Gotham Gazette Sun, 29 Nov 2020 11:09:08 +0000 Joomla! - Open Source Content Management en-gb (Webmaster) How Cuomo Closes Budget Gaps and May Approach Largest Deficit Since His First Year 2014 exec budget

(photo: Governor's Office)

When Governor Andrew Cuomo took office in 2011, the state faced a $10 billion budget gap that necessitated massive cuts in spending for the next fiscal year. The state’s Medicaid program was redesigned to cut $2.7 billion in spending. School aid was also cut by about $2.7 billion. There were cuts to state agency spending and redesigns that reduced another $1.5 billion. The rest was covered with new resources, revenue enhancements (though, no new taxes, the governor emphasized at the time), and one-time funding streams including debt management and reestimates of spending.

The governor received widespread praise at the time, including from leaders of both major political parties, for that budget and for leading the state through particularly challenging fiscal times.

Fast forward to 2020 and the state is yet again grappling with a huge projected gap for the coming fiscal year -- $6.1 billion -- and the governor has indicated he believes state education aid and Medicaid spending need to be revisited, and that he will not support raising taxes or creating new ones. It’s the largest gap the governor has had to deal with since his first budget and, to the particular concern of fiscal watchdogs, comes amid a period of sustained economic growth rather than in the tumultuous years after a global recession like the last time around.

In other words, the state currently faces more of a spending problem than a revenue problem. And it also bodes ill that state reserves are far from robust, particularly relative to the $177 billion annual budget (of which, $102 billion is state operating funds), and that the governor continues to push spending down the line rather than dealing with it immediately.

Next week, Cuomo will present his executive budget for fiscal year 2021, which begins April 1, and he’s expected to rely on some tried and true methods, some of which have been questioned as fiscal gimmickry, but he’ll likely have to expand the toolkit given the size of the projected deficit.

Most of the gaps in past years have been far lower than $6.1 billion, requiring minimal maneuvering by the state. In fiscal year 2013, the gap was $3.5 billion; in FY 2014, it fell to $1.35 billion; in FY 2015, it was $1.7 billion; in FY 2016, $1.8 billion; in FY 2017, $1.78 billion; in FY 2018, however, it jumped to $3.5 billion; and in FY 2019, it hit $4.44 billion.

Cuomo Restrains Spending and Closes Budget Gaps, with Risks
After the 2011-2012 budget, the governor was successful in passing eight on-time, or nearly on-time, budgets that kept within, or close to within, his self-imposed cap of 2% annual growth in state spending. But he’s used various maneuvers for which the governor has become infamous and which in part led to the budget problem the state must now contend with.

Year after year, the state has managed gaps through, among other measures, cutting hundreds of millions in projected costs of agency operations and reduced spending on aid to localities (including cuts to education, social services and housing, public health and mental hygiene services). That approach would have likely worked again for the 2021 fiscal year, for which the projected gap was expected to be about $3.9 billion when the current year’s budget was enacted.

But, in the mid-year financial update published by the state Division of Budget in November, that number was modified to $6.1 billion, taking into account an additional $3 billion in increased Medicaid costs, driven by several factors, and setting off a flurry of concern and finger-pointing about the state’s fiscal picture. The out-year budget gaps are projected to be even larger, given current trends, with a $9 billion gap in 2023 if nothing significant changes.

The state has taken at least one step to rein in the Medicaid cost uptick, cutting payments by 1% starting earlier this month – affecting hospitals, doctors, nursing homes, home care providers, and others – while also looking to find $1.8 billion in savings in the program.

Cuomo’s budget director, Robert Mujica, has also stressed that the budget gap is nothing to worry about. “There is no doubt it will be a challenge, but it is a challenge that is manageable. The Governor has closed gaps much larger than this,” he wrote in a Medium post in December.

The governor contended in his January 8 State of the State speech that the overall increase came from the state covering the costs of Medicaid that is capped for localities, which to some sounded as if he may call on municipalities to pay more. In a gaggle with reporters on Monday, however, he sought to provide reassurances that such a proposal was not forthcoming. “I’ve not yet proposed how we believe we should resolve it,” he said of the budget gap. He added, “Nobody should worry. Life is good. Be optimistic.”

That may be a stretch for budget monitors, who say that the budget gap is manageable but also preventable. They warn that the governor’s budget tactics, though restrained, may be unsustainable and prove disastrous if a recession hits and urge him to look elsewhere for long-term savings and budget cuts, particularly areas such as economic development spending where the governor has been reluctant to pull back.

Closing the Gap: Dos and Don’ts and Surprises
“It’s a gap that’s closeable. Revenues are coming in at or above projections,” said Dave Friedfel, director of state studies at nonprofit watchdog Citizens Budget Commission, in a phone interview. But he emphasized that the gap was one that the state should have expected and prepared for, particularly owing to deferred Medicaid payments.

The 2019 fiscal year pushed $1.7 billion in Medicaid payments to the 2020 fiscal year, and the current budget pushed another $2.2 billion in Medicaid payments to next fiscal year. The governor’s mid-year budget update says that the Department of Budget plans to make such deferred payments “permanent,” setting up what some watchdogs call a dangerous practice.

“Deferring that payment was really damaging because it pushed the costs from last year into this year, and it also undermined this year's financial plan because they didn't account for that,” Friedfel said. Though in the short term, it may not affect the state’s fiscal health, it would complicate the state’s choices in a recession, where, according to CBC estimates, the state would face as much as a $35 billion shortfall over three years.

“It's never a good fiscal practice, but it's even worse when the revenues are coming in and the economy is doing well,” Friedfel said. “This was completely preventable and it wasn't the result of any type of an outside shock. The federal government didn't suddenly change reimbursement rates. There was no surge in Medicaid enrollment...So this was definitely a preventable budget gap.” (New York does have a significant population enrolled in Medicaid, about 6.27 million individuals, and the Cuomo-driven minimum wage increase to $15 has significantly increased costs for health care providers).

Friedfel has several prescriptions for state officials: cut economic development spending and find long-term savings in retiree health insurance benefits. He also said the state could save $800 million with a more focused approach to Foundation Aid, the supplemental funding given to schools to provide a “sound basic education” under a State Supreme Court ruling. He cautioned against any effort to force localities to absorb Medicaid costs.

“It really is a progressive thing that the state did, that Governor Cuomo did by capping out the local share [of Medicaid],” he said. “If you reverse that, you're saying to localities because you have a lot of poor people, people on Medicaid, that you therefore have to contribute more to the state which is the opposite of progressive. That would be regressive.”

E.J. McMahon, founder and research director of the Empire Center for Public Policy, a nonprofit fiscal watchdog, is hoping against but expecting that the governor will use “cash flow timing maneuvers” again to balance the budget. “He's rescheduling a hunk of the payments to [Medicaid] providers and basically making his cash flow issue their cash flow issue,” he said in a phone interview. “It's not the most prudent approach because it is basically meant to hide the problem rather than deal with it.”

Based on past experience, McMahon said the governor may also tap reserve funds on a one-shot basis. “He can't possibly actually save $2 billion in what's left of the fiscal year so there will be a lot of gimmickry related to timing and reserve funds that will, I think, largely paper over the problem,” he said.

The most striking part of the problem, he said, echoing Friedfel, is that the state has not seen in more than 40 years a budget deficit of this size at a time when the economy is expanding and revenues are on target. “Usually our problems occur when there's an economic downturn and our revenues fall short. This is purely, totally due to excess spending in a category [Cuomo] manages and has more control over than any previous governor has had,” he said.

McMahon noted in a blog post on Wednesday, based on state tax receipts through December, there’s an additional $1.3 billion above revenue projections at the state’s disposal. But that does not solve what is an over-spending problem, he said.

He did give the governor some credit for his fiscal moderation in earlier years, however.

“If you adjust for the bookkeeping tricks that he's used to make it appear like 2% [annual growth rate]...still adjusting for inflation, his nine years as governor have been on the whole the most restrained nine years of any governor in modern history,” McMahon said.

“Cuomo showed considerable fiscal discipline during his first years in office, especially in his first budget in 2011, and he still has considerable power to shape a budget that basically reboots his first-term approach and lowers the spending trend going forward,” McMahon also said. He noted that the Legislature has little power to add spending other than separate line items which the governor could veto. To override those vetoes, the Legislature would need votes from the entire Senate Republican conference and from eight upstate Assembly Democrats, he said.

“Now, as recently as Pataki’s last term, gubernatorial vetoes were repeatedly overridden by a Republican-controlled Senate in partnership with the Assembly’s Democratic super-majority,” he wrote. “But that could only happen now if Cuomo goes (further) out of his way to alienate Senate [Republicans], assuming he also can’t retain the loyalty of suburban Senate Dems. In short, it’s unlikely.”

Both McMahon and Friedfel pointed to the pitiful amount of reserve funding the state has put aside, barely $2 billion relative to the more than $102 billion in state operating funds budgeted for this year. Cuomo has, McMahon pointed out, relied on $12 billion in monetary settlements from financial institutions following the recession as a stand in for reserves, of which about $6 to 8 billion has already gone out the door.

“His whole attitude with the now $12 billion windfall settlement is a classic have your cake and eat it too,” he said. “The actual statutory reserves are puny by national standards...but he also gets the cite that money as part of his reserves...I'm not gonna be too speculative [but] he'll tap some of it and help solve his budget problem for next year in some fashion,” McMahon said.

“Without wanting it to happen, I anticipate gimmicks,” he said, “but we'll see.”

by Samar Khurshid, senior reporter, Gotham Gazette

Read more by this writer.

How Cuomo Closes Budget Gaps and May Approach Largest Deficit Since His First Year Wed, 15 Jan 2020 05:00:00 +0000
The Governor's Dilemma: Gimmicks or Gumption exec budget address

(photo: Governor's Office)

Next week Governor Cuomo will unveil his proposed budget for the state fiscal year beginning April 1. In his November modification of the current year’s budget and financial plan there was a preview of the severity of the problem he faces: a significant deficit -- originally $6 billion, now reduced to $4 billion in the current fiscal year, which ends in only 12 weeks -- that is projected at $6.1 billion for next fiscal year and to grow to more than $9 million in 2023.

The governor has acknowledged the magnitude of the budget challenge and hinted that serious structural changes are needed, but it is far more likely his budget will contain a variety of short-term fixes and avoidance devices to close the gap. 

Much attention has been paid to the fact that state deferred $1.7 billion in Medicaid expenses from fiscal year 2019 to 2020 to address the recent dramatic increases in the program’s costs. The current deficit is being papered over by again rolling about $2 billion of expenses into the next fiscal year, as well as cutting Medicaid reimbursement rates across the board by 1% and achieving other unspecified savings.

But these fixes are by no means sufficient to handle the cumulative deficit over the next four years, estimated at $28 billion, the largest faced by this governor since early in his first term. 

The size of the deficit and the governor’s vague comments in two public appearances last week have created a high level of anticipation and anxiety about the impending budget proposal. The leader of the State Assembly, Carl Heastie, is talking about higher taxes on the wealthy; Senate Majority Leader Andrea Stewart-Cousins has been less enthusiastic about more taxes but has not proposed an alternative.

After his January 6 speech to the Association for a Better New York in New York City, I asked the governor if he expects to raise taxes to deal with the deficit. His answer was an unequivocal “No.” He continued:

“We have equated politicians’ response, ‘well we have a problem, the answer is more money’ - no. There’s not necessarily a correlation between more money and better product...the answer isn’t always more money. It’s government’s’s a legislative answer because they don’t have executive control, so the simple answer is ‘we have to make education better, I’m spending more money’ — we’re already spending more money per pupil than any state in the United States of America, but you’re in the middle when it comes to performance, so the answer’s not always more money. And some of these situations are structurally problematic. We have a problem with Medicaid that is going up very high. A one-shot cash revenue is not the answer - fix the problem. Money tries to paper over the problem, and I’m not in the papering-over business...we’ve been able to say ‘We have reduced your taxes on the state level,’ and I want to continue to be able to say that. Money is not going to solve our Medicaid problem, the health costs have to be addressed structurally, and a one-shot dose for the system of sugar to give us a short high with revenue is not the answer.”

I couldn’t agree more! The audience cheered. But do we all mean the same thing when we talk about the need to address “structural problems”? Probably not.  

Two days after the ABNY speech the governor delivered his official State of the State Address in Albany. It contained many quintessential Cuomo elements, i.e. assertions that progressive government must be pragmatic and appeals to the can-do spirit of New Yorkers to build big. With respect to the deficit, he again made generic references to correcting “structural” problems that raised more questions than answers.

First, he was critical of the way state school aid is distributed, noting derisively that it is not progressive and that some districts spend more than $30,000 per student while others spend far less because they lack sufficient resources derived from property taxes. He repeated several times as if a mantra: “use state funds to raise those at the bottom.” The audience cheered; again, who could disagree? But how does the governor mean to rationalize school aid to make it truly progressive and save the state money? 

School aid is the second largest expenditure in the state budget, totaling $27 billion a year. It has grown 37% over the last decade. The reason it is so high is that everyone from the teachers unions to parents/voters to the State Education Department to every district’s legislative representatives wants more money for schools every year. A major issue in every budget negotiation is not how much more school aid is needed but rather, how much less than advocates demand is acceptable to the Legislature.  

Giving less — or at least no more — to the property- and income-rich districts and to those that have lost school population, and redirecting the savings to poorer districts that need state aid to have enough to provide the sound basic education promised to all students by the State Constitution would mean total school aid would need to rise by only $300 million, not the billions demanded by advocates, saving $800 million, maybe more, per year. It would be very surprising, if welcome, if this is what the governor proposes.

Second, at the very end of the State of the State Address the governor blamed the recent dramatic increase in Medicaid spending – the largest expense in the state budget, which has grown an average of 6.3% per year over the last four years – on the fact that the amount localities contribute to the program is capped and the state has borne all the increases in costs since the cap was imposed in 2015. He cited the amount this saves Erie County ($177 million), Westchester ($175 million) and New York City ($2 billion), wise-cracked “it is too easy to write a check when you don’t sign it” and stated that we need to pay for healthcare “‘intelligently and prudently.” If the local expense cap is the structural problem with Medicaid he means to fix, he is on the wrong track.

Medicaid spending is driven by state policy and health system practices, not by administrative costs at the county or New York City level. New York State has, and has been proud of, its relatively generous eligibility and benefit levels, which mean that there are a whopping 6 million New Yorkers on Medicaid — one of every three residents — and it is the state’s largest expenditure, costing $80 billion a year (half federally reimbursed), accounting for more than one of every three dollars in the state budget.

It is entirely appropriate to ask for more help from localities in curbing misuse and fraud in the program and the governor wisely announced that he will reconvene the Medicaid Redesign Task Force that was effective in achieving Medicaid savings in his first term (bring back Jason Helgerson!).

But there is no justification for pushing costs down to the localities which have even more limited sources of revenue than the state and already pay more of Medicaid costs than the rest of the localities in the country combined. Indeed, freezing the local share of Medicaid to the amount they paid in 2015 and taking full state responsibility for the operation and cost of the program is one of the most significant accomplishments of the Cuomo administration. The Legislature already rejected an effort to lift the cap on New York City’s share when the governor tried to do so in 2016.

One of the sources of the recent dramatic growth in the costs is the state’s directive to pay all home health aides and other Medicaid direct service providers a minimum wage of $15 an hour – immediately in the metro area and over time in the rest of the state — which added $1.5 billion to the budget in this fiscal year, growing to almost $2.3 billion additional in 2023. This may have been a good policy decision but it was not accompanied by commensurate systemic savings that would keep the growth in program spending manageable. Another is the fact that as the population ages, more and more people need long-term care, at home and in nursing homes. 

I know several people whose parents or relatives have transferred their resources to family members and taken other measures to qualify for Medicaid to pay for their long-term care, which is now responsible for almost half of the state’s total Medicaid costs. I am sure the same is true for some readers of this column. Indeed even presidential candidate Senator Amy Klobachar said in the debate this week that she expects her mom to go on Medicaid eventually.

Can we expect the governor to propose ways to cut down on the use of personal and long-term care or to tighten Medicaid eligibility requirements? This is no more likely than a structurally reformed school aid plan.

Why should a locality and those taxpayers who live there be financially punished because it happens to have a particularly large share of the state’s low-income population and hence its Medicaid enrollees? Is this progressive government? Why is it OK for state tax dollars to go to economic development efforts to shore up upstate economies that need it but not OK for state revenue to fund needy Medicaid recipients wherever they live in the state? That is not structural reform, but only shifting a serious and growing financial responsibility to another level of government.

So, get ready for a deficit reduction plan that includes cost shifts to New York City, to public authorities, and to capital spending, along with accounting gimmicks, optimistic savings estimates, and other tactics that avoid difficult decisions that would make some legislators and constituents unhappy. I hope I’m wrong.

Carol Kellermann was president of Citizens Budget Commission from 2008 through 2018.

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The Governor's Dilemma: Gimmicks or Gumption Wed, 15 Jan 2020 05:00:00 +0000
In State of the State, Cuomo Plots Changes on Education Aid, Medicaid, Marijuana and More gov state state address january

(photo: Darren McGee/Office of Governor Andrew M. Cuomo)

In his annual State of the State speech on Wednesday, Governor Andrew Cuomo was at times somber and sobering and, at others, impassioned and defiant as he laid out his legislative agenda for the 2020 session in Albany.

Speaking before elected and appointed officials, labor leaders, and others who gathered from across the state at the Empire State Plaza Convention Center in Albany, Cuomo admitted, “It is going to be a challenging year.” He took stock of the “frightening times” for the country and the world, pointing to the recent earthquakes in Puerto Rico, the devastation of wildfires in Australia, and the United States’ tense standoff with Iran.

But it was the situation at home in New York State that most troubled him, he said, as he bluntly addressed the increased divisiveness and hatred infecting politics, marked by a spate of anti-Semitic hate crimes that have gripped the state in recent months. He paid special tribute to the victims of an incident in Rockland County in December, where five Jewish people were attacked by a man with a machete at a Hanukkah gathering.

Prompted by the troubling trend, Cuomo reiterated his proposal for a new domestic terrorism law that would cover hate-motivated violence, while outlining additional measures of a multi-pronged response.

“Our ship of state is stronger than it has been in decades, but the ocean we navigate is as tempest tossed as we have seen,” Cuomo said. “Waves of anxiety, injustice and frustration are being fanned by winds of anger and division, creating a political and social superstorm, but these are the times when New York is called upon to show leadership and set a course for a troubled nation.”

Cuomo repeated some of the same beats from previous State of the State speeches as he took a victory lap over the sweeping progressive legislation passed last year under a Democrat-led Legislature for the first time during his now nine-plus years as governor. As he’s done before, he embraced the label of “pragmatic progressive” as he critiqued those who he said cannot back rhetoric with action, continuing his attempt to set himself apart from his ardent critics on the left.

“Progressive government by definition must be functional...Progressive government does not make promises it cannot fulfil,” he said, as he went on to detail broad progressive proposals of economic, racial, and social justice, along with his trademark commitments to fiscal moderation and his signature economic development programs, which have been the source of criticism from the left and the right.

Early in his speech, he said the state would launch a “nation-leading response to the transcendent threat” of climate change, as he proposed that New York would make major new commitments to improve the environment and bolster emergency response capacity. He announced the proposal of a $3 billion Restore Mother Nature bond act to fund preservation and resiliency efforts across the state, and made additional commitments to promote green energy infrastructure and the electric vehicle industry, as well as a proposed ban on single-use styrofoam products. The bond plan must be approved by voters this November in order to move ahead.

Along with new plans to tackle climate change, the governor went through a wide variety of proposals, some returning from last year, like the legalization of adult-use marijuana. He also made provocative comments about the two largest areas of state spending -- education aid and Medicaid -- that appear to set the table for intense negotiations as the governor prepares his executive budget, due by January 21.

It wasn’t until nearly an hour into his speech that Cuomo spoke of the especially pressing challenge facing the state budget: a $6.1 billion projected budget gap, largely stemming from an increase in Medicaid costs. But he said little about how he would tackle it other than providing a few initial breadcrumbs.

Cuomo said he would reconvene the Medicaid Redesign Team, which he first created in 2011 to control costs and restructure the state’s Medicaid program. But, as expected, he did not announce plans for new taxes or other measures to raise revenue. His executive budget will tell much more of the story about how the governor plans to close the gap. 

Mayor Bill de Blasio, speaking to reporters after the speech, expressed some concern about how those health care savings would be achieved but said he would reserve final judgement until the governor releases a detailed proposal. "I am certain the state has some fiscal challenges. I respect that, but my first response is,  okay let’s all sit at the table and figure out how we can save money together and make sure that the common goal is to not take health services away from New Yorkers who need them," he said.  

Cuomo did, on the other hand, propose cutting the corporate tax rate for small businesses from 6.5% to 4% and also touted the lowering of tax cuts for middle class families that had been enacted in 2016 and are continuing to go into effect this year. “Our middle class is our backbone. We have to keep working with them to keep them strong and this tax cut will do just that,” he said, seemingly promoting the cut as a new initiative as he has done each year.

In recent weeks, Cuomo had already unveiled more than 30 proposals, many of which he reiterated in his speech including new gun control bills, ending gender-based pricing discrimination, and closing the rape intoxication loophole, to name a few. He also revived unfinished business from last year’s session including legalizing recreational marijuana and ending the ban on gestational surrogacy.

The speech included several proposals geared towards improving the lives of working and low-income New Yorkers. He pledged to pursue new protections for workers in the gig economy, an issue he ignored last year after promising action in late 2018, but has become far more pertinent with about 40% of the state’s workforce employed in various relevant fields. “Too many corporations are increasing their profits at the expense of the employee and the taxpayer. That must end,” he said.

He also proposed expanding the state’s child tax credit, which he said would provide a $400 annual credit to about 400,000 families with children under the age of four. Additionally, he pushed an expansion of the Excelsior Scholarship that would provide free college tuition to families earning up to $150,000, from the current threshold of $125,000.

On K-12 local education funding, the governor seemed to suggest sweeping changes in how the state distributes aid to school districts, insisting that the current formula is severely flawed and not truly progressive in its approach to funding schools in lower-income communities. Pointing to a massive funding gap – on average, the richest district spend about $36,588 per student while the poorest district spend as little as $13,033, he said – he indicated pending action.

“The progressive path is clear: our state funds should be used to reduce funding disparities,” he said, potentially starting to set up a major debate in the coming months.

Cuomo made no mention of the bail reform debate that has been raging in recent months, with critics arguing the state must toughen sweeping changes made last year and Cuomo himself indicating earlier this week that changes need to be made.

Taking stock of the homelessness crisis across the state, Cuomo vowed to “take a giant step this year” to tackle the problem and build large swathes of affordable housing. “There is no policy or political debate to be had...We don’t need to reinvent the wheel. We just have to turn it. We know what works and we know what doesn’t work from experience,” he said, during his tenth State of the State speech and with reference to his decades working on the issue, from the nonprofit sector to his time as the federal housing secretary under President Bill Clinton.

In promising a massive infusion of funds to address the crisis he seemed to take a dig at New York City and Mayor de Blasio, as he insisted that investment must come with competent management by localities that receive it. The city accounts for nearly half the state’s population and has long been unable to significantly reduce homelessness despite varying attempts, though help from the state has been extremely limited, with Cuomo himself ending a state rental subsidy program early in his tenure and, more recently, opposing a bill, popular in both houses of the Legislature, called the Home Stability Support Act that would create a new state housing subsidy program to prevent homelessness or quickly end it for those receiving the benefit. 

Responding to the governor's speech, de Blasio touted his administration's efforts and again noted that the governor offered no details. "I honestly want to understand the vision because I am glad he raised it but I didn’t hear a specific plan," the mayor told reporters. Instead, he said he was focused on advocating for the passage of the HSS Act, which "would have an immediate positive impact" on homelessness.

Building on the state’s heralded Paid Family Leave law, the governor advanced a paid sick leave proposal that would provide five days of paid leave for employees of small businesses and seven days for large businesses. New York City already has its own paid sick leave law, but Cuomo’s proposal would bring the benefit across the state.

He proposed several public health-related measures as well, including a crackdown on the sale of illegal cigarettes, new restrictions on vaping products and related advertisements, a ban on analogs of fentanyl, expanded access to Medication Assisted Treatment for those suffering from addiction, and drastically lowering prescription drug prices.

The governor also announced continuing economic development investments, a practice that he said have been successful, especially in saving the upstate economy, but fiscal watchdogs have criticized in the past for showing little return on investment. And he touted major infrastructure project proposals including the expansion of Penn Station in New York City and hundreds of millions for the redevelopment of the Erie Canal alongside the many ongoing projects that he has made a signature focus. He also touted the recently-passed $51 billion MTA capital plan.

Noting that New York passed a law to obtain President Donald Trump’s state tax returns, Cuomo also proposed the “Nothing to Hide” law, lest New York legislators be accused of being hypocrites. The bill would mandate that every elected official and state commissioner earning more than $100,000 a year would have to make their tax returns public. “Let New Yorkers know who is paying their officials, and who their representatives actually work for, because you can't serve two masters,” he said in the lone government ethics proposal of his remarks.

Cuomo ended his speech as he began it, with a passionate call to end the scourge of racism and tackle hate. He pledged increased resources to the state’s Hate Crimes Task Force, additional grants for security at schools and places of worship, and announced a plan to expand New York City’s Museum of Jewish Heritage on the Holocaust. He also called for the state schools curriculum to include lessons on civic values and religious diversity.

“New York can stem this ugly tide and calm the sea of division,” he said, unveiling a new state seal that would add the words, “E pluribus Unum,” out of many one.

“The ugly violence did not start in New York, but it must end in New York,” he said. “We know that unity is the only path forward.”

by Samar Khurshid, senior reporter, Gotham Gazette

Read more by this writer.

Ben Max contributed to this article.

Note - this article has been updated with comments from Mayor Bill de Blasio. 


In State of the State, Cuomo Plots Changes on Education Aid, Medicaid, Marijuana and More Wed, 08 Jan 2020 05:00:00 +0000
An Excellence Escalator for State School Funding cuomo second round comm ini

(photo: the governor's office)

Our broken system of school finance is currently the subject of roundtables led by the State Senate's new Democratic majority. The hearings are focused on reforming the Foundation Aid formula that determines the bulk of state aid to local districts.

Broken? According to the Alliance for Quality Education, the gap between the average per pupil spending in the 100 wealthiest and 100 poorest school districts has grown to a record $10,218 per pupil. These stark differences are reflected in teacher salaries and class sizes, counselors and librarians, facilities, and technology, among other social and academic supports. Flowing from these inequities are pervasive proficiency challenges among students of color in our poorest districts, robbing them of their inherent rights to educational and economic justice.

The school finance system has long been a source of political in-fighting. The Foundation Aid "pie" is largely dictated by the Governor through the executive’s power over the state budget. The Legislature then slices the pie among the state's 750 school districts based on a combination of need and political muscle. In Albany, that's not a fair fight.

The winners tend to be wealthier suburban swing districts where voters keep close tabs on their elected representatives to bring home maximum funding. Every dollar in state aid is a dollar less in local property taxes, the driver of the inequitable system of American school finance where school quality it directly related to the property wealth of its citizens. 

Individual legislators’ accountability to rural and urban school districts is less direct and party control of these seats more assured. As a result, school aid is not the make-or-break electoral issue it is in the suburbs. The profound effect of this political mismatch is that the needier districts are disproportionately dealt out of Foundation Aid, which was originally meant to close the gap.

So merely reforming Foundation Aid will not solve the problem of inequitable and inadequate state aid. The formula is broken because, at bottom, it is based on political rather than educational considerations. The solution is to rearrange the legal equation to reflect educational finance as a right, not subject to the exigencies of political might. We need to see the issue as one of promoting the civil rights of all students.

Solving such a big problem requires a big idea: a constitutionally required escalator that automatically raises the level of each district’s state funding to match per pupil spending by our wealthiest districts. This new funding structure based on a standard of educational excellence would permanently correct the otherwise intractable power imbalance favoring wealthy districts, bringing a new level of educational quality to all the states’ children and an ensuing level of prosperity for all New Yorkers.

The Excellence Escalator: How It Works
Today, our state constitution provides a lowest common denominator right to a “sound basic education” pegged at the level of a “meaningful high school education” by the New York State Court of Appeals in its 2003 opinion in Campaign for Fiscal Equity v. State of New York (“CFE II”). The Foundation Aid formula was developed in response to CFE II but has never realized its promise of meeting the fiscal equity demanded by the Court of Appeals decree. Stifled by the iron rule of political power, the CFE II and its predecessor and successor decisions have proven of little use in Albany’s hotbed of competing school district interests vying for self-limited state funds.

Moving beyond the false promise of judicial rescue through Foundation Aid will require a constitutional amendment to replace the Court of Appeals’ “sound basic education” adequacy standard with a standard of “educational excellence” tied to funding levels our wealthiest residents deem appropriate for their own children.

The excellence escalator will assure that state aid meets or exceeds the per pupil spending in our wealthiest districts. While expensive, the sticker shock of the state providing highest-level funding can be mitigated by adjustment of aid for individual district measures of student need and local capacity, formulaic data already available and largely immune to political manipulation.

In practice, our wealthiest districts would receive zero state dollars but no ceiling on local spending. Districts of similar wealth that chose not to tax at that level would also receive zero by failing to meet local capacity. But districts that taxed to the max would be rewarded by state assistance to meet the highest levels of per pupil district spending.

As a result, the excellence escalator is less radical that it seems. It does not discourage local spending and maintains local school taxes as the bulwark of our system of school finance. But, as a constitutional guarantee, the provision assures that the state will match funding to levels of real world spending that currently benefits only our most well-off students.

Besides providing a greater degree of educational equity, the escalator would dramatically encourage desegregation by removing a major obstacle to families’ movement between districts: the quality of schools. By diminishing the gap in per pupil spending between districts, a major reason for our entrenched enclavism, a growing hole in our social fabric could be mended.

The path forward for the excellence escalator is not free of the same politics that currently traps us in the broken system of Foundation Aid. But it is a one-time fix, requiring approval by two successive legislative sessions and a voter referendum. Today’s problem is a constant battle, fought every year against impossible odds. A constitutionally mandated school funding excellence escalator would turn the tide toward educational equity and quality, a big idea whose time has come.

David C. Bloomfield is Professor of Educational Leadership, Law and Policy at Brooklyn College and The CUNY Graduate Center. This essay is adapted from testimony presented to the New York Advisory Committee to the U.S. Commission on Civil Rights. On Twitter @BloomfieldDavid.

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An Excellence Escalator for State School Funding Tue, 05 Nov 2019 05:00:00 +0000
Key Issues to Watch as New State Budget is Finalized Cuomo state budget briefing

Gov. Cuomo and top aides (photo: governor's office)

The deadline for the state’s 2020 fiscal year budget is midnight on Sunday and state legislators are expected to work through the weekend as they negotiate a variety of thorny issues with Governor Andrew Cuomo, finalizing the details of policies that have been agreed to in principle, fighting over other issues that are less settled, and determining exactly how much to spend on what in the new fiscal year that begins Monday.

Some of the budget bills are already public, with key details emerging, while the final of the series of bills, together commonly referred to as “the budget,” is likely to hold many of the major policy compromises that may come together in the final hours. Some high-profile deals already appear in place, including a ban on plastic bags (with some carve-outs) and an accompanying fee on paper bags. Ultimately, “the budget” will be a long list of compromises on spending, taxing, and policy priorities.

The new budget is expected to come in at roughly $175 billion.

The governor has been touting his top priorities -- congestion pricing, criminal justice reform, and a permanent property tax cap -- but there are a slew of other issues he cares about and those being pushed by the Senate and Assembly majorities, and even with Democratic control of both houses and the governor’s office, it’s hard to predict which ones will be included in the final budget bills.

If the governor does not get his way, he has threatened to let the deadline pass without signing a budget, though legislative leaders have said they’re committed to ensuring they will get it done on time. (The first pay raises for legislators in roughly two decades hang in the balance, though it’s not exactly clear how on time the budget needs to be for those pay raises to stay on track.)

In the mix are also several cost shifts and funding cuts to New York City, which Mayor Bill de Blasio has warned about and is lobbying against. As has been the case over the years, it’s not likely that he’ll be successful in pushing back each and every one.

Cuomo’s Priorities
The governor has made it clear that the Legislature must agree to his three top priorities, without which he says he won’t sign a budget before the deadline. He has been rallying to make the 2 percent cap on annual property tax increases permanent -- the cap is in place in counties outside New York City and will expire next year. He also says he fears that the Legislature will punt on criminal justice reforms -- changes to bail, speedy trial, and open discovery laws -- and believes the budget provides the right pressure to get to a deal, especially on the contentious and complicated details of bail.

On congestion pricing, Cuomo has attempted to corral all the stakeholders, even winning the support of Mayor de Blasio, who had been a long-time opponent of the policy. Like with others, the details must be worked out and there are a variety of stakeholders who want a say. Long-term funding of the MTA is at stake, not to mention trying to reduce traffic in Manhattan.

Cost Shifts to New York City and Education Aid
De Blasio warned in his own preliminary budget proposal in February that the governor’s budget would impose a $600 million burden on the city in cost shifts and cuts to existing programs. A large part of that total stems from $300 million in less-than-expected education funding, with the governor proposing a new school funding formula to reach the poorest schools in the neediest districts. The details of that formula remain a mystery.

Education aid across the state is the largest portion of the budget and always one of the most contentious issues. State legislators, advocates, and local officials always want a larger increase in aid than Cuomo believes is necessary, with data largely supporting the governor. This year, Cuomo is attempting to change the system, but it’s unclear whether legislators will go along, even with tweaks.

Campaign finance and ethics reforms
The governor has called for public financing of elections, aiming to create a system similar to the one currently used in New York City where small dollar contributions are matched with public funds. Despite Democrats in both the state Senate and Assembly having supported legislation in the past to create such a system -- the Assembly has even voted it through its chamber -- there isn’t agreement on a final bill, and the possibility that it will either not make it into the budget or there will be a somewhat vague passage in the budget language that is a commitment to create a system at a later date, perhaps through a new commission.

Assembly Speaker Carl Heastie recently raised several unfounded and some more legitimate concerns about the proposal and indicated that there weren’t enough votes in his chamber to approve it. But then his chamber had support for a public campaign finance system in its one-house budget resolution. Senate Majority Leader Andrea Stewart-Cousins and her members have been more steadfast in their commitment to campaign finance reform, with several senators loudly pushing for it along with a massive coalition of advocates representing more than 200 organizations across the state.

Some long-sought campaign finance reform did pass earlier this year, with the significant narrowing of the infamous LLC loophole.

Less talked about in the budget debate have been the governor’s proposals to tackle independent expenditures, which includes new disclosure requirements for 501(c)(3) and 501(c)(4) organizations, as well as Cuomo’s proposal to require any entity that spends at least $500 in a year to register as a lobbyist. Nonprofits, advocates, and activists have pushed back against the ideas, saying the governor is attempting to stifle his critics.

Cuomo has also called for banning campaign contributions from corporations and limited liability companies, and a code of conduct for lobbyists, which Cuomo said he would implement for the executive branch if lawmakers do not approve it. The Legislature has already approved lowering LLC contributions to $5,000, in line with corporate donations.

Advocates have also urged the passage of clean contracting bills that reduce conflicts of interest and prevent corruption in the state’s contract bidding processes. Cuomo has promised unilateral action on creating a so-called ‘database of deals’ which would detail projects receiving state benefits and make them accessible to the public. He’s also proposed strengthening the oversight powers of the comptroller and the state attorney general. It’s unclear if those provisions will also be passed into law.

Voting reforms
Republicans who controlled the state Senate for years were loathe to approve several voting reforms that Democrats repeatedly proposed in vain. This year, advocates were buoyed in their hopes that reforms would sail through. Some already have as the Legislature passed early voting and began the process of amending the state constitution to allow same-day voter registration and no-excuse absentee ballots by mail.

The Senate has moved ahead on allowing the use of electronic poll books but there has yet to be a three-way agreement with the Assembly and governor’s office, though there have been rumors that a deal is imminent. There also isn’t consensus on how many days of early voting the state will allow or how much funding the budget will include to implement it locally. It's also unclear if a system of automatic voter registration may be implemented.

Criminal Justice Reforms
The three big reforms that advocates have long called for include banning cash bail and making other changes to pre-trial detention rules to keep far fewer people incarcerated, and implementing speedy trial and open discovery legislation. Cuomo has insisted the proposals must be in the budget and has even that he will “take the blame” for their passage if suburban legislators are worried about approving them.

But there has been pushback against the proposals from the state district attorneys association, other law enforcement, and more conservative legislators. There has also been disagreement among progressive Democrats about where to draw certain lines, including around what discretion judges will have to determine the accused’s “dangerousness.” The Senate and Assembly nearly reached a deal a few weeks ago on the package of bills but it failed at the last minute. Given the focus on these issues, especially from the governor, a deal is likely.

MTA Restructuring, Congestion Pricing, E-Scooters and E-Bikes
Transit issues have been front and center in this year’s budget negotiations with New York City’s subway crisis lending added urgency to the need to find a sustainable revenue source for the Metropolitan Transportation Authority (MTA). Cuomo has made a big push for congestion pricing as one of the main funding sources and has also called for restructuring the MTA board to give him more control, though he already appoints a plurality of board members and its top leadership, and the board rarely, if ever, goes against his wishes.

Though the Legislature seems close to an agreement on a congestion pricing program, which would toll cars entering Manhattan’s Central Business District, the specifics haven’t been ironed out yet, including around exemptions to the fees, changes in bridge tolls, and investments in other MTA branches, like LIRR and Metro North.

Cuomo has also called for the state and New York City to split 50-50 any MTA capital costs that aren't covered by dedicated funding streams. It's unclear if state legislators will allow that language to be part of a final budget deal or if the process around negotiating the MTA capital budget will be left to a later date as it typically is.

Speaker Heastie indicated the Assembly is willing to advance the proposal in principle while Senate Majority Leader Andrea Stewart-Cousins has been less definitive. The governor’s proposals for the MTA’s structure also remain uncertain.

The governor has also proposed allowing municipalities to legalize the use of electronic scooters and bicycles, and big firms that offer those services have been expending significant resources lobbying state lawmakers, regulators and the governor’s office to push that policy through. Legalization would be particularly impactful in New York City, where the NYPD and Mayor de Blasio are facing criticism from the City Council and advocates over a crackdown on e-bike use that has been particularly impactful on immigrant delivery workers.   

Marijuana Legalization
Cuomo has proposed legalizing the recreational use of marijuana for adults, which the state estimates would raise about $300 million in revenue annually. He had hoped to use that revenue to fill the MTA’s budget gaps.

But earlier this month, Cuomo raised doubts about whether marijuana legalization would be included in the state budget and said if it was not, then it most likely would not happen at all this year. However, the Assembly and Senate leaders have indicated that they are willing to advance it. As the budget negotiations moved ahead, it appeared a marijuana legalization deal would not come together in the budget, but nothing at all in play is ever fully in or out until the budget is done.

Census Funding
The New York Counts 2020 coalition of nonprofit organizations, business groups, and community service providers have been pushing the state to include at least $40 million in the budget to fund outreach efforts for the decennial population count next year. This census, where New York has a great deal on the line in terms of congressional representation and federal funds, will be particularly challenging, with the federal government underfunding the Census Bureau and primarily relying on a digital methodology, which is a departure from previous years, not to mention the push for a citizenship question.

New York already faces its own unique issues with reaching hard-to-count communities, particularly because of the state’s large immigrant population, much of which is concentrated in New York City. And though the state created a commission to examine the issues around the Census, it was not named until after its initial deadline for submitting a report had already lapsed. That report is not expected until after the budget. Indications on Thursday, including from the city’s Census leader, Julie Menin, pointed to the $40 million being included in the state budget, but that had not been finalized.

Education Aid, Mayoral Control and Charter Cap
In past years, Governor Cuomo and Senate Republicans repeatedly dangled mayoral control of New York City schools over Mayor de Blasio to extract concessions such as increasing funding for charter schools and more transparency from the Department of Education. This year was less contentious but Democratic legislators still wanted adjustments to approve an extension.

The mayor is expected to receive a three-year extension on mayoral control, up from a two-year renewal last time and multiple single years before that, but will nonetheless have to commit to certain demands made by legislators from his own party, including improvements in parent engagement.

New York City this year reached a statutory cap on the number of charter schools in the five boroughs, which Cuomo and Republicans had increased in previous legislative sessions. Charter school advocates have continued to push for eliminating or increasing the cap but lack powerful allies in the Legislature. If there is an increase in the charter cap snuck into the budget, it will all but certainly be because Cuomo made it a priority.

Cuomo proposed an increase of several hundred million dollars in education funding, for a total of $27.7 billion, and spoke of a new “Education Equity” formula to replace the Foundation Aid formula currently used to provide additional funding to school districts. But he hasn’t released details of the proposal, which the state education department is meant to outline. That has incensed education advocates and New York City elected officials who say the governor is not living up to the Campaign for Fiscal Equity court decision which would means billions more in education funding. The two legislative majorities outlined increases in education aid of more than $1 billion in total, with the final number likely somewhere between theirs and Cuomo's.

Revenue Raisers and Taxes
Besides congestion pricing, budget negotiations have also involved other possible revenue raising measures including a pied-a-terre tax, a real estate transfer tax, an internet sales tax, and the extension of the state’s so-called millionaires tax.

After talks of marijuana legalization seemed to stall, the Senate had floated the idea of a pied-a-terre tax on people’s second homes worth more than $5 million in New York City to replace the revenue that would have come in for the MTA from marijuana taxes. The pied-a-terre tax could raise an estimated $650 million each year. Cuomo was on board with the proposal as well, but the Assembly shot down the idea, citing difficulties in navigating the complicated property tax system in the city. Speaker Heastie said instead that the state should do a simpler one-time tax on expensive real estate transfers above $5 million. The discussion appeared to stall.

Cuomo has additionally proposed eliminating a loophole that allows third-party online retailers to avoid collecting sales taxes -- which could bring in nearly $400 million in revenue.

On the millionaires tax, there reportedly seems to be three-way agreement on a five-year extension of the current rates, though an Assembly proposal to increase the tax, and the number of people it applies to, did not get much support.

A previously-scheduled middle class tax cut appears to be staying as designed.

Healthcare and Medicaid
Cuomo had proposed as much as $550 million in additional state Medicaid funding in his budget proposal but he pulled back in February as the prospect of federal cuts to healthcare loomed and tax revenues came in lower than expected. Both the Assembly and Senate pushed to restore that funding and Cuomo appeared to backtrack.  

Environmental Policy
After he and the Legislature overrode a New York City law to impose a fee on single-use plastic and paper bags at retail stores two years ago, Cuomo introduced legislation last year to pursue a statewide plastic bag ban. The bill failed in the Republican-led state Senate but Cuomo reintroduced the proposal this year and it appears on the verge of passage, with a variety of carve-outs and other specifications, like a fee on paper bags and opt-out provisions for localities. Legislative leaders indicated on Wednesday that they had reached an agreement on the bill and that it will likely be passed with the budget.

There’s also a concerted effort this year by environmental advocates to advance the Climate and Community Protection Act, which would transition the entire state economy to renewable sources of energy by 2050. The bill has passed in the Assembly three years in a row but there isn’t consensus this year with the governor’s office or the Senate. Cuomo introduced his own Climate Leadership Act, which is similar in ways to the CCPA but would only mandate that the state’s electricity sector be renewable by 2040. Advocates say his proposal doesn’t go far enough and it’s hard to see what compromise he may reach with the Legislature. This legislation has been little discussed by Cuomo or legislative leaders as the budget deadline approaches.

Pay Raises
If the state Legislature fails to pass an on-time budget, which would technically mean by the April 1 deadline, senators and Assembly members will lose out on a $10,000 annual raise (from $110,000 to $120,000) in their base pay which is meant to go into effect on January 1, 2020. The raises were put into motion by a state commission last year, which set a schedule to bump up legislator salaries over a three-year period. The raises also apply to the comptroller, state attorney general and certain state agency commissioners. Cuomo has seemed to use the raises as leverage over the Legislature to ensure that the budget is not late and that it includes his priorities.

by Samar Khurshid, senior reporter, Gotham Gazette

Read more by this writer.

Key Issues to Watch as New State Budget is Finalized Thu, 28 Mar 2019 04:00:00 +0000
Ending The School Aid Charade gov cuomo edu

(photo: governor's office)

It is budget season in New York State and the annual game of determining the amount of state aid each of the 674 school districts will receive is in full swing. Every district and its legislators will fervently argue that more school aid is needed, that its schools are underfunded, and that its students will suffer serious harm if more money isn’t devoted to them as soon as possible. But in fact, the vast majority of New York’s schools are generously funded, while our results in terms of achievement are only mediocre. Instead of targeting additional aid to the few truly needy districts, all are given more.

As is the case in most states, New York public schools are primarily a local responsibility. Each school district runs its own schools, has its own contract with the teachers union, and relies on local property taxes to fund a large part of its costs. State school aid is meant to supplement the local tax contribution so that children in ‘low wealth’ districts are not denied the ‘sound basic education’ guaranteed by the State Constitution.

Each year a chorus of school advocates including the teachers union, school administrators, and state legislators argue for more state school aid. Whatever increase the Governor proposes is inevitably denounced as too little. The higher amount recommended by the State Education Department (SED) (controlled not by the Governor but by the Legislature via the State Board of Regents) is also decried as too low. Inevitably, some compromise amount is set in the state budget that is always a significant increase over the prior year.

The total amount of legislatively-approved school aid statewide rose 32% percent over the ten years between 2006 and 2017 and totaled more than $28 billion in fiscal year 2018, the largest expense in the state’s operating funds budget. Combined with local allocations, New York State school districts now spend a whopping $69 billion a year, an average of more than $25,000 per student, by far the highest amount in the country.

The game in its current form has been played since 2011, following the recession of 2008 when across-the-board school-aid cuts were imposed, when the Governor and the Legislature agreed to an annual ‘cap’ on the growth of school aid tied to growth in personal income and used a ‘foundation formula’ to determine the amount of aid each district would get, based on its number of poor students, English language learners, students with disabilities, regional cost differences, property values, and wealthy residents.

But the cap has never really been adhered to, and the results of the foundation formula are undermined through the addition of other kinds of aid (e.g. transportation, high tax aid) and foundation aid ‘hold harmless’ provisions ensuring that no district ever loses aid and indeed, that all get at least some increase each year no matter what they spend.

Why does this game go on? First, school aid is the primary vehicle for state legislators to ‘bring home the bacon’ and demonstrate effectiveness to their voters. The wealthiest school districts are in suburban areas where residents have shown the value they attach to top quality schools by paying very high property taxes. Even though these districts are already spending outsized amounts per pupil on their schools, they want more and their representatives need to get it for them. The Governor needs the support of these legislators for other parts of his agenda, so he is loath to disappoint them.

Second, public education advocates continue to make the argument that there are unmet school needs as revealed by the shortfall between aid amounts and what would have been provided under the foundation formula had it continued to be applied as approved in a lawsuit filed by a consortium known as the Campaign for Fiscal Equity (CFE).

The lawsuit ended in a settlement in 2007, and, while clearly articulating the right of all children in New York to free quality education, did not legally require implementation of its calculations of optimum aid. The Governor has called the CFE aid formula a ‘ghost of the past’ but the state teachers union and an alliance of other advocacy groups continue to insist that there is a shortfall of at least $4 billion in state school aid.

It is true that some school districts are underfunded and should receive more state aid to make up for their high number of poor students and their low property tax wealth. But there are less than 35 districts in this category and their unmet needs total less than $200 million. This shortfall could easily be filled by re-allocating a small part of the money that is going to school districts that do not need it; they are already spending far more than enough.

The 62 wealthiest districts in New York are receiving almost $5,000 a year in state school aid and are spending an average of $30,500 per student per year. The 68 poorest districts are getting much more aid – an average of $15,700 per student – but because they don’t have sufficient local resources, they can spend only $22,000 per student per year. There is no educational reason to give the wealthier districts any aid, and certainly no more than they are getting.

Surely, everyone involved in setting school aid amounts knows this. But the CFE advocates don’t want to alienate a large of portion of their support from the wealthy districts by arguing only for targeted aid increases and the legislative representatives of the well-funded school districts are certainly not going to kill the golden goose. So we continue with a charade of hand-wringing about the need for more school funding state-wide.

This year Governor Cuomo has proposed almost $1 billion in additional aid, SED wants more than $2 billion more, and the CFE groups are still demanding $4 billion. The reality is there is no justification for more state school aid, it just needs to be re-allocated and targeted to the specific districts that are actually needy. But more school aid there surely will be. This is especially infuriating when the Governor is proposing to reduce spending on Medicaid to address an expected $2.3 billion revenue shortfall in the next fiscal year.

In his second State of the State address, in 2012, Governor Cuomo complained that all the adults in the public school system have lobbyists pressing for more spending and that he would now be the students’ lobbyist. But over time, he has made compromises with the political realities; while his school aid proposals are accompanied by rhetorical acknowledgement of the need for better targeting, the chorus of calls for everyone everywhere in the state to receive more school funding continues. It is well past time for this charade to end.

Carol Kellermann was president of Citizens Budget Commission from 2008 through 2018.

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Ending The School Aid Charade Sun, 03 Mar 2019 05:00:00 +0000
10 Burning Questions After Cuomo’s State of the State and Budget cuomo legistlation pro

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]

by Samar Khurshid, senior reporter, Gotham Gazette

Read more by this writer.

10 Burning Questions After Cuomo’s State of the State and Budget Wed, 30 Jan 2019 05:00:00 +0000
A School Finance Fix to Aid Education and Local Taxpayers Cuomo education aid

(photo: The Governor's Office)

The annual Albany showdown over school aid started early this year. Even before Governor Cuomo’s State of the State speech, new State Senate Majority Leader Andrea Stewart-Cousins called for a permanent cap on local property tax increases to fund schools, signaling agreement with the governor’s long-held position.

So where’s the dispute?

Other legislators, particularly the Assembly’s powerful New York City delegation led by Speaker Carl Heastie, will likely oppose the measure. Taking their cue from teacher unions and other advocates for increased education spending, city pols have no need to worry over the cap.

The controversy is less between Democrats and Republicans (Cuomo and both legislative majorities are Democrats) and more between city and suburban voters. Under New York’s school finance laws, big cities, including New York, fund their schools from general revenues, supplemented by state and federal aid. Suburban and rural districts, though, fund their local burden by dedicated property taxes, so the cap is enormously consequential to those residents’ bottom line while far from obvious to city voters.

When was the last time a city legislator was criticized – let alone lost an election – for failing to bring home the state aid bacon? Never. It’s a non-issue because we don’t see the dollar for dollar trade-off between local property taxes and state school support. But that is often the biggest issue upstate and on Long Island. Every penny from the state offsets identifiable local school taxes. And property taxes are a particularly painful drain on suburban homeowners since, unlike paychecks, property values are not easily liquidated to pay the taxman.

But there’s a solution to the city/suburban school aid impasse. Foundation Aid to the rescue!

Foundation Aid is based on a complex formula for distributing state money to local school districts. If property taxes are capped, then Foundation Aid can pick up the increased burden if it is based on far more progressive state income taxes.

Moving school funding from dependence on local revenues to state sources makes all kinds of sense and can be done without further burdening middle-class taxpayers who need relief, not replacement of one tax burden for another.

An incremental increase in marginal income tax rates on high-wealth individuals to meet the needs of kids and overburdened middle class residents of the state’s highest-need districts makes sense. Those with high net-worth just got a bonanza from the federal tax cut, far in excess and disproportionate to lower earners. Taking a slice from that inequity to support middle class adults and better educate over 3 million New York children seems a fair solution to the Albany impasse.

In addition, an increase in Foundation Aid would allow the state to make needed tweaks to the formula itself, promoting Cuomo’s promise to divert resources from better financed districts and schools to those more in need. The Educational Conference Board, a statewide coalition of district administrators and parents, recommends reweighting categories of Foundation Aid more efficiently, basing assistance on student poverty, disability, enrollment growth, English proficiency, and population density. 

Sometimes, legislative compromise can yield better solutions than opponents’ original, polarized stands. This year, state school finance reform presents such an opportunity for reducing local taxpayer burdens while improving education. Legislators and the governor should seize the moment.

David C. Bloomfield is Professor of Education Leadership, Law, and Policy at Brooklyn College and The CUNY Graduate Center. On Twitter @BloomfieldDavid.

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A School Finance Fix to Aid Education and Local Taxpayers Mon, 28 Jan 2019 05:00:00 +0000