, according to the Molinaro campaign.

Schiffbauer noted the issue could help distinguish Molinaro from his rivals.

“It’s an issue that you really haven’t seen many people talk about in New York state and city,” he said, adding that the candidate’s experience as a father could make the issue come to life for voters. “He’s not bringing it up just to bring it up. He’s always talking about this issue.”

Fixing the MTA
In his interview with Gotham Gazette, Molinaro sought to stake a claim in the red-hot MTA debate by noting the authority’s service -- specifically, the Metro-North Hudson Line -- extends through his county, where he often says upstate and downstate meet.

He outlined changes he would make to the authority’s structure, calling for the board to get the power to fire its chair, a governor appointee.

While new MTA New York City Transit President Andy Byford has promised to make accessibility one of his main priorities, Molinaro also called for increased services for people with disabilities.

“I know it’s something that he’s going to take on,” said Langworthy. “He’s going to show that the money has been wasted. He’s going to have proposals to fix it.”

Molinaro promised as much in the interview, but asked whether he’d be willing to increase spending to help disabled people use the MTA, he demurred.

“My basic philosophy is make government as effective and efficient as possible,” he said. “I don’t subscribe to the [idea], ‘Well, we always have to spend more money to achieve something.’”

Molinaro also declined to comment on Byford’s multibillion-dollar plan to fix service, which has drawn support from Cuomo. Nixon released her own subway plan at the end of last month, which is supportive of the Byford plan, but includes several mechanisms to pay for it and long-term funding of the MTA, something Cuomo has not figured out yet, though he continues to promise to pursue congestion pricing next year after he was unable to push it through the Legislature in the recently-ended session.

Molinaro has not outlined his plans for funding the MTA’s long-term capital needs.

Jails and justice
The national debate on criminal justice reform has played out in the Democratic primary, with Nixon apparently pushing Cuomo left on legalizing marijuana. Before campaign season, Cuomo announced proposals including the elimination of cash bail, speeding up trials, and fixing or closing substandard jails, but he has not won passage of any of those measures.

Gerald Benjamin, a political scientist and director of the Benjamin Center at SUNY New Paltz, said Molinaro could play his criminal justice record in Westchester County to his advantage.

The Republican has spearheaded the creation of a jail to replace the overcrowded facility there. He launched the initiative before a state government report ranked the old jail as one of the worst in New York.

While the project does not necessarily symbolize legislative reform, it speaks to management and budget decisions, and Benjamin said Molinaro’s effort to tackle the issue could earn him points.

“He took that issue on, which previous county executives hadn’t done,” said Benjamin, who co-authored a 2011 policy paper on jails in the Hudson Valley. “It was a costly choice and he took it on in a just-right way from a public policy perspective.”

Molinaro has not made clear where he stands on issues reducing or eliminating the use of cash bail for most non-violent offenses, an issue that has some bipartisan support, and he has not indicated that criminal justice reform will be a focus of his campaign.

The Trump factor
As the general election approaches, the Democratic gubernatorial nominee, whether Cuomo or Nixon, is likely to tie Molinaro to President Donald Trump. Molinaro will also be asked to weigh in on Trump policies, statements, and controversies, though he is already loathe to do so, preferring, like some other Republican candidates around the country, to keep the focus on his race and platform.

Cuomo and his representatives have repeatedly labeled Molinaro as a “Trump mini-me” and a conservative opposed to LGBT and immigrant rights, as well as other progressive principles.

Molinaro says he did not vote for Donald Trump for president, claiming he instead wrote-in former upstate Republican Rep. Chris Gibson.

But Flanagan, of CUNY’s Staten Island college, said that stance might backfire.

Being ambivalent about Trump might alienate the president’s supporters while failing to win over any Democrats. Molinaro recently said he does not favor the Trump policy of separating immigrant families at the border, and has previously criticized the president’s “both sides” response to a white nationalist rally in Virginia and the Trump tax reform’s low threshold for state and local tax deductibility. On the latter point, however, he has also faulted Cuomo and Democrats for policies leading to New York’s high tax burden on income-earners and homeowners.

Flanagan said members of Trump’s base on Staten Island might think, “He didn’t like Trump? Forget him; I’ll vote for Cuomo.”

Conservatives interviewed for this article illustrated how tricky it will be for Molinaro to stake out his position in relation to the president.

Langworthy voiced disgust at the “mini-Trump” characterization.

“It is just infantile,” he said. “If that’s [Cuomo’s] message, he should be ashamed of himself.”

State Conservative Party Chair Mike Long, whose party has endorsed Molinaro, said the gubernatorial candidate should embrace Trump’s economic policies.

“You have to do something similar to what Donald Trump has done as president of the United States,” he said. “Look at the outcome with him - he’s already created tremendous growth in our nation...That’s what has to be done in the state of New York.”

Fighting a centrist
Flanagan pointed out several areas where it will be difficult for Molinaro to distinguish himself from Cuomo without going too far to the right.

Perhaps no issue is more challenging for a New York Republican trying to win statewide than gun control. Cuomo’s legislation to expand the state’s assault weapons ban, among other measures, is hugely popular in New York City, and gets a small plurality of supporters upstate. But there are parts of the state that are heavily Republican and ardently opposed to the Safe Act, again begging the question of how Molinaro locks up the base while appealing to suburban moderates.

Flanagan said Molinaro could chart a new course by “artfully” arguing for a system in which localities determine new gun regulations.

“I do have concerns with how aggressive this governor has been,” he previously told Gotham Gazette. “I think in some ways irresponsibly ignoring those that do support, as I do, the Second Amendment and forcing legislation without having the kind of local robust conversation necessary. I believe the constitution is as it’s written.”

On education, Flanagan said, Molinaro could argue for more charter schools, though it would be tough for him to distinguish himself from Cuomo, a strong supporter of charters who has secured a variety of legislative and budgetary victories for the growing sector. Flanagan also said Cuomo’s failure to deliver on promises of universal pre-K for the state could be open to criticism from the Republican candidate.

“Somehow this guy needs to get the independent voters,” Flanagan said of Molinaro. “[Universal pre-K] may be an issue where he could engage the independent voters without getting a lot of backlash from the Republican base.”

Conservatism and charisma
It is difficult to say what lessons previous Republican runs for governor might hold for Molinaro. In 2014, Cuomo handily defeated Rob Astorino, a county executive from just north of New York City who ran on a campaign opposing Cuomo’s gun-control measures and ban on hydraulic fracking. Astorino’s gun control pitch didn’t work, and fracking has largely fallen out of the headlines.

The last Republican to become governor, George Pataki, ran on promises of an across-the-board tax cut to unseat Cuomo’s father. But the campaign came during the nationwide “Republican Revolution” of 1994 -- a vastly different climate compared to Trump’s first term. Pataki did win three terms, though, and, when introducing Molinaro at the Republican state convention, said he sees parallels this year to his initial, surprise victory over an incumbent Cuomo.

Which issues beyond the initial list he has offered -- taxation, state spending, unfunded local mandates, cutting business regulations, government ethics and campaign finance reform, MTA management reform, and better accommodations for people with disabilities -- Molinaro will prioritize and put forth detailed policy plans for is to be seen. It is clear a main focus will be highlighting that he is not Governor Cuomo.

Molinaro’s campaign might come down to banking on incumbent fatigue, conservative nostrums, and personal charm -- the Republican candidate’s charisma helped him become mayor of Tivoli at age 19, and he has maintained a career in politics ever since.

“I just haven’t heard a bold new idea,” Flanagan said of Molinaro. “It’s not like he’s the Jack Kemp of New York who sort of personifies a new third wave for the Republican Party or anything.”

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by Shant Shahrigianh, Gotham Gazette
      

Read more by this writer.

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Molinaro Starts Campaign on Attack, Policy Plans to Come Tue, 26 Jun 2018 04:00:00 +0000