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10 Burning Questions After Cuomo’s State of the State and Budget


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Gov. Cuomo with Lt. Gov. Hochul & legislative leaders (photo: Mike Groll/Governor's Office)


Governor Andrew Cuomo, a third-term Democrat, delivered his State of the State speech earlier this month, laying out his proposed $175.2 billion executive budget for the 2020 state fiscal year that begins April 1. Calling it his “justice agenda,” Cuomo unveiled a long list of proposals, some new and many rehashed, expressing confidence that full Democratic control of the state Legislature would allow for a slew of sweeping policy victories that had been denied by years of Republican obstruction in the upper chamber. In the two weeks since then, the Assembly and Senate have indeed advanced several bills -- some of which the governor has quickly signed -- to reform the state’s voting laws, protections for the LGBTQ community, reproductive health rights, and criminal justice system.

The budget gap for next fiscal year, which begins April 1, is about $3.1 billion, lower than the one the state had to cover last year. Cuomo has proposed a 3.6 percent increase in spending each for healthcare and education, the two largest buckets in the budget. Under Cuomo’s plan, which will now be the subject of negotiations with the Legislature, the health care budget would increase by about $700 million, reaching $19.6 billion, and education spending would increase by $1 billion, for a total of $27.7 billion. The governor has also proposed a new education funding formula that he calls “Education Equity,” which would redistribute funds to the poorest schools in the poorest districts, he says, and will be a central element of budget discussions.

[READ: 15 Notable Cuomo Proposals Not In His State of the State Speech]

There’s a great deal to be hashed out, both in terms of policy and the state budget, in the next three months, including stakeholders beyond the governor and legislators, such as advocates, service-providers, local officials like Mayor Bill de Blasio, and others. Though the governor finds himself largely allied with the Legislature on broad progressive priorities, there are areas of disagreement, small and large, and details to be worked out on a host of complicated policies.

Now that Cuomo has framed the discussion with his policy and budget plans, the Legislature is fast at work passing bills and others around the state are pushing their agendas, here are ten of the outstanding questions for the upcoming Legislative session and budget:

1. Will the state stick to a 2% cap in spending increases?
Cuomo is fond of touting his administration’s fiscal discipline and his self-imposed 2 percent cap on increased spending each year. But it’s become a tradition for him to use maneuvers that move spending off the state budget to help mask the actual uptick in spending.

“One of the things that we noticed was that the governor again purports that this keeps state spending at 2 percent,” said Dave Friedfel, director of state studies at Citizens Budget Commission, a nonpartisan watchdog, said of the governor’s executive budget plan, “and it looks like it’s closer to 3 percent. It’s probably a touch more, based on some quick adjustments that we could see right away where money was moved out of state operating spending in a budget year but not in the current year for the calculation.”

2. Will the state put away more money in reserves?
The state would have just $2.3 billion in rainy day funds based on Cuomo’s budget, a pittance compared to the $175 billion in planned spending and an amount that would be insufficient for the state to survive an economic downturn if one should occur without major spending cuts and/or tax increases. The state, and the country at large, is reaching the tail end of the second-longest economic expansion in history and most experts say it will not last too much longer.

“The tide will turn eventually,” Friedfel said. “It’s a matter of how severe that recession is going to be. So we were hoping to see more deposits to the state’s rainy day funds.” Friedfel praised the governor’s proposal to put $500 million more into reserves over the current and upcoming fiscal years but said it wouldn’t be strong enough. “In the absolute best case scenario, [based on] the last three recessions, you could expect to see a revenue shortfall of $20 billion over four years and right now the state’s rainy day fund, even with the governor’s deposit is gonna have $2.3 billion,” he said.

Experts like Friedfel have pointed to California, a similarly high-tax and high-spending state, as a model to follow since that state has put away nearly 10 percent of its operating budget into reserves -- the California rainy day fund is expected to reach $15.3 billion by next year.

3. What will congestion pricing look like?
Cuomo has embraced congestion pricing -- tolling traffic into the Manhattan business district south of 60th Street -- as a crucial method to fund the MTA (and help reduce traffic). At his State of the State, he said the proposal could bring in as much as $15 billion over ten years. But he gave few details of what he believes the program should look like and his budget similarly does not outline exact tolls or methodology.

For elected officials in New York City and its suburbs, congestion pricing is far from a settled idea (there is also concern upstate about transportation funding). New York City Mayor Bill de Blasio has repeatedly emphasized that he would prefer a millionaire’s tax to fund the MTA, and has hemmed and hawed about an ideal congestion pricing plan, while lawmakers in outer boroughs have raised concerns that the program will hurt the pockets of their constituents. However, support for congestion pricing has grown significantly over the last few years, and Cuomo appears committed to passing some version of the program.

Still, there are many questions to answer as a scheme is crafted.

“But I think the bigger question too is, the city runs the roads and bridges that will generate this revenue, so how much of the money will go back to maintaining these roads and bridges?,” said Nicole Gelinas, senior fellow at the Manhattan Institute, a think tank. “That’s something the city really has a stake in. You wouldn’t want to see the city having to pay hundreds of millions of dollars to rehabilitate these bridges every few decades and then they’re generating money that only goes to the MTA.”

The governor's proposal, as Gelinas pointed out in a column for the New York Post, would give the Triborough Bridge and Tunnel Authority, which falls under the MTA, the ability to take over city streets, sidewalks, roads, bridges and tunnels to build the infrastructure to implement congestion pricing. In effect, it would put city infrastructure under the control of the state which could potentially, Gelinas warned, use that power to demolish bike lanes and pedestrian-friendly spaces and create more space for cars. "This would be a huge deal even if the state were offering something in return: a bigger say over how the MTA spends our money," she wrote. "Instead, Cuomo has said that he’d like more control over the MTA. More money from the city — and more dominance over its future."  

4. Will the governor and Legislature force New York City to split MTA costs with the state?
The governor has suggested that any shortfalls in capital funding for the MTA, after congestion pricing revenues are accounted for, should be split 50-50 between the city and state. He dubiously argued in his speech, as he has before, that he doesn’t control the MTA and that the city is legally responsible for funding subway and bus system capital needs. “And it is worth splitting the cost with New York City, to make the investment we should've made for decades to keep that transportation system vital,” he said, indicating that he could leave it entirely to the city.

Mayor de Blasio disagreed with the governor’s contention, and pushed back against his suggestion that the city had funded the majority of capital plans in past decades. But the mayor may have no choice in the matter if the governor and Legislature force his hand through law, as they did last year in compelling the city to fund half of the $836 million Subway Action Plan put into motion to arrest the rapid decline of subway service over the last few years.   

“On the MTA, it’s going to be very difficult negotiations to start off from here,” said Gelinas of the Manhattan Institute. “It’s hard to see the city going along with having to pay a much bigger portion of the MTA capital budget without having some kind of greater say in what happens at the MTA. The governor seems to want to go in the opposite direction with giving the state a bigger say, although it’s not really clear.”

In the weeks since the speech, Cuomo has repeatedly criticized the very management that he has appointed at the MTA while arguing that it should be restructured to give him more control, though he effectively already has near-absolute power over it.

“I think it’s a little disturbing that he would tie the rest of the existing [2015-2019] capital plan money for the MTA to all of this reform because that’s money that was already promised,” Gelinas added. “They’re already bidding out contracts based on that money. If you’re gonna say that $7.3 billion won’t be available unless we completely restructure the MTA, not only then do you have to worry about the future capital budget but now he’s sort of creating a big hole in the current MTA capital budget...It would be really hard to conceive of an MTA where the city, the suburbs, they’re still providing this money...but they don’t have say over the major capital projects that the MTA embarks on.”

5. What will Cuomo’s new education funding formula look like?
Cuomo proposed $1 billion in increased education funding overall, about $1.1 billion less than what the state Board of Regents recommended. In a series of slides during his speech, Cuomo pointed to education funding disparities across the state stemming from the current “Foundation Aid” formula, also known as Fair Student Funding, and how local districts distribute it to their schools, insisting that more money was being funnelled to richer schools in the poorest districts. His argument formed the basis for his “Education Equity” proposal, which would require school districts to dedicate a significant amount of foundation aid money to the poorest schools.

De Blasio was among those to quickly critique the governor’s proposal, insisting that in New York City at least, funding had been sent where it was needed, despite figures Cuomo had for the first time presented during his speech. The mayor, and education advocates and elected officials, have repeatedly urged Cuomo to fully fund the state Court of Appeals’ Campaign for Fiscal Equity (CFE) decision that first led to the creation of foundation aid -- a decision Cuomo insists is no longer relevant, with a commitment he says has already been met -- which would require billions more in funding, which Cuomo has refused to provide.

Rather, the governor’s budget briefing book took pains to argue that CFE has no relation to foundation aid. But he did not outline what his new proposal would entail, instead leaving it up to the state Department of Education to hammer out a plan.

6. Will Cuomo leverage mayoral control of city schools to get concessions from de Blasio?
Cuomo’s budget book noted his support for extending mayoral control of New York CIty schools by three years, a position he has taken in the past as well. But in the past, the governor -- and Republicans who controlled the state Senate earlier -- used mayoral control as a form of leverage over de Blasio, who is more closely allied with Assembly Speaker Carl Heastie and the teachers unions, attempting to enact concessions including an expansion of a charter school cap.

Cuomo did not mention charter schools in his speech and his budget briefing book has only a small section dedicated to them, but he has been friendly to the sector in the past, and charter school donors have been generous to his campaigns. It’s not clear yet whether Cuomo will pursue increasing the statutory cap, which is close to being reached, especially since Republicans who favor the charter sector no longer have clout in Albany. There are some Democratic legislators who are supportive of charters, but it is unclear how loud those voices will be in their conferences, and whether Cuomo will put any political capital into another expansion of charters’ ability to grow.

And if it isn’t charter schools, it’s unclear what, if anything, Cuomo may try to trade for extending mayoral control.

7. What will marijuana regulation look like?
This is one particularly burning question that has more answers than the others. Cuomo proposed a regulated program to legalize adult recreational marijuana use and raise $300 million in revenue annually, though it allows counties and municipalities to opt out. His budget puts forward the Cannabis Regulation and Taxation Act, which would impose three taxes on the cultivation and sale of marijuana for recreational use. He has also insisted that regulation must be accompanied by decriminalization for those already convicted on marijuana-related arrests and set a legal use age of 21.

But as legislators negotiate what Cuomo has outlined, questions remain about where the marijuana revenue will go and what the new regulation will look like in practice, particularly for businesses, among other details to be decided. The governor is a more recent convert to the cause of legalization and he has heeded the advice of advocates and other elected officials who have long supported legalization and have insisted it should come with benefits for the communities that have been most adversely impacted by marijuana enforcement.

“Now we just have to put it in place, and we have to do it in a way that creates an economic opportunity for poor communities and people who paid the price, and not for rich corporations that are going to come in to make a buck,” Cuomo said in his speech.

New York City is expected to comprise a majority of the state’s marijuana market and de Blasio, who was until recently opposed to legalization himself, also warned against the “corporate takeover of the marijuana industry.” Speaking at a news conference in Albany after the governor’s speech, he said, “[T]his should be a community-based form of business, a small business focus, and a focus on those who are economically harmed by the previous policies.”

8. Will Cuomo’s ‘Green New Deal’ have legislative backing?
Cuomo proposed a “Green New Deal” to increase New York State’s investment in renewable energy and reach 100 percent clean energy by 2040. It was a sweeping declaration from the governor, who has long faced criticism from activists that his environmental record has not been strong enough. At the same time, Cuomo failed to mention the Climate and Community Protection Act, a bill that seeks to accomplish similar goals but has not moved in the state Legislature, though it may this year.

It’s unclear what compromise might look like, or whether the Legislature will force Cuomo’s hand -- the proposals have differing timelines for achieving certain milestones, among other differences, and advocates say the governor’s ideas don’t go far enough. With legislative action, the proposed environmental regulations would also have the strength of law rather than being enacted administratively and being vulnerable to cuts in the future. Senator Todd Kaminsky has indicated that he will continue to pursue the CCPA, potentially setting up a clash between the governor and lawmakers.

9. Will the Legislature advance the New York Health Act for single-payer health care?
While running for reelection, the governor was ardent that he supports a single-payer health care program, the likes of which would be established by the proposed New York Health Act -- but he has repeatedly said it should be mandated and funded by the federal government rather than the state. New York would have to increase overall state government revenue by $139 billion by 2022 to pay for the program, according to a RAND Corporation study. It would provide health coverage to all New Yorkers -- they wouldn’t have to purchase insurance or receive it from employers -- and patients would not have to pay deductibles, co-payments or out-of-pocket costs. The study estimates that total health care spending in this case would be similar to what current levels are expected to be in 2022, and would be about 3 percent lower by 3031, “with the ten-year cumulative net savings being about $80 billion, or 2 percent.”

The bill -- which its sponsors say will be altered in a new version soon to be introduced -- has passed the Assembly but not the Senate, though both houses are now under Democratic control. Still, legislative leaders have not listed the New York Health Act as a top priority for this year. Several Democratic state lawmakers successfully flipped seats last year on platforms that included support for the New York Health Act, and some legislators, especially the lead sponsors, Assemblymember Richard Gottfried and Senator Gustavo Rivera, are expected to continue pursuing it, which could create a significant fissure both within the Legislature and with the governor’s office.

“It was clear in the country and New York that healthcare was the number one issue on voters’ minds,” Gottfried, chair of the Assembly Health Committee, said in an interview with Gotham Gazette right after the November election. “A solid majority of the new state Senate has either been a cosigner, voted for it in the Assembly, or campaigned on it. So I think we’re on track to get it passed in the Assembly and state Senate.”

10. Will the Legislature fully close the LLC loophole and pass stronger ethics reforms and a public campaign finance system?
The state Legislature passed several ethics and campaign finance reforms within the first few days of the new session, including severely limiting donations that can be made by Limited Liability Companies and requiring increased disclosure of the ownership of those firms. But that measure did not completely close the so-called ‘LLC loophole,’ which has allowed untold amounts of money to flow into state elections from moneyed interests and has drawn the ire of good government advocacy groups.

Cuomo, the biggest beneficiary of LLC donations of any elected official in the state, has said he wants to close the loophole entirely, a pledge he reiterated at his State of the State while also calling for a ban on corporate contributions to political candidate campaigns -- under the new law passed by the Legislature, LLCs, like corporations, can donate a maximum of $5,000. The Legislature is expected to take up further campaign finance reforms as well, which could mean that LLC and corporate donations may soon become a thing of the past, while a state public campaign finance system could be put into motion.

Cuomo has also proposed a broader agenda of reform that includes curtailing contribution limits across the board, a proposal that could meet with some resistance, and expanding the state’s Freedom of Information Law to cover the Legislature, to which lawmakers have been strictly opposed, among a variety of other reform measures.

[READ: Cuomo's 2019 Agenda of Election, Campaign Finance and Government Ethics Reforms]

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.



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