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Key New York City Issues in Final State Budget Negotiations


Cuomo budget presentation

Gov. Cuomo during his budget address (photo: Darren McGee/Governor's Office)


A state budget is due by the April 1 start to the new fiscal year, and lawmakers have pledged to have a spending plan -- which is likely to include several new policy items -- done before Friday, March 30, given the impending Passover and Easter holidays. As Governor Andrew Cuomo and legislative leaders negotiate a wide variety of policy and spending issues, many are important to New York City, not the least of which include determinations of state funding to the city for education, juvenile justice, public housing, and more.

Mayor Bill de Blasio has called Cuomo’s January $168 billion executive budget plan a mixed bag for the city, criticizing a handful of funding cuts or shifts, omissions, and proposals that he believes would hurt the city. Plans related to MTA funding, including a possible congestion pricing scheme, or at least one phase of such a program, are toward the top of the list of controversial measures being debated in Albany that are of utmost importance to de Blasio, other city-based elected officials, and city residents.

De Blasio testified in Albany in February, laying out the city’s state budget priorities and critiquing Cuomo’s budget proposals. Since then, controversy surrounding NYCHA, the MTA, design-build authority, and other policy and funding matters has only intensified.

Statewide tax reforms are at the top of Cuomo’s list, provoked by the federal tax code changes passed at the end of last year, and could have major implications in New York City. Beyond more basic negotiations over spending and funding, other statewide issues being debated in the state capital that are include sexual harassment prevention and punishment, voting reform, bail reform, and more.

Negotiations are largely being held among Cuomo, a second-term Democrat, Assembly Speaker Carl Heastie, a Bronx Democrat, Republican Senate Majority Leader John Flanagan of Long Island, and Jeff Klein, leader of the Senate Independent Democratic Conference, which has a ruling coalition agreement with Flanagan’s conference. Those “leaders meetings” as they are often called symbolize the “four men in a room” that is the oft-criticized phrase for Albany’s secretive, concentrated, and male-dominated decision-making. Making talks even more secretive this year is that they’ve mostly been held at The Governor’s Mansion, not at the state Capitol, home of the statehouse press corps and where rank-and-file legislators work.

Talks recently heated up after the Senate and Assembly passed their one-house budget resolutions, in which the majorities formalize their policy and spending priorities and proposals. The two houses, each with a different party in control, differ widely on a host of policy matters and budget priorities, though a large bulk of the budget is not controversial because education, Medicaid, and other funding is likely to be allocated from the state to localities largely as it has been for years.

Complicating matters is that this is a state-level election year, with Cuomo seeking a third term and all of the Legislature on the ballot as it is every two years. Party control of the state Senate hangs in the balance, in part through special elections set for April 24 that will fill two vacant Senate seats previously held by Democrats, which Cuomo purposefully scheduled for after the budget is set to be done.

A rundown of issues of special importance to New York City shows what’s at stake as state budget negotiations hit their final stages.

Public Housing and Infrastructure
During his state budget testimony, de Blasio singled out NYCHA as in need of reform and increased funding from the state. To that end, the State Assembly’s budget includes $275 million reserved for NYCHA repairs. The Senate included no additional funding for NYCHA in its spending plan. Cuomo has recently been appearing at NYCHA complexes, bashing de Blasio and the city for its management of the housing authority, and pledging state help, including a push for a new $250 million, design-build authority to speed repairs, and a state emergency declaration that would include use of a private company to manage fixes.

De Blasio has said he wants to see design-build authority for the city, including for NYCHA, additional state funds for the housing authority, and the release of millions of dollars in funds allocated in prior budgets. He has been skeptical or critical of the possible emergency declaration.

Cuomo had curiously left design-build -- a streamlined contracting and construction process -- for New York City out of his executive budget. The Assembly has passed a bill authorizing design-build for several projects in the city, but the Senate has not, and the Senate did not include design-build authority for the city in its one-house budget. Senate Leader Flanagan has not explained why, but there has been a lot of talk that design-build for the city will be one key piece of horse-trading that annually occurs in finalizing the budget.

A failure to allow for design-build, the de Blasio administration says, would impede the city’s efforts on projects such as NYCHA repairs, Brooklyn-Queens Expressway construction, and jail replacements for Rikers Island, which is slated to close within ten years. The state has used design-build on a variety of projects, often touted by Cuomo, to save billions of dollars and years in estimate project time.

Transportation
Problems with the MTA, namely the city’s subway service (but also bus efficiency), have been felt by most New Yorkers and well-documented over the past year in particular. De Blasio has waged a public relations campaign to ensure that New Yorkers know Cuomo controls the state authority -- where he appoints the leadership and a plurality of the board members -- and called on the state for better spending prioritization and a new source of revenue, which he has said should come from a tax on high earners, but Cuomo has said could be attained through congestion pricing. While de Blasio has been skeptical of congestion pricing, he was somewhat warmer to the three-step phase-in proposed by Cuomo’s “Fix NYC” panel.

Those recommendations appear to be the basis for state negotiations, though Cuomo did not publicly embrace the plan, only backing portions of it publicly, while raising a few questions and leaving it out of his budget plan. Both legislative houses are cool to congestion pricing, though Cuomo has said he is pushing hard for a plan, indicating there could be an initial piece -- a surcharge on taxis and app-based for-hire vehicles like Uber and Lyft, in this year’s budget. The Assembly appears more friendly toward that possibility than the Senate.

Cuomo wants to institute “value capture” zones in New York City, which would use property tax revenue the state argues is generated by transit improvements. De Blasio maintains that value capture would “grant the MTA the power to raid our property taxes on properties within a one mile radius of certain projects,” cost the city much-needed funds, and violate city sovereignty.

Since February, Cuomo has amended the specifics of his value capture proposal since it was included in the initial budget in new draft of the legislation, Politico New York recently reported. City officials, however, are not persuaded by Cuomo’s value capture pitch -- Deputy Mayor Dean Fuleihan and Department of Transit Commissioner Polly Trottenberg came out against the proposal the same day.

Meanwhile, short-term, there are ongoing debates over funding for the “Subway Action Plan,” put forth by MTA Chair Joe Lhota and supported by Cuomo, which would allocate $836 million toward repairing the subway and take a variety of other emergency measures to improve subway performance. Cuomo quickly agreed to fund half the plan, and he and Lhota called on de Blasio to fund the other half from city funds, which the mayor declined to do, pointing to money he says the state has raided from the MTA over the years and the fact that city residents already contribute the bulk of the MTA budget.

Notably, City Council Speaker Corey Johnson has said he believes the city should fund the other half of the Subway Action Plan, but the overall Council position has not been made clear. Comptroller Scott Stringer had said from the start that the city should match the state’s half, prioritizing the subway system and its riders over additional fighting over budget maneuvers and responsibility.

Along with the subway action plan, the governor’s budget includes $429 million for MTA repairs, according to a press release. The Assembly budget plan allocates $490 million in new funds to the MTA, would bring MTA funding in the next budget to a total of $5.3 billion, and $10.5 billion to transportation overall, according to a news release. The Senate’s one-house budget does not include new funding for the MTA.

Additionally, de Blasio and many in New York City are again calling on the state to allow the city to install more speed cameras in school zones. The Senate blocked the measure last year. The mayor recently added to this agenda, urging the state to enact multiple pieces of legislation to ensure dangerous drivers are kept off the road. It’s not immediately clear if there is any hope for such measures to be included in the budget.

Education
Unlike many other recent years, there are few education policy issues on the table this year, leaving funding levels as the central schools-related item of significant concern in budget negotiations.

The governor’s executive budget increases school aid across the state by $769 million over the current fiscal year, including $338 million in “Foundation Aid,” a supplemental funding formula to aid local school districts based on need. The increase brings the school aid total to $26.356 billion, an increase of 3% over last year. The executive budget claims that this is “double the statutory School Aid growth cap” and that school aid is the “state’s highest funding priority.”

Despite this, advocates have charged for years that the state’s funding formula leaves schools not fully funded, including as it relates to the Campaign for Fiscal Equity court ruling of more than a decade ago. Cynthia Nixon, who recently announced a challenge to Cuomo in the Democratic gubernatorial primary, has worked extensively with advocacy organization Alliance for Quality Education (AQE) and has made “fully funding” public schools a top campaign plank, adding an additional political element to budget negotiations around this topic.

The fault supposedly lies in the flawed Foundation Aid formula; the formula is based on a wealth index that, according to an analysis by the Citizens Budget Commission, “make the neediest districts in the state seem less needy, while the state’s wealthiest districts seem less wealthy.” The 2006 court ruling required the state to provide a more equitable funding formula, which led to Foundation Aid, but local politicians and advocates say that the state has not lived up to its agreement and that high need schools do not receive the aid they require.

In his testimony in Albany, de Blasio said that there is a $211 million gap between what the city is designated to receive in the Executive Budget and what it is supposedly owed through the Foundation Aid formula.

The Assembly included a larger school aid increase in its own proposed budget, to the tune of $1.5 billion, to bring total school aid spending to $27.1 billion. This includes a $1.2 billion increase in Foundation Aid to $18.4 billion.

The Senate proposal, meanwhile, includes an aid increase smaller than the governor’s, at $717 million with $379 million in Foundation Aid increases, to bring total education investment to $26.1 billion. The Senate proposal also includes a plank calling for a removal of the cap on charter school growth, though after it was a key piece of negotiations and legislation last year, the charter school cap has flown significantly under the radar this year.

Both the governor’s and the Assembly’s budgets include increased investments in and expansion of the state’s public pre-kindergarten, but the scale is again different. Cuomo’s budget includes a $15 million increase while the Assembly’s budget include a $50 million increase. Both budgets also include a $50 million set-aside for community school aid, aiming to facilitate the creation and maintenance of schools that double as community hubs.

Voting
Cuomo’s “Democracy Agenda,” introduced in December, includes several reforms to the voting process in New York, which has often been described as among the worst in the nation. These include items Cuomo has backed in past years like early voting, automatic voter registration, and same-day voter registration.

New York is not as behind the curve in enacting automatic and same day registration -- nine states have automatic registration and 15 have same-day -- but on early voting, the Empire State has been substantially outpaced. New York is one of just thirteen states not to have the measure, which is annually blocked by the Senate, though it is unclear how much weight Cuomo and Assembly Democrats have put behind it.

Cuomo last month announced 30-day budget amendments to provide 12 days of early voting and added $7 million to pay for it, a move celebrated by advocates and reform-minded legislators. The Assembly and Senate are less amicable to early voting: the Assembly proposal provides for eight days of early voting, while early voting is entirely excluded from the Senate proposal. Senate Republicans have historically been hostile to voting reforms.

Cuomo’s proposal does not address other areas of interest for advocates, such as the consolidation of state and federal primaries and easing some of the strictest deadlines in the nation for registration and for switching party registration.

Ethics and Transparency
Ethics reform is once again taking a backseat in budget negotiations. Cuomo, in his executive budget, called for closing the LLC loophole and banning outside income for legislators. Cuomo also called for social media companies to disclose who pays for political advertising on their platforms in the wake of the discovery of secret ad buys in the 2016 election by Russians. Cuomo also called for a new “Chief Procurement Officer” to “oversee the integrity” of the procurement process, where apparent abuses have occurred under his watch and he has been against reinstating pre-audit oversight to the state comptroller.

Cuomo’s executive budget and State of the State speeches devoted little attention to ethics reform, and the Assembly and Senate are not taking up the cause despite the recent high-profile trial and conviction of the governor’s former top aide, Joe Percoco, as well as the upcoming bid-rigging trial of Alain Kaloyeros, the former president of SUNY Polytechnic. The Assembly has been more aligned with the governor on campaign finance reform, but the Senate has shown little interest in any additional ethics or campaign finance reform measures.

There is some discussion around watchdogs’ call for mandating a “database of deals,” which would create a public database of all economic development contracts in the state, tracking who is getting taxpayer money for development contracts and how it is being spent. Both the Assembly and the Senate included the deals database in their one-house budgets, but the governor has not signaled his support. As it did last year, the transparency and accountability measure could be bounced from the final budget as part of annual horse-trading.

Criminal Justice
In his State of the State address in January, Cuomo outlined a criminal justice agenda that he referred to as “the most progressive set of reforms in the nation,” aiming to reshape the criminal justice system in New York towards fairness and equity.

The marquee proposal of the pack is eliminating cash bail for misdemeanors and nonviolent felonies, which has largely received praise from criminal justice advocates and follows a nationwide push to end a practice that many say is discriminatory against low-income people and people of color. Some advocates, however, have said that it could go much further, such as eliminating bail entirely and abolishing the bail bonds system. Advocates have also voiced concerns about the broad jurisdiction of judges to keep people on “preventative detention,” or a judge deeming that a suspect is not fit for release. On the other hand, Senate Republicans have been cool to the notion of reform.

The governor also proposed changing discovery process. According to the governor himself, New York is tied for having the worst discovery laws in the nation. New York is one of 10 states that does not require the prosecution in a case to share evidence with the defense on a strict timetable; for instance, in New York, a prosecutor could share potentially exculpatory evidence with the defense just hours before the trial begins, leaving the defense with little room to mount an argument. The reform requires evidence to be shared “incrementally” and in a “timely and consistent manner.”

Also included in the governor’s proposal is a ban on asset seizure by police in the absence of an arrest, and the return of assets to those who are not convicted in a court of law. He also put forth proposals to speed up the trial process in order to prevent judicial backlog and long pretrial detention, which has come under fire in the wake of Kalief Browder’s suicide, and to remove “reentry barriers” for the formerly incarcerated, such as ending suspension of drivers’ licenses and removing certain fees such as the “parole supervision fee.”

While Cuomo's bail reform proposal has received some support from reformers, many advocates have voiced deep concerns about the governor's discovery reform. The criticism centers around a “right of redaction” of names in the evidence provided to the defense by the prosecution, which the Legal Aid Society told the New York Law Journal would give prosecutors “blanket authority” to black out identifying witness information.

The governor’s proposals are out-paced from the left by those of the Assembly (and the Senate Democrats, who are in the minority). The Senate Democrats’ proposal eliminates cash bail entirely; the Assembly’s approach is more in line with Cuomo’s, but eases certain restrictions on the payment of bail by charitable bail organizations such as the Brooklyn Community Bail Fund. This would allow those funds to pay bail of up to $10,000, up from the current $2,000 cap, and allows them to operate in more than one county.

On discovery, the Senate Democrats call for “automatic, comprehensive discovery” of all material possessed by the prosecution while the Assembly’s bill calls for a deadline of 15 days after arraignment, similar to the governor’s. The Assembly and Senate Democrats both place greater restrictions on prosecutory redactions than the governor’s proposal.

The Assembly and Senate Democrats both have speedy trial language that is also beyond what Cuomo is pushing, though he has also included measures. Cuomo's speedy trial provisions have received some criticism from advocates: #FREEnewyork accuses the governor’s plan of failing to address the issue of “court congestion and under-resourced courts,” failing to eliminate speedy trial release for pretrial detainees, and that it would not fix the “speedy trial clock loophole” that allows prosecutors to stop the statutory time limits that govern New York’s current laws even if the defense isn’t ready, along with other criticisms.

The Assembly’s proposal would ban solitary confinement for those under 21, over 55, for people with disabilities, pregnant people or people in the post-partum period, or those in a “newborn nursery program.” It would also set limits on the “use and duration” of solitary.

The Assembly’s bill would also establish an “Office of Special Investigation” in the Attorney General’s office to independently investigate instances where individuals die in the hands of law enforcement, either in custody or during an encounter. In 2015, Cuomo named Attorney General Eric Schneiderman as the special prosecutor in charge of investigating civilian deaths at the hands of police officers; the special prosecutor was named as an effort to bypass the alleged closeness between District Attorneys and police departments.

Senate Republicans did not include language about the planks of Cuomo’s criminal justice reform package, and some are pushing back against the notion of limiting the use of cash bail. Their opposition represents a significant roadblock to the passage of the governor’s criminal justice agenda items, which could be his signature progressive accomplishment of this budget cycle. On Sunday evening in Albany, after a leaders meeting, Senate Leader Flanagan told reporters that "bail reform is probably going to be one of the policy matters that’s discussed outside the budget,” according to Politico New York.

Meanwhile, the Child Victims Act appears to be in for its now-annual legislative fight; Governor Cuomo strongly supports the legislation, which extends the statute of limitations for victims of child sex abuse, and included it in his budget proposal, as did the Assembly. But it was excluded in the Senate one-house budget resolution.

Celebrities such as Corey Feldman and Julianne Moore have attempted to raise the profile of the CVA and ensure it is included in the budget, but another high profile figure, Cardinal Timothy Dolan, recently met with legislators in Albany to lobby for the removal of the “lookback” provision, which would allow for the re-opening of “time-barred” cases within a certain window of time; the governor is proposing one year. Given the history of child sexual abuse associated with the Catholic Church, Dolan is claiming that the CVA will be “toxic” to the church with the lookback, prompting sharp rebukes from Cuomo and others.

Taxes
Perhaps the most challenging aspect of state budget negotiations is agreeing on an attempt to change the state tax code to mitigate the effects of the new federal tax code, established by law in December.

“The FY 2019 Budget protects New Yorkers against attacks from Washington and helps further our bold, progressive agenda to move New York forward," Cuomo said in a press release with his 30-day amendments to his executive budget. "After working with experts and stakeholders, I am advancing further reforms through these budget amendments that to safeguard our competitiveness and help protect residents from this federal economic assault."

Specifically, after amendments to it in February, Cuomo’s budget allows for employers to implement a 5% payroll taxes, which can still be deducted from federal returns, in order to avoid the federally-mandated $10,000 cap on state and local tax deduction. Cuomo would also create new ways for New Yorkers to pay for government services through charitable giving, which might be deductible from federal taxes, though the IRS may have to rule on any new systems put in place, and he wants localities to also be able to create such structures, which would result in state and local tax credits to individuals who give to the charitable entities for education and possibly other services.

And in order to avoid the the $1.5 billion of tax increases on New Yorkers due to the new federal tax law, Cuomo’s budget “decouples” state and local taxes from the federal tax code.

The Assembly “largely accepts the Executive proposal aimed at protecting New Yorkers from federal tax reforms,” according to a press release, and increases income taxes for New Yorkers who earn over $5 million annually.

The Senate, however adopted a different approach in its tax plan, leaving out the Cuomo tax code proposals, and omitting what Senate Majority Leader John Flanagan estimates as $1 billion in new taxes in Cuomo’s budget. “We rejected the new taxes and other proposals that would hurt families and businesses, and put forth a plan to give taxpayers the relief they need and deserve. We also make sound investments in education to help our students, fund critical infrastructure, and propose new measures to strengthen our communities,” Flanagan said in a March press release. The Senate’s budget also lowers taxes on utility bills, retirement income and bridge tolls.

Cuomo included the "revenue raisers" in his budget plan in order to help close the state budget deficit. Since Cuomo's budget presentation, estimates have changed that indicate the state is expected to take in hundreds of millions of dollars more in tax revenue than previously thought, in part due to reaction to the new federal tax law.

De Blasio is opposed to the new federal tax plan on ideological and practical grounds. “The tax bill passed by Congress was written by millionaires for millionaires, while everyone else suffers,” he said in a December press release following the bill’s passage. And, like Cuomo, has also spoken to the need for the state and city to respond to the tax plan, which he believes adversely affects New York City residents. Combatting what the two rivals both see as the harmful effects of the tax plan is one issue that de Blasio and Cuomo agree upon. “I want to commend the Governor for trying to find ways to blunt the effects of the new tax law and I look forward to working with him, and all of you, on solutions,” de Blasio said during his February state budget testimony.

Sexual Misconduct
Amid a national reckoning with seuxal misconduct, including workplace harassment, Albany lawmakers have made an effort to enact legislation aimed at preventing and punishing such conduct. Cuomo unveiled several policy proposals in his State of the State, and the issue may be one where consensus can be found for a slate of new policies.

However, there is a lot of attention on both substance and process, as many are concerned about the possibility of four men -- one of whom, Senator Klein, has recently been accused of forcibly kissing a staff aide in 2015 -- deciding new sexual misconduct policies. There has been some talk of Senate Minority Leader Andrea Stewart-Cousins being included in negotiations on the topic, but it is unclear to what extent she or any other women will be allowed to participate.

Cuomo’s budget language would prevent state funds from being used for settlements of sexual harassment or assault cases. He would also ban confidentiality agreements unless the victim chooses to agree to one, and mandates that the Joint Commission on Public Ethics creates a units to investigate sexual harassment allegations in state government. “Sexual harassment afflicts people of every gender, race, age and class, and there must be zero tolerance for sexual harassment in any workplace, including those of the State and local governments,” reads the budget summary.

Cuomo’s agenda would also institute uniform policies across state government, instead of the current situation where the executive branch and each of the two legislative houses has its own policy.

"The Assembly Majority recognizes that putting families first means making sure that everyone, especially women, never feel that they have to tolerate sexual harassment to earn a paycheck," said Assembly Speaker Carl Heastie. "These new policies will empower individuals to hold harassers accountable and help put an end to the culture of harassment that plagued our workplaces for far too long."

To that end, the Assembly’s proposal lends the Attorney General more authority to prosecute criminal cases and defend victims in civil ones. The Assembly’s budget would also outlaw mandatory arbitration agreements and void clauses in contracts that “waive rights relating to discrimination claims.” In addition, the Assembly budget includes a provision requiring the state’s Division of Human Rights to craft a set of anti-sexual harassment guidelines and share it with the public and for state and local agencies, along with entities who “do business” with the state, to report to the state on sexual harassment matters.

Among the Senate’s proposals on sexual harassment is Senate Bill S7848A, sponsored by Republican Senator Cathy Young. Like Cuomo’s, the bill would institute a consistent policy on sexual harassment across all branches of state government, ban confidentiality agreements that prevent survivors from talking about incidents and would allow the state to “recoup” money spent on sexual harassment settlements. “Our legislation will help prevent sexual harassment and ensure all employees throughout this state are provided with the safe work environment they deserve,” said Flanagan of the legislation. However, the Senate's legislation has drawn criticism from lawmakers, advocates and experts due to certain language around false reporting and omissions.

But before the budget is passed, six women who have made sexual harassment allegations against state lawmakers have urged the governor to listen to input from survivors and for the state to take its time in passing legislation, extending past the budget into the legislative session to follow if needed.

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by Ben Brachfeld, Sam Raskin and Ben Max



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