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Key Takeaways: How the State Budget Impacts New York City


Cuomo

(photo: The Governor's Office)


Early Saturday morning, the New York State Legislature finalized a new $168 billion budget ahead of the April 1 start to the 2019 fiscal year. The process to agree on the budget heavily involved four men -- Democratic Governor Andrew Cuomo, Democratic Assembly Speaker Carl Heastie, Republican Senate Majority Leader John Flanagan and Senate Independent Democratic Conference Leader Jeff Klein -- in the usual largely closed-door process.

When a deal was reached, the various parties sought to claim victories, including, for the Senate GOP, about what was not in the budget. The list of stated priorities for Cuomo, Heastie, and Mayor Bill de Blasio that were not included is indeed fairly long, and includes criminal justice, election, and campaign finance reforms; additional taxes and more speed cameras around city schools; and much more. 

But, along with the basics of a spending plan that funds state government and sends aid to localities, chiefly for education and Medicaid, there was quite a bit that did make it into the budget deal.

Cuomo is touting the budget’s inclusion of added funding for New York City public housing (NYCHA), anti-sexual harassment legislation, and a new state tax code that aims to blunt the impact of the new federal tax code. The governor, who is seeking a third term this year, is also boasting about measures to remove guns from those convicted of domestic violence, what he calls a first step toward a fuller congestion pricing plan for New York City, and more.

“The budget hit the priorities that we had set out,” Cuomo said Friday night in Albany after the budget passed. “When we started we said, number one, we have to defend against that federal tax increase, number two invest in education, three fight sexual harassment, four protect our democratic process, safeguard the environment, and grow the economy.”

Mayor Bill de Blasio, for his part, called the new state budget a “mixed bag” for the city. Though de Blasio was forced into sending more than $400 million to the MTA for the Subway Action Plan, he commended the governor for heeding his call to allocate more resources to the ailing subway system. 

“When it comes to the subways, Mayor de Blasio has always demanded two things: significant movement by the state toward a real plan, and a dedicated lockbox so city riders' money goes toward fixing city subways,” said de Blasio spokesperson Eric Phillips in a statement to Gotham Gazette on Monday. “This budget appears to respond to the Mayor’s demands on behalf of the city’s straphangers. There are no excuses left for the Governor to hide behind. He must do his job and fix the subways.”

It was a sentiment de Blasio presented during a NY1 appearance Monday night. There are a number of provisions in the budget that de Blasio disagrees with, including an impending independent monitor to oversee the spending of the new NYCHA funds. The mayor also said he’s disappointed about measures that did not make it into the budget, like the additional speed cameras that he says would save lives.

City Comptroller Scott Stringer and City Council Speaker Corey Johnson were pleased that the city would pay for half of the Subway Action Plan. “For months and months since, we’ve continuously released alarming reports that have spotlighted the delays underground, the economic ramifications of slowdowns, and the crisis in our transportation systems. Each time, we’ve continued to call for the full funding of the emergency plan. It has always been the right thing to do,” Stringer said in a press release on Friday. “Today, it appears action is finally happening. We’re glad to see the City taking this step forward.”

“I applaud @NYCMayor Bill de Blasio for this decision,” Johnson tweeted on Saturday of the move to agree to pay the 418 million toward mending the subway. “As I've said for months, the subways are in crisis and we must work together towards a solution.”

The MTA Action Plan funding the city will put forth is one of a number of key takeaways from the state budget for New York City.

More Transportation
While the budget included a surcharge on for-hire vehicles, such as taxis and Ubers, traveling below 96th Street in Manhattan, there is no comprehensive congestion pricing plan. After reversing course on congestion pricing last summer, Governor Cuomo formed the Fix NYC Advisory Panel, which recommended a comprehensive congestion pricing plan with three phases over three years; Cuomo never officially endorsed the plan. 

The governor faced headwinds in both the Assembly and Senate, and the budget includes only the surcharge on for-hire vehicles, aimed at reducing traffic in Manhattan and producing an estimated $400-plus million in annual revenue for the MTA. In addition, the budget includes funding for over 50 new bus lane enforcement cameras.

NYCHA
The budget includes a new $250 million investment in the troubled New York City Housing Authority. Governor Cuomo in March vowed not to sign a budget that didn’t include additional funding for NYCHA as he assailed de Blasio and NYCHA leadership for its management and the crises at public housing, notably those related to lead paint and heat, as well as mold and general disrepair. The new money will be added to previously allocated state funding that hasn’t been spent, totaling $550 million. 

The money comes with a catch, though: spending will be overseen by an outside private contractor chosen by the mayor, the City Council, and NYCHA tenant leadership.

“In the situation of NYCHA, it’s so bad that New York State has stepped in,” Cuomo said. Cuomo declared a state of emergency for NYCHA in an executive order on Monday.

“When I go, cameras come,” he said in his state Capitol Red Room announcement of a budget deal on Friday night, around 9 p.m., “and I wanted New Yorkers to see how deplorable these conditions were.”

The new state investments and oversight come as the federal government has also added checks on NYCHA operations, with more possibly coming soon as the result of an ongoing federal investigation.

Some have connected Cuomo’s recent interest in NYCHA -- he’s made more visits in the last month than in his prior seven years as governor combined -- to both an opportunity to vilify his rival de Blasio and the primary challenge he’s now facing from Cynthia Nixon, who also recently visited NYCHA, as the guest of Brooklyn Borough President Eric Adams. Nixon said there should be a $1 billion state investment.

The Assembly’s one-house budget had included $275 million in additional funding for NYCHA, while the Senate’s had included no additional funding.

The state budget also gives NYCHA design-build authority for critical repairs, allowing for a streamlined procurement and construction process and should help speed timelines for things like boiler replacements.

Design-Build
Speaking of design-build, the budget allows the City of New York to use it in three areas: NYCHA, Rikers Island replacement jails, and the Brooklyn-Queens Expressway. 

Design-build allows both the design and construction of a capital project to be consolidated into one contract for one firm, shortening the project timeline, decreasing costs, and increasing efficiency. This stands in contrast to the currently allowed procurement process of design-bid-build, which requires separate bids for the design and construction aspects of a capital project.

The city has asked for design-build authority for all of its capital projects, or for a longer list than the three, but has long been met with heavy resistance from the state Legislature and a seemingly limited push by Cuomo, who had omitted design-build for the city from his January budget proposal despite continually touting its impact on state projects. The state has used design-build for several of its recent high profile capital projects, such as the Tappan Zee Bridge and the Kosciuszko Bridge.

Design-build authority should allow the city to speed its ten-year plan for closing Rikers Island jails completely, and will allow it to make long-planned, critical infrastructure repairs to the BQE. On the latter, city DOT Commissioner and MTA Board member Polly Trottenberg has estimated savings of $113 million and a construction timeline shortened by two years.

Penn Station
The governor’s transit zone value capture proposal to fund the MTA, which faced major criticism from city elected officials as a raid on city property tax revenue, did not make it into the final budget. But a somewhat related and also controversial measure did make it into the budget: the state has more authority around Penn Station, though not nearly as much as Cuomo had sought in a last-minute proposal, according to de Blasio. The mayor said Monday night on NY1 that what was passed was nothing like what Cuomo had floated that would have given the state authority over a wide swath of land -- reaction from city officials had been swift and harsh. 

In the budget announcement Friday night, Cuomo framed the issue as a matter of safety, acknowledging, though, that the final language dealt more with Penn Station itself than the surrounding area.

“This is not just a transportation issue this is a public safety issue,” Cuomo said. “Current Penn Station is dangerous especially in this age of terrorism.” The administration claimed that Penn’s poor infrastructure and layout, and heavy congestion, was an attractive target for a terrorist attack, and that the state needed to utilize eminent domain in order to reduce security threats.

Education
The state’s public schools will see an increase of $1 billion in school aid in the new budget. This is above the governor’s originally proposed $769 million increase and the Senate’s proposed $717 million increase, but below the Assembly’s proposed $1.5 billion increase. Out of the $1 billion increase, New York City will receive $334 million, bringing the state’s total funding for New York City schools to $10.54 billion, including $7.76 billion in Foundation Aid. 

Cuomo also won a significant new oversight power over the city’s schools. The budget requires certain school districts, such as New York City, to report spending of state funds on a per-school basis. Cuomo has argued that the issue with schools funding is one that can be fixed with better management, not more money.

“How much did the high performing schools in this borough get? How much does a student in the chronically failing school get? We’ve never had that conversation,” he said on The Brian Lehrer Show in late March. “And you can’t even find the information. And I said, in this budget, in January, ‘that’s the relevant conversation.’ It’s not how much money do you spend, we spend more than anybody else.”

Cuomo originally proposed a more far-reaching program that would require the state to approve budgets for large school districts.

De Blasio doesn’t buy Cuomo’s argument, and has said there is more information about school spending already available than Cuomo recognizes. In his own appearance on The Brian Lehrer Show, de Blasio criticized the governor for continuing to fail to fulfill the terms of a decade-old court ruling mandating more equitable funding for schools statewide.

“Of course it’s about the money,” de Blasio said. “The governor often likes to put out these ideas without having the facts behind them. There’s a huge amount of information that is publicly available on how much we spend on each school.”

Total education spending by the state in the enacted budget is $26.7 billion.

Beyond school aid, it also includes a $50 million increase in funding for community schools and a $15 million increase for pre-kindergarten, as well as investments in the No Student Goes Hungry program, after-school programs, and an $81 million increase in charter school funding. An expansion of the state’s school breakfast program will allow the city, which already has a “Breakfast After The Bell” program in elementary schools, to expand to middle schools and high schools, according to a statement from Hunger Free America.

Criminal Justice
Cuomo’s criminal justice reform package is entirely absent from the enacted budget, a blow to New York City leaders and advocates who have been among the loudest voices calling for things like bail reform and tying them to closing the jails on Rikers.

Cuomo had proposed a eliminating money bail for nonviolent felonies and misdemeanors, but despite support from the Assembly the Senate would not allow the measure through.

The same goes for Cuomo’s proposed reform of the state’s maligned discovery process, which would have required timely sharing of potentially exculpatory information by prosecutors with the defense but had been criticized by advocates for giving prosecutors a virtually unlimited right to redact information; the proposed speedy trial reform, which would have expedited the court process in order to avoid long pretrial detention; and the proposal to add strict limitations on asset seizure by police and new programs to support re-entry into society by ex-convicts.

The budget cuts the state’s $41 million funding of the Close to Home program, which places incarcerated juveniles in rehabilitation facilities in or close to the city in order to keep them close to their families and maintain continuity and help them advance and transition. As noted by Chronicles of Social Change, the cut comes just as New York’s juvenile detention facilities are preparing for an influx of new detainees, since the recently passed Raise the Age legislation will place 16- and 17-year-old offenders in the juvenile justice system rather than the adult criminal justice system.

Administration for Children’s Services Commissioner David Hansell referred to the cuts as “troubling,” according to New York Nonprofit Media. Other proposed cuts to child welfare services at ACS that were in Cuomo’s executive budget did not come to fruition.

The Child Victims Act, which would significantly lengthen the statute of limitations on prosecuting childhood sexual abuse and would create a year-long “lookback period” to re-open “time-barred” cases, also failed to make it into the budget. Despite the governor’s heavy support for the bill and the backing of celebrities, victims, and advocates, the CVA was once again killed by Senate Republicans, with the backing of the Catholic Church. Senate Majority Leader Flanagan said on The Capitol Pressroom radio program on Tuesday that his conference is open to continuing discussions about a change in the law.

The highest profile criminal justice item to make it into the budget is a ban on sex between police officers and individuals in police custody. This was spurred by the alleged sexual assault of Anna Chambers, who said she was raped by two NYPD officers while in their custody. The defendants, Richard Hall and Eddie Martins, who each quit the force days before a scheduled internal trial, claimed in their defense that the sex was consensual. The new state law makes it illegal regardless of any notion of consent.

Health Care
According to Cuomo, the budget includes $18.9 billion in state Medicaid spending. Much of the state’s Medicaid program is funded by the federal government; the total cost of the state’s Medicaid program is in excess of $70 billion.

The budget includes $1.1 billion in funding for Medicaid Disproportionate Share Hospital, a federal program that disperses funds to hospitals that serve a large number of patients who are either uninsured or on Medicaid. Last year, New York City Health and Hospitals Corporation received $360 million in DSH funds withheld by the state in the midst of proposed federal cuts to the program. The state, facing a $4 billion deficit, suggested the city tap into its own reserves to finance the ailing city hospital network.

As the budget wrapped up, the Cuomo administration and the Legislature negotiated a deal that would enable the government to capture $2 billion from the sale of health care provider Fidelis to Centene Corporation. Fidelis, which is operated by the Roman Catholic Diocese of Brooklyn, is a Medicaid provider; the government argued that, since the business was built on selling government health insurance plans, the state is entitled to a substantial portion of the sale. As such, the state will be able to capture some 53% of the $3.75 billion sale price, key to helping the state close the budget deficit it was facing.

Taxes
New York State and New York City are notoriously high-tax jurisdictions and the recently-passed federal tax bill compounds the phenomenon, city and state officials have said, especially for upper middle-class and high-income earners. Cuomo made it a top priority to ensure New Yorkers face as little addition tax burden as possible by “protecting taxpayers against federal tax changes.”

On this front, the budget includes attempted workarounds to help New Yorkers avoid bearing the burden of the reduction of SALT, or state and local tax deductions from federal taxes. The budget decouples state and local taxes from the federal code, will allow employers to pay an optional payroll tax to help employees reduce their income taxes, and creates new charitable giving entities where New Yorkers can give to offset their taxes and receive a corresponding tax credit from the state. It is unclear how well these measures will work, given that employers have to opt in on the payroll measure and the IRS will have to weigh in on the charitable deductions.

"New York will also become the first state to implement new measures to shield families from the devastating federal tax law's elimination of full state and local deductibility — an economic arrow aimed at the heart of this state's economy,” the governor said in a press release. Cuomo has said his top priority is repeal of the new federal tax code, or at least of the SALT cap, now at $10,000, which would likely require Democrats to take control of Congress and the White House.

Anti-Harassment Legislation
As the country struggles with how best to confront rampant sexual harassment in workplaces, New York state lawmakers pledged to enact legislation aimed at preventing and punishing sexual harassment in public and private work environments. “We put into place the strongest and most comprehensive anti-sexual harassment protections in the nation, ending once and for all the secrecy and coercive practices that have enabled this unacceptable behavior for far too long,” Cuomo said in a press release.

To that end, the new legislation requires sexual harassers to repay taxpayer funds when they are found liable (not in other settlements, however, according to The New York Times). In addition, a new measure will prevent sexual harassers from sweeping allegations under the rug by ensuring that nondisclosure agreements are only reached at the victim’s request. “[N]ondisclosure agreements can only be used when the condition of confidentiality is the explicit preference of the victim,” Cuomo said of the budget’s new legislation.

Other measures on this front include mandating all state contractors “submit an affirmation” that they have sexual harassment policies in place and that their employees are made aware of them via training. The budget also mandates the Department of Labor and Division of Human Rights will form sexual harassment policies to be used by public and private employers.  

However, there has been a great deal of criticism of the process by which the new measures were reached, with the only female legislative leader -- Senate Minority Leader Andrea Stewart-Cousins -- left out of the negotiations. The policies have also been criticized by advocates and former state government aides, some of whom experienced harassment, for not empowering victims enough, not simplifying the process to report claims, and not protecting people who face other types of workplace harassment. "These laws will not adequately protect workers, leaving them to navigate an opaque process and in danger of retaliation,” the group of former staffers stated following the budget’s passage.

The bill has also been criticized for not addressing or reforming in any way the Joint Commission on Public Ethics, tasked with investigating sexual harassment allegations. Cuomo had sought to add funding for a new JCOPE unit, but that was not part of the budget deal.

Also Missing
The DREAM Act, which would allow for state college assistance to be provided to undocumented New Yorkers, was again included in the Assembly’s and Cuomo’s budget proposals, but did not make it through the Senate. Members of the IDC attempted a maneuver to attach it to a budget bill but it was defeated.

The DREAM Act is one of several other progressive wish-list items again left out of the budget, blocked by the Senate, including measures like codifying Roe v. Wade abortion protections into state law.

Despite calls among government reformers and some reform-minded legislators, a number of government ethics, campaign finance, and election reforms were again left out of the state budget. Specifically, the budget does not institute early voting, keeping New York in the minority of states, nor does it implement same-day voter registration or several other election reform measures. There is no new ban on outside income for legislators or implementation of term limits; nor is there any change in the state’s exceptionally high individual campaign donation limits or the notorious LLC loophole, which essentially negates even those high donation thresholds. There is also no new limits on donations from those with or seeking state business.

***
by Ben Brachfeld and Sam Raskin

Note: this article has been corrected to remove mention that there is language in the budget allowing the state to take money related to the city's Health + Hospitals insurance provider, Metroplus.



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