Gotham Gazette Thu, 22 Apr 2021 20:43:11 +0000 Joomla! - Open Source Content Management en-gb (Webmaster) Letter from a Constituent: Speaker Heastie, Please Stand Up for the Bronx reg fund east

Speaker Carl Heastie (photo: Michael Appleton/Mayoral Photography Office)

I’ve lived in The Bronx all my life — and all my life, our political leaders have hung our borough out to dry.

For as long as I can remember, being from The Bronx meant going to underfunded schools, surviving in food deserts, and living in overcrowded homes or crumbling NYCHA units. None of these conditions are inevitable; rather, they’re the outcome of negligence and disinvestment by lawmakers. The people of The Bronx deserve better. Assembly Speaker Carl Heastie: to deliver justice for your neighbors in The Bronx, it’s time to end tax breaks for the rich and invest in our New York.

Over the last century, a procession of politicians have made policy decisions that actively hurt the Black and brown majority of our borough, from building the Cross Bronx Expressway straight through our communities to redlining our neighborhoods. These choices led to a generational poverty that requires intentional investment — in education, in jobs, in housing — to correct. And yet, it’s 2021, and this legacy of disinvestment is as strong as ever. Tens of thousands of Bronx residents live in failing public housing; countless others are chronically rent-burdened, on the brink of eviction, or already homeless. Our schools, which serve our majority Black and brown children, are deeply underfunded. And we suffer one of the highest rates of food insecurity in the entire country.

COVID-19 made it all worse. Over 17% of Bronx residents are currently unemployed — the highest rate in the state — even as employment rates rebound statewide. Such high joblessness is a dangerous spark, setting off disruption after disruption: hungry families, people kicked off their health insurance, families evicted from their homes, and troubling child poverty. This endless cycle is fundamentally a policy failure, not a matter of millions of low-income Bronxites failing to pull themselves up by their bootstraps. And yet, in essence our leaders continue to throw up their hands as if there’s nothing they can do.

Speaker Heastie, as a longtime constituent in your district, I’m appealing to you directly: The Bronx needs tens of billions in dollars in new revenue to end this senseless suffering. That’s the kind of investment it will take to create hundreds of thousands of well-paying jobs; to finally give our children the education they need to succeed; to stop the cycle of poverty that housing insecurity creates.

To raise the funds needed to finally invest in The Bronx, we must end tax breaks on the rich. Right now, New York’s wealthiest residents enjoy enormous, unearned tax breaks on their wealth and incomes, their luxury cars and properties, and even on the corporations they own. That’s the kind of backwards policy that lets the rich get richer while The Bronx stays poor. And this year, it’s the policy that has let billionaires accumulate over $80 billion during a global pandemic while your neighbors are still out of work.

The six bills in the Invest in Our New York Act are the clear solution. By reversing these unfair tax breaks on the richest among us, New York can finally stop balancing its state budget on the backs of Black, brown, immigrant, and working class people. By passing these bills, we can fully fund our schools, hospitals, and housing. And just as disinvestment has a negative ripple effect, investment will have a positive one. Fully funding our schools will mean more opportunities for young people in The Bronx. Accessible healthy food will mean fewer comorbidities. Functional public transport will mean Bronxites can afford to travel to good jobs anywhere in the city.

Speaker Heastie: you know as well as I do that if we fail to raise this revenue by ending tax breaks for the rich, it’ll be communities like ours in The Bronx that will suffer. Property taxes will go up for homeowners; the budgets of life-saving services — from food pantries to drug harm reduction services — will be cut; unemployment will stay high. And all the while, the systemic inequality that leads to all of this pain in the first place will go unsolved.

As a lifelong Bronxite and a dedicated community activist, I have seen a lot of injustice in my time. But over the past year, I have also been hopeful that a new day for the Bronx is around the corner. From Pelham to the South Bronx, residents from all walks of life are coming together to demand more from our elected officials. The Governor is exceptionally weak, and we have a unique moment now to deliver for The Bronx. Progressive rhetoric is not enough.

We know you, as our legislative leadership, have more power than ever. As you are about to propose the Assembly’s budget for the next fiscal year, we turn to you: pass the Invest in Our New York Act and deliver the future that the Bronx deserves.

Curtis Robinson is an activist and life-long resident of Assembly Speaker Carl Heastie’s district in the Bronx.

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Letter from a Constituent: Speaker Heastie, Please Stand Up for the Bronx Thu, 11 Mar 2021 05:00:00 +0000
State Legislators Eye Revenue from Inheritances and Gifts with New ‘Heirs Tax’ state legis tax

The State Capitol in Albany (photo: Michael Appleton/Mayoral Photography Office)

As New York State faces a severe budget shortfall and awaits federal aid, some lawmakers and activists are advocating for a package of legislation that would increase taxes on the state’s wealthiest residents to avoid cuts to services for the most vulnerable. Among those proposals is a bill that would tax inheritances for multi-millionaires and raise as much as $8 billion for the state every year, according to supporters’ calculations. 

State Senator Jabari Brisport of Brooklyn and Assemblymember Michaelle Solages of Long Island, both Democrats, introduced the companion bills in their respective legislative houses to establish the new “heirs tax,” a part of the Invest in Our New York Act, which includes additional legislation to increase or create new taxes on millionaires and billionaires, Wall Street activity, and corporations. Proponents of the six-bill package estimate it would altogether raise $50 billion in annual revenue and would help forestall austerity measures by the state.

Governor Andrew Cuomo estimated in his recently-released executive budget that the state faces a $15 billion deficit for the current fiscal year and the next, and has been warning for months that without adequate federal stimulus dollars, he will be forced to slash aid to localities, which pays for education, social services and other programs, while also planning a relatively minor income tax increase on the state’s top earners. Cuomo, whose estimation of that deficit has been debunked given significant federal aid and higher than expected tax revenue, has repeatedly argued that the state cannot tax its way out of the current fiscal crisis that does exist -- in part to avoid pushing wealthier New Yorkers to relocate to other, lower-tax states -- and is calling for $15 billion in aid from the federal government.

New York’s current estate tax allows residents to receive nearly $6 million through inheritances without paying taxes, a system that advocates say is regressive and allows the accumulation of generational familial wealth without benefit to the public good. The heir’s tax proposal would amend that by creating a separate inheritance tax while also establishing taxes on receiving gift income, changing estate tax rates, and creating a new gift tax on donors.

The bill would tax inheritances in excess of $250,000, exempting retirement and pension funds. It also allows $2 million to be excluded from the taxable value of a primary family residence if the value of the inheritance is below $5 million, a provision that was included because of rapid gentrification in parts of New York City. There is a similar exemption in the bill for the value of family farms across the state.

“At a time when working-class people are fighting just to survive, New York’s most privileged dynasties are living more lavishly than ever off of vast sums of inherited wealth,” Brisport said in a statement. “I am proud to be introducing the Heirs Tax with Senator Sanders because it has never been more urgent that we require New York’s ultra-rich to pay equitable taxes on the fortunes they are handed.” Brisport referred to State Senator James Sanders Jr., a Queens Democrat who is co-sponsoring the bill. The bill has ten other co-sponsors in the 63-seat Senate. The Assembly bill also has ten co-sponsors besides Solages in the 150-seat Assembly.

Under the lowest bracket, inheritances between $250,000 and up to $500,000 would be taxed at 5%, while at the higher end, any inheritance income in excess of $10 million would be taxed at 50% – it is a marginal tax and only the amount above $10 million would be subject to it. Similarly, up to $50,000 in gift income would be exempt from the new gift income tax. Between $50,000 and $100,000 in gift income would be taxed at 5%; gift income in excess of $2 million would be taxed at 50% (again, taxing the amount above $2 million). The bill would also increase taxes on gifts worth more than $750,000. 

“It is time for each of us to do our part in building back a better and more equitable New York, said Solages, who chairs the Black, Puerto Rican, Hispanic & Asian legislative caucus. “We must invest in New Yorkers who make up the foundations of our society and economy. High-income New Yorkers must contribute their fair share to ensure our middle and low-income families recover from the COVID-19 pandemic. Working with Senator Brisport and the Invest in Our New York Coalition, we have introduced legislation to reform the inheritance and estate tax. Revenue generated can rebuild New York’s economy, prevent cuts to our schools and essential services, as well as finally begin the long journey back to true wealth equity in our state.”

In response to the heirs tax proposal, EJ McMahon of the Empire Center think tank argued that it would lead wealthy New Yorkers to "remove themselves from New York taxation" and the $8 billion annually would not be achieved. McMahon also noted that New York is currently "one of only 12 states that impose a tax on estates of deceased residents" and that "only six states have inheritance taxes, with rates from 10 to 18%."

The Invest in Our New York coalition is comprised of prominent progressive advocacy groups including the Alliance for Quality Education, Citizen Action, Empire State Indivisible, Make the Road New York, New York Communities for Change, New York Working Families Party, NYC-DSA, Strong Economy for All, VOCAL-NY, New York Communities for Change, and Upstate Downstate Housing Alliance/Housing Justice for All.

by Samar Khurshid, senior reporter, Gotham Gazette

Read more by this writer.

Note: this story has been updated with additional information and commentary from EJ McMahon.

Note: this story has been updated to note Assemblymember Solages represents a district in Long Island, not the Hudson Valley.

Ben Max contributed to this story.

State Legislators Eye Revenue from Inheritances and Gifts with New ‘Heirs Tax’ Tue, 16 Feb 2021 05:00:00 +0000
Democrats Hold Senate Majority, All of State Government; Here's What's on Their Agenda cuomo heastie stewart cousins

Gov. Cuomo, Speaker Heastie, Majority Leader Stewart-Cousins (photo: Governor's Office)

Despite facing tough battles in districts that they narrowly won two years ago and being on the verge of defeat in some places, Democrats also flipped a few seats and will grow their large majority in the State Senate, retaining control of both chambers of the Legislature by wide margins. Along with the ongoing tenure of third-term Governor Andrew Cuomo, Democrats will keep full control of New York state government through 2022, the next state election year.

This means the party will have the opportunity, however dominated by the coronavirus public health and socioeconomic crises the state faces, to build on its long list of liberal legislative action from the 2019-2020 session, the first with full Democratic control of state government in a decade.

Though they appear set to continue intra-party bickering and more substantive debate between moderates and those further to the left, the continued dominance of state government may embolden Democrats to pursue additional legislative priorities. And a new crop of progressive legislators, some members of the Demcoratic Socialists of America, will join both the Assembly and Senate, with plans to pull those majorities further left.

But it’s uncertain what Democrats running state government will prioritize and what they will be able to accomplish as New York continues to face dire financial straits caused by the coronavirus pandemic. Perhaps now more than ever policy and finances are inextricably linked, though there are some measures with minimal fiscal impact that legislators are eyeing for next session.

Even with Democrat Joe Biden winning the presidency and the party holding on to the majority in the House of Representatives, the fate of the U.S. Senate lies in two January runoff elections in Georgia, leaving the prospects for major financial aid to New York in limbo.

Before Biden is sworn in as president on January 20, the Legislature will be scheduled to return to session and Cuomo scheduled to outline his own 2021 agenda and budget proposals for the next fiscal year. But prior to that, Cuomo and other state officials must deal with a current fiscal year budget crisis that they have yet to solve.

What that process entails is, along with the immense question of federal aid, one of a number of variables and connected crises that will determine what is top of mind for Democrats in early 2021.

The first priority for the governor and Legislature will be to stabilize the state’s finances. Cuomo, who received significantly expanded budget powers under emergency legislation passed during the early days of the coronavirus outbreak, has been holding back some local aid and other state spending, and putting off crucial larger decisions for months as he hopes for a next federal stimulus package. He has long-resisted calls, including from some legislators, to advance revenue-raising measures including tax hikes on the wealthy, holding out for more federal aid and saying he does not want to give top earners any more reason to leave New York for other states.

“We know the challenges facing our state, as we fight this pandemic and work to recover economically, are daunting," said Senate Majority Leader Andrea Stewart-Cousins, at a news conference on Monday. "As we continue to confront this crisis, we know that the burden must be shared fairly, and that we must secure additional revenues, including help from our federal government, and that all this must be done without relying on our working and middle class families, our struggling small businesses.”

She added, "Our priority right now, quite honestly, is to get out of this budget situation that we're in, to get people COVID-free to the extent that we can, to get this virus under control and to get the economic situation in our state under control."

There continues to be some slim hope for a lame-duck federal package before January 20, but Cuomo and others have expressed more optimism for what Biden may be able to negotiate once he takes power, whether with a split Congress or two Democratic chambers.

In an August 31 letter to Congress, Cuomo and labor leaders said the state needs at least $59 billion to cover the current fiscal year and next, a total covering state government, local governments, and state-affiliated authorities like the Metropolitan Transportation Authority, which has been seeking its own $12 billion federal bailout.

“There is no combination of state efforts that will address this financial crisis without federal assistance,” they wrote. “Even if state and local governments cut expenses, increase taxes, and reduced services, the revenue shortfall would still be in the billions of dollars. Moreover, forcing state and local governments to take such actions would only further the pain and extend the period of time for the nation's economy to recover.”

Cuomo has withheld or held off on cutting tens of billions of dollars in local aid.

Many of the issues that Democrats in Albany confront will hinge on what any federal aid package looks like, and when it may come, if at all. For instance, a push for cancelling rent for thousands of New Yorkers to avoid an eviction crisis may fail without an infusion of funds. Any potential debate about providing universal health care in the state will likely be marginalized if the state is deeply in the hole. New taxes or increases in existing ones may be unnecessary if budget gaps are covered. "The reality is that we have a huge deficit and we need a lot of answers. And most of those good answers need to come from our federal government,” Stewart-Cousins said.

What also remains to be seen is how far left the new Democratic conferences in each chamber will swing. Several newly elected progressive Assembly members from New York City unseated long-term establishment Democrats in the primaries with support from the Working Families Party (WFP) and the Democratic Socialists of America (DSA), among other left-wing groups. But that majority is quite large -- well over 100 out of 150 seats -- and while it is dominated by New York City members, Speaker Carl Heastie of the Bronx has always governed in a collaborative fashion with the more moderate Senate majority and Cuomo.

In the Senate, a mix of moderates and progressives will join or return to the conference, but Democrats may be emboldened by the fact that they passed many liberal priorities of the past two years and only added to their large majority. State Senator-elect Jabari Brisport of Brooklyn, an outspoken democratic socialist, is among those heading to Albany from the city who plan on pulling the Legislature to the left.

There are a slew of bills and policies, some revenue-related and others less so, some with more support from the leaders of the party and others pushed staunchly by the activist wing, that Democrats are poised to consider as the new Legislature is seated. Some have emerged as a consequence of the pandemic. Others have lingered from years past and from the previous session. Some were pushed hard by the insurgents who just won contested primaries, others were Cuomo’s priorities before the pandemic hit.

But because of the pandemic, taking stock of the election results and ascertaining any real 2021 “agenda” for Albany Democrats -- beyond salvaging the state’s finances and thus ensuring government programs happen, state government continues to function and local governments are funded -- is difficult. While there are important clues in the early, pre-pandemic 2020 agendas put forth by Cuomo and the legislative majorities, as well as policies promised by winning Democratic candidates, so much will indeed hinge on the state fiscal picture, what comes from Washington, D.C., and, potentially, where the debate over state tax policy lands.

Spokespeople for Governor Cuomo, Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie did not respond to repeated requests for comment for this article.

While new items are likely to emerge or gain momentum, here’s a rundown of what Democrats may have on their 2021 state government agenda.

Marijuana Legalization
The legalization and taxation of marijuana for recreational use by adults has been a priority for Democrats for years, and Governor Cuomo has also embraced it in the last two budget sessions both as a criminal justice reform and a potential revenue-raiser that could eventually bring in more than $300 million for state coffers annually.

The governor and Democrat-led Legislature could not come to an agreement on legalization in either 2019 or 2020, though they did decriminalize possession to a degree earlier this year. The sticking point appears to be the amount of revenue that is re-invested in communities that have been most negatively impacted by marijuana criminalization and the larger “war on drugs.”

As neighboring states have moved towards legalization – New Jersey voters approved a ballot referendum on marijuana legalization on Tuesday – the governor has pursued the policy with more urgency as well and recently indicated it is something of a must for 2021. The issue will likely be a prominent agenda item in the upcoming legislative session, particularly as it could provide some help to fill the budget deficit the state faces, though mostly not until the industry is built out in future years.

As the pandemic has devastated low-income New Yorkers and blown a hole in the state budget, there has been a growing clamor from left-wing Democrats and grassroots progressive activists to increase taxes on the wealthiest New Yorkers. Cuomo, however, has long been opposed to most new or increased taxes, and believes that such proposals would drive higher-income New Yorkers to migrate to states with lower tax rates.

Both the Senate and Assembly legislative leaders, Majority Leader Senator Andrea Stewart-Cousins and Speaker Carl Heastie, have expressed support for increasing taxes on millionaires and billionaires, but neither chamber nor the two in collaboration have moved to force the governor’s hand.

A newer class of progressive Democrats have also become a prominent bloc in the Senate and several of them have vowed to pursue new tax legislation rather than allow broad cuts to local aid and state services, as Cuomo has threatened to do. The incoming Assembly members who ran on progressive platforms to beat incumbents and other more moderate legislators have also vowed to pursue several revenue-raisers. While the Assembly Democrats have long advanced higher taxes on top earners, the Senate has joined Cuomo with more opposition. This summer, Stewart-Cousins announced a revenue working group, but it has not produced any recommendations.

Renter Protections and Homlessness Prevention
Millions of New Yorkers lost their jobs during the pandemic and though the governor placed temporary moratoriums on both residential and commercial rent evictions, hundreds of thousands of households and thousands of businesses are at risk of eviction as their rent piled up for months. Legislators and activists have been calling for a ‘cancellation’ of rents for those who’ve lost significant income and become unable to pay, but the state doesn’t have the fiscal ability to make landlords whole. Federal aid for this purpose would likely be necessary for the state to move ahead.

While much related to rent relief will depend on federal aid, there has been an ongoing call from some for a “good cause” eviction bill, which was not approved by the Legislature amid its passage of a massive package of rent protection in 2019, a package that mostly applied to those in rent-regulated apartments. The bill would give tenants of all kinds the right to renew a lease except in certain specific circumstances as well as restrict rent increases past a set threshold.

Meanwhile, Queens Assemblymember Andrew Hevesi’s proposed Home Stability Support legislation promises to be a strong deterrent against homelessness by increasing the value of rental vouchers for those on public assistance. But the bill has failed to move through the Legislature even in good fiscal times. Though it may be more necessary now than ever before, as more families are availing themselves of welfare benefits and a potential tsunami of evictions looms on the horizon, the state doesn’t have the cash flow to fund it without receiving significant federal assistance or significantly increasing taxes. Still, Hevesi and others are likely to continue pushing for the measure.

Voting and Election Reforms
With long lines during early voting and with the New York City Board of Elections making massive mistakes with absentee ballot mailings, the presidential election yet again prompted scrutiny of New York State’s election laws, which dictate the city BOE’s antiquated structure, and administrative procedures. Elected officials and advocates want to see changes to everything from voter registration to the structure of the BOE.

Though the Democrat-led Legislature has approved a slew of reforms to expand voting and improve election administration, there’s much left to be done. Among pending measures are same-day voter registration and no-excuse absentee ballots, both of which require amendments to the state constitution. The Legislature has already voted both proposals through and must pass them again before placing them on the ballot for voter approval.

New York is among the states that also takes the longest to count absentee ballots, with counting beginning a week after Election Day. State Senator Mike Gianaris has proposed legislation that would mandate that the count begins on election day.

Reforming the BOE is a harder task, requiring a state constitutional amendment as well. The agency is partisan by nature, with an equal number of commissioners appointed by Democrats and Republicans, the two parties receiving the largest number of votes in elections. Though it is the New York City BOE that has been the subject of most criticism, restructuring it would require state action and there are powerful establishment interests, particularly Heastie, the former head of the Bronx Democratic Party, who do not seem inclined to act.

Education Funding
In recent budget sessions, Governor Cuomo has attempted to change the way the state hands out Foundation Aid to struggling schools in less well-off districts, as required by the Campaign for Fiscal Equity state court decision in 2006. He proposed an “education equity” formula that would send more money to poorer schools by reallocating funds but not by significantly increasing foundation aid. While the proposal has some support from fiscal watchdogs, education advocates say it will underfund poorer schools in low-income communities of color.

Cuomo did not seem to push especially hard to implement the new formula this year. It remains to be seen if he will attempt to do so next year, even as he threatens to cut billions from local aid, including education.

Another Cuomo idea that failed last year was the expansion of eligibility for the state’s Excelsior Scholarship for tuition-free public college. The governor proposed increasing the income threshold from $125,000 in gross family income to $150,000. Without federal aid, there’s a chance that the program may in fact be cut next year. 

Individual and Group Legal Protections
Last year, the governor sought to pass a bill that would close the so-called rape intoxication loophole, which makes it difficult to prosecute sexual assault when a victim is voluntarily intoxicated and cannot provide consent. But the measure was not approved in the state budget after the two legislative chambers failed to come to an agreement on the bill. The Senate and the governor’s office pledged to continue to advance it and could possibly take it up next year.

Governor Cuomo also proposed an expansive Equal Rights Amendment for the state, which would prevent discrimination by adding a list of protected categories to the state’s bill of rights including sex, ethnicity, national origin, age, disability, sexual orientation, and gender identity. Though the Senate has approved a proposal similar to Cuomo’s, the Assembly has repeatedly passed a much narrower version. As with any amendment, it would need to pass the Legislature in two consecutive sessions before being placed on the ballot.

Gig Worker Protections
Last year, Cuomo promised to pursue protections for workers in the gig economy but failed to follow through, and he did not advance anything again this year. Over the years, lawmakers have proposed legislation but none has seen much movement.

Recent proposals have been based on the AB5 measure passed in California that created an “ABC test” for worker classification. That measure, which prevented misclassification of workers as independent contractors, experienced a major blow after California voters approved a ballot proposal, Proposition 22, in this year’s general election that rolled back some of the protections established under the law. Companies like Uber and Lyft bankrolled a $200 million campaign to promote the passage of that measure.

Criminal Justice Reform
Last year, the state Legislature approved a package of criminal justice reforms – including speedy trial, discovery, and bail reforms – that were broadly praised by progressives but faced opposition from some moderate Democrats, Republicans, and powerful law enforcement unions. Pieces of the reforms, notably on bail, were rolled back earlier this year, but the legislation was a major focus of Republicans in state legislative races, especially in Brooklyn, Long Island, and Hudson Valley swing districts. Yet Democrats appear to have prevailed in most of those races.

Activists are calling for reform that would improve conditions for those in detention, and the pandemic has only added urgency to their calls as jails and prisons became clusters of COVID-19 infections. Among the measures they want to see passed is an elder parole bill that would make any inmate above the age of 55 who has served 15 years in prison eligible for parole, the Humane Alternatives to Long-Term (HALT) Solitary Confinement Act which would end the use of solitary confinement in state prisons, among other things, and the Less Is More Act, which would prevent a person on parole for being lcoked up for non-criminal technical parole violations such as missing curfew or a failed drug test.

Another pending issue for reform advocates that are part of the “DecrimNY” coalition is the Stop Violence in the Sex Trades Act, which would decriminalize sex work. Though the issue of decriminalization has slowly gained footing, it hasn’t yet been embraced by Democrats writ large. The coalition is also opposed by the New Yorkers for the Equality Model coalition, who would rather see legislation that ends enforcement against sex workers but still prosecutes those who pay for sex.

Police Reform
In the wake of the national protests after the killings of George Floyd and Breonna Taylor by police officers earlier this year, the Legislature and governor enacted several long-stalled reforms to policing including a repeal of a state statute that prevented the public disclosure of police officers’ disciplinary records and outlawing chokeholds by law enforcement.

But police reformers have said their work is far from over and they want to see several other measures enacted at the state and city levels. Governor Cuomo issued an executive order mandating that all municipalities pass police reinvention plans that are submitted to the state in order to get any state funds for policing. Mayor Bill de Blasio has already announced that he will work with the New York City Council to advance a new package of police reforms to be voted on in summer 2021, building on a number of reforms that were approved this summer.

Advocates have called for ending the qualified immunity doctrine that protects police officers from civil lawsuits over misconduct. State Senator Zellnor Myrie, a Brooklyn Democrat, has also pledged to introduce legislation that would accomplish that.

New York Health Act
The New York Health Act, which would provide universal, single-payer healthcare coverage to all New Yorkers, is another piece of legislation that some say has never been more urgent than now, as the state continues to battle the pandemic and begins a slow path to recovery, and with many having lost their employment-based health insurance. But it would necessitate a major overhaul of the state’s health insurance and health care sectors, major tax increases (offset for most New Yorkers by savings on health insurance and care), and was a long-shot even during good economic times. Governor Cuomo has long opposed the New York Health Act as too costly and too disruptive, while saying he favors single-payer health care on the national level.

Even before the pandemic, the bill carried a huge price tag, though it eventually would create billions in savings for the state. A study by the RAND Corporation showed that a single-payer healthcare system would require an additional $139 billion in state tax revenue in 2022.

Environmental Bond Act
Earlier this year, the governor advanced and the Legislature approved a $3 billion Restore Mother Nature Bond Act to promote environmental restoration and climate resiliency projects. But the bond act needs to be approved by voters through a ballot question and, as the pandemic devastated the state’s finances, the governor pulled the proposal. Advocates from more than a hundred organizations recently held a virtual lobbying event to push for the bond to be placed on the ballot next year.

by Samar Khurshid, senior reporter, Gotham Gazette

Read more by this writer.

Note - this article has been updated with comments from Senate Majority Leader Andrea Stewart-Cousins. 

Democrats Hold Senate Majority, All of State Government; Here's What's on Their Agenda Sun, 22 Nov 2020 05:00:00 +0000
Could a Tax on Stock Trading Help New York Fill Its Massive Budget Hole? rings op bell

Gov. Cuomo at the New York Stock Exchange (photo: Darren McGee/Governor's Office)

This story was published in partnership with New York Focus, an independent, investigative news publication covering New York state and city politics, as part of its launch.

As the pandemic roiled markets in the spring, New York recorded surging revenue from an obscure tax on Wall Street stock trading. From April to June of this year, according to state tax department data, it collected $2.9 billion—more than double the amount it notched over the same period last year.

But that money never made it to state coffers: New York does not actually keep the tax revenue. Instead, since 1981, it has rebated the money to investors, meaning that, in practice, the stock transfer tax is little more than an administrative hurdle for brokers’ legal teams.

A proposal to start collecting the dormant tax has seen growing support in the state Legislature, following a staggering pandemic-spurred drop in tax revenue and state funding cuts to localities, which could deepen without an infusion of funds. The bill, which is one plank in a campaign led by progressive labor groups and activists, would end the rebate, allowing tax authorities to begin collecting the revenue again.

Opponents of the legislation center their argument on the threat of capital flight. If New York imposed the tax, they say, firms would move their residency or trading activities to another state to escape it—a notion that may be keeping even some progressives spooked.

Neither the Assembly nor the State Senate, both led by Democrats, has moved the relevant legislation. While the Assembly majority has long-favored several revenue-raising measures, Senate leadership recently formed a working group to examine possible strategies for filling the state's multi-billion-dollar budget gap in lieu of federal aid. Governor Andrew Cuomo, a third-term Democrat, has resisted calls for new taxes, and argues that the stock transfer tax proposal would undermine New York’s position as a global financial hub.

“In the digital age it would be even easier for transactions to simply be moved out of state to avoid the tax,” Freeman Klopott, Cuomo’s budget spokesperson, said in a statement to New York Focus.

The reasoning echoes a recent memo circulated by lobbyists for the Securities Industry and Financial Markets Association (SIFMA), reviewed by New York Focus, which argues that the tax would place heavy operational burdens on brokerage firms. “To avoid these additional costs, trading activity will naturally migrate to areas outside New York,” the memo reads.

But tax experts say that most frequently threatened avoidance strategies are unlikely to succeed. Traders would struggle to evade the tax, even if they moved out of state, those experts say. The New York Stock Exchange is unlikely to pack up and leave, since it doesn’t pay the tax itself but passes it on to investors. And investors are unlikely to stop trading on the exchange anytime soon, economists say, since New York’s trading hub far outstrips its closest rivals in high liquidity and low transactions costs—and would even after reinstituting a small tax on stock sales.

What transactions are in New York’s jurisdiction?
In order to impose a tax, the state needs “nexus”: it needs to show that the transaction occurred within New York’s jurisdiction.

But when most trading is electronic, what does nexus mean, anyway? The financial services industry is heavily concentrated in New York, but many operations—especially data storage and communication technologies—are housed in New Jersey and Illinois. Both of those states are currently seeing fierce pushback against similar efforts to impose a financial transaction tax.

Lawmakers seeking to tax finance say lobbyists’ arguments can seem like a game of whack-a-mole. Depending on which state is attempting to impose a tax, the securities industry may contend that what really confers tax jurisdiction is the location of trading firms, the location of exchanges, or the location of data centers. Failing those arguments, lobbyists argue that the industry is largely conducted beyond state borders, in the global financial cloud.

The stock transfer tax currently in place—the one that is immediately rebated—is levied on nearly all stock sales that occur “within New York State.” On paper, it imposes a tax of 1.25 cents on a sale of stock worth $5 or less a share, rising with the price of shares. Under the bill to begin collecting that tax again, a transaction would be subject to the tax “if any activity in furtherance of the transaction occurs within the state or if a party involved in the transaction satisfies a nexus with New York state which shall be defined as broadly as is permitted under the United States Constitution.”

Could New York’s tax department really collect taxes under that ultra-broad definition?

The short answer, experts say, is: probably.

The United States has not seen a new financial transactions tax imposed in decades, meaning there is a lack of litigation on the issue—so it’s not clear which way courts would rule, if the STT were implemented and challenged. Even so, legal experts think a recent Supreme Court ruling means investors lack attractive options that put them beyond the long arm of New York’s tax authority.

What if trading firms moved out of state?
If a firm moved to New Jersey but continued trading on the New York Stock Exchange, New York would likely still have substantial enough connection to impose a tax, attorneys familiar with state residency requirements say.

Before the rise of online commerce, state tax authorities imposed sales tax on businesses with a brick-and-mortar presence in that state. In the 2018 decision South Dakota v. Wayfair, the Supreme Court relaxed the older “physical presence” requirement, noting that states are “confronting the complexities of defining physical presence in the Cyber Age.” Explaining that out-of-state tax exemptions had become “a judicially created tax shelter,” the Court expanded states’ ability to impose taxes remotely.

Timothy Noonan, a partner at Hodgson Russ LLC who specializes in litigation on tax residency in New York City and State, said Wayfair appears to give New York broad authority to tax trades that are requested in other parts of the country.

An investment firm seeking to avoid the tax might try to argue that it is unconstitutional for New York to tax an out-of-state firm, Noonan said. But the case would be hard to make.

“I think the government would point to the Wayfair case—point to the trend indicating that nexus, in 2020, is a lot easier to establish,” he said. “And that an economic presence, such as trading over the New York Stock Exchange, is enough to create that taxable nexus.”

The current trend, Noonan said, points toward more decisions like the one in Wayfair.

Darien Shanske, a tax professor at UC Davis Law School, told New York Focus that firms would probably not be able to escape the tax by leaving the state.

“If everything is the same, except that instead of yelling into your phone on the New York Stock Exchange [floor], you’re yelling into your phone in New Jersey—but all the other machinery is the same—then that still looks like New York has a good claim to tax that transaction,” he said.

Furthermore, Shanske said, New York’s tax department “is notorious for being persnickety.” The Department of Taxation and Finance has aggressively brought cases seeking to tax financiers who work from second homes in Connecticut or Vermont—and won them.

“The idea that the New York revenue authority is just going to be like, ‘Yeah, you moved to New Jersey, I guess we can’t tax you anymore’—that’s just not how it’s gonna go,” Shanske said.

Alternatively, an investor seeking to avoid the stock transfer tax might point out that trading is conducted through the New York Stock Exchange’s out-of-state servers.

But here, too, tax attorneys say it would be tricky to skirt New York’s jurisdiction. Since Wayfair, courts appear to care less about where sales transactions take place—whether in New Jersey, Panama, or cyberspace.

“Even if the servers are in the cloud,” Noonan told New York Focus, “if you follow the sales tax issue in the Wayfair case, an economic presence is enough to create that nexus. And the economic nexus here, the nexus of the transaction, would be, ‘We don’t care where the servers are, we don’t care where the traders are. It’s happening on the New York Stock Exchange. That gives us the nexus—the jurisdiction—to tax it.’”

What if the New York Stock Exchange left altogether?
What if the entire New York Stock Exchange relocated? (Many—though not all—of the equity purchases under the stock transfer tax are conducted on the NYSE.)

If the New York Stock Exchange moved to another state, Shanske said, this could pose a more serious threat to transfer tax collections, making it harder for the revenue authority to argue that NYSE’s stock trades remained within their tax nexus. Still, it would be a matter of degree.

“How much of the New York Stock Exchange has to move, or shift its business, before the connection is too slight? I’m not sure,” Shanske said. “It’s something of an unknown.”

Historians have cast doubt on the suggestion that the Exchange would pick up and move, pointing out that the NYSE threatened to move to New Jersey immediately after New York initially adopted the tax in 1905, but never followed through. Others point out that the Exchange already pays a premium to maintain its operations in high-rent Manhattan.

James Parrott, a tax policy expert and economist at The New School, said the battle is more a matter of political negotiation than about the marginal costs of algorithm-driven trading. If the stock tax is enacted without the acquiescence of industry, he said, brokers might retaliate.

“Whatever the relocation costs are involved in moving the New York Stock Exchange and NASDAQ and all of the trading floors out of New York,” Parrott said, firms might be prepared to pay “whatever it takes to evade this.”

To avoid this scenario, Parrott said, stock tax proponents should focus on building public pressure—so that a major undertaking like moving the stock exchange during a lopsided recession, to avoid a tax, would look too politically risky.

What if firms leave the New York Stock Exchange?
Another strategy the securities industry suggests might help investors skirt the tax: why not simply delist from the New York Stock Exchange, and conduct trades over cheaper platforms?

The trouble here, say economists who study stock trading, is that there are few good alternatives.

There’s the London Stock Exchange (LSE), but that floor has had an analogous transfer tax in place since 1694, despite continuous grumbling from traders. The LSE’s levy is frequently cited as a success story for transfer taxes, since it has not stopped the Exchange from consistently ranking among the world’s top exchanges by market capitalization.

Within the United States, economists who have studied stock levies say, investors in search of highly-liquid, low-cost trading platforms have few alternatives to the New York Stock Exchange.

“Even with the reinstatement of the STT, overall transaction costs for firms trading on the New York exchanges would almost definitely still be well below those of alternative trading platforms,” the economists Robert Pollin and James Heintz found.

“One of the advantages of the New York [Stock] Exchange is, with the high volume of trading, your transaction costs tend to be low. So, when you add in the stock transfer tax, it makes less of a difference,” said Assemblymember Phil Steck, a Democrat representing Schenectady and the longtime champion of legislation to revive the STT. State Senator James Sanders, Jr., a Queens Democrat, sponsors the bill in the Senate.

Stephany Griffith-Jones, an economist at Columbia University who studies financial markets, said moving off the New York Stock Exchange would carry other costs, like higher capital adequacy requirements—the amount of capital a financial institution is required to keep on hand—and increased legal risk.

Plus, she said, new markets do not spring up overnight.

“You’re going to want to sell in New York, because that’s where the big markets are,” Griffith-Jones said. “You’re not going to find, in Oklahoma, a lot of people wanting to trade very sophisticated securities.”

‘A backdoor to federal relief’
Far from worrying that the stock tax would push firms to flee to other states, proponents tout the tax as a convenient way to capture new out-of-state revenue. Advocates contrast the STT’s potential to raise revenue from trades in New York and beyond with Cuomo’s escalating pleas for federal funding to replace lost tax revenue, which have so far failed to draw concessions from a gridlocked Congress.

Patrick Nelson, a Democratic Committeeman from Saratoga Springs, said the STT is one in a bundle of measures that could help New York capture a greater share of economic activity.

“We’re simply asking for some of the money back that we use, as New Yorkers, to bail out Kentucky and Mississippi and Florida and Texas and Georgia, and all these other states that take more from the federal government than they pay in,” said Nelson, who is the Democratic and Working Families Party nominee for State Senate in New York’s 43rd district. “It’s a means for us to access some of the money that we pay out to the other states.”

“You could almost think of it as a backdoor to that federal relief, as well,” Nelson added.

‘Salami tactics’
Multilateral financial taxes—designed to span multiple states or governments—are more effective than unilateral ones, the International Monetary Fund (IMF) has found. Intuitively, this makes sense: scaled-up taxes offer fewer opportunities for escape.

Although local taxes are more vulnerable to evasion, several existing examples work fine. The same IMF study noted the success of the UK, Hong Kong, and Singapore in imposing STTs without international cooperation. “Unilateral STTs, even if levied on fairly narrow bases, are certainly feasible as witnessed by their use in numerous developed countries,” the study found—especially when imposed in “established financial centers.”

Local financial taxes can also be forerunners to national or international versions. In Europe, individual member states’ existing levies could soon be knitted together into an European Union-wide tax. Likewise, advocates for a state-level STT say it could be a forerunner to the national financial tax supported by senators such as Kirsten Gillibrand (D-NY).

Griffith-Jones, who has advised efforts to implement a European financial transaction tax, said the securities industry’s lobbying campaigns follow a predictable, divide-and-conquer pattern.

“It’s salami tactics,” she said. “They always do this. When the UK wanted to expand its financial transaction tax, even people on the right of the Labor Party would say, ‘Oh yes, we’ll do it, but only if the U.S. does it. For it to work, it has to be internationally coordinated.’”

While an international tax would be harder to evade than a national one, and a national tax would be harder to evade than a state tax, the question is just how much evasion would occur with a state tax. And many tax attorneys think that at the current level, most firms wouldn’t take on the hassle and cost of evasion.

“There’s clearly some level of stock transfer tax that is sufficiently low that nobody’s going to change their business structure to avoid it,” Shanske said. “And the rate on this tax is pretty low.”

Although debates have centered on the risk of tax flight, there are other considerations for and against reviving the tax. Governor Hugh Carey signed legislation phasing out the tax in 1978, citing concerns that it put New York at a competitive disadvantage.

Opponents say it will cause job losses in the securities industry—which could have ripple effects—and that it will increase stock volatility. Proponents say it will reduce dangerous high-frequency trading by the same firms that have seen record profits amid coronavirus-driven market pandemonium. Still others say that it should be expanded beyond stocks to a broader tax on all financial transactions.

Michael Kink, director of the labor-backed progressive coalition Strong Economy for All, which is helping lead the push for several revenue-raising measures, said advocates would like to see more debate about tax initiatives outside annual hearings on the governor’s budget proposal. Typically, he said, there are too few occasions for on-the-record testimony by stakeholders.

“I would love public hearings as an opportunity to help lawmakers and the public understand the mechanics of all these bills.” Kink said. “Talking about proposals, digging into the details, forcing SIFMA to say in public under oath what they like to whisper and sleaze about in private.”

No 'Urban Neo-Marxists' Here
The stock transfer tax’s putative strength is its political feasibility: it is already on the books. Since the collection infrastructure is already in place, it has been popular among legislators looking for relatively painless ways to raise revenue without authorizing brand-new taxes, and unlike some other revenue-raising proposals being debated, it could immediately help fill state coffers devastated by the pandemic’s impact on existing taxes.

A federal financial tax has also gained popularity. Jared Bernstein, a top economic advisor to Democratic presidential nominee Joe Biden, is a vocal booster of the idea, as is Biden running mate Kamala Harris.

The California senator is no crusader against Wall Street. Her selection for the Democratic ticket drew praise from “titans of industry,” as one banking attorney, who specializes in distressed debt, recently gushed to the Financial Times. Harris is so unthreatening to the securities industry, according to the Wall Street Journal, that traders attributed a recent stock market rally to her selection for the coveted VP slot.

And even Michael Bloomberg, who shot down a proposal to reinstate New York’s STT as mayor, supported a federal equivalent during his 2020 presidential bid.

New York City Mayor Ed Koch supported reinstating the STT as part of an aid package to the city and the Metropolitan Transportation Authority, as the city struggled to close a $1.3 billion budget gap in 1982. Koch’s deputy mayor for finance Kenneth Lipper—a Wall Street insider recruited from Salomon Brothers bank—reportedly opened discussions with brokerage houses about reinstating the tax.

“This is not a tax being proposed by left-wing radicals to pillage the coffers of the gentry,” New York Times columnist Sydney Schanberg wrote at the time. “Edward Koch and Kenneth Lipper hardly qualify as urban neo-Marxists.”

Yet the proposal to reinstate New York’s stock transfer tax has been stuck in the same news cycle for two decades: it is perpetually an idea whose time has finally come.

This past summer, as ebullient markets seemed to come unstuck from an underlying economy wracked by the COVID-19 recession, the business press once again reported that lawmakers were considering resurrecting the dormant tax. It’s a familiar pattern: proposals to bring back the STT have routinely surfaced during periods of fiscal strain, and then fizzled.

Now, momentum is building again for a spate of tax-the-rich proposals. Steck told New York Focus that his bill’s revenue-raising potential dwarfs alternatives.

“You’ll hear about the pied-a-terre tax, scaffolding tax,” Assemblymember Steck said. “You’re not going to get anywhere near those numbers.” Meanwhile, he adds, “the governor is an obstacle, because the governor is stuck in 1980.”

“We have this budget hole to plug, and the governor and the [Assembly] speaker [Carl Heastie] want to wait and see if Joe Biden becomes president,” Steck said. “If that happens, they may decide to go with some of the lesser revenue-raisers.”

But eyeing the upcoming legislative session in 2021, Steck is optimistic. With New York facing the most staggering fiscal hole since the 1970s, he said, “there might be no alternative.”

This story was published in partnership with New York Focus, an independent, investigative news publication covering New York state and city politics, as part of its launch. Sign up for its newsletter here.

Could a Tax on Stock Trading Help New York Fill Its Massive Budget Hole? Mon, 12 Oct 2020 04:00:00 +0000
A Wall Street Investor and an Unemployed Immigrant Cook Agree: Tax Billionaires, Support Excluded Workers gov cuomo rings

Gov. Cuomo at the New York Stock Exchange (photo: Don Pollard/governor's office)

Income inequality in our state was a crisis before anyone had even heard of COVID-19, but five months into the pandemic, it is now a question of life or death for millions of New Yorkers.

As two individuals sitting on opposite sides of that inequality divide, we are united in our demand to the State of New York: we must tax the rich, and we must do it right now.

One of us, Morris Pearl, is a millionaire. I built my fortune on Wall Street, but I retired from that job after deciding that I wanted to concentrate on making the world a better place.

Now, I make most of my money off passive investments. In the middle of an unprecedented economic crisis those investments are doing better than ever. Investing doesn’t use much of my labor and it barely takes up my time, and yet it’s made me wealthier than millions of other New Yorkers who actually need to work for a living. And thanks to our state lawmakers’ unwillingness to tax folks like me fairly, I pay significantly lower tax rates on what I earn from my investments than most New Yorkers do for what they earn from their hard work.  

On the other side of things I, Ajay Puran, lost my job at a roti shop in Richmond Hill back in March as the economy shut down. I’m 16 years old and go to high school. But I’m also the oldest child in a family of six, so I used to work 8-10 hour shifts on weekends to help pay the rent and support my younger brothers and sister. Because of the pandemic, my mom and I both lost our jobs. We became dependent on my dad’s income alone - even though his work wasn’t regular and his job didn’t bring in anywhere near what we need to survive. I recently found another job occasionally cleaning and sanitizing the apartments of rich people in Manhattan who left the city. But our income is still a tiny fraction of what we used to live on. 

My family and I are undocumented. No one in my family is eligible for a single dollar in unemployment or any emergency income. When we can find work, my dad and I are working what everyone calls “essential” jobs and we’re getting a lot of thank yous. But no amount of thank yous will put food on our table or help us to pay the rent. As undocumented people we are somehow keeping this country running through our essential work, but then when there is no paid work available, we are excluded from all unemployment assistance and other income to help us survive.

Many families like us have to make a choice between working while sick or becoming homeless. And in a pandemic, everyone else in New York is only as safe and healthy as my family, and all the other undocumented people who live here.

We both agree that this sorry state of affairs is not inevitable.

Millions of New Yorkers are suffering, and the state government can offer more assistance to the people who need it most, including undocumented immigrants. There’s plenty of money available to spend, it’s just in the bank accounts of New York’s wealthy. All we need is for the state Legislature and Governor Cuomo to step up and understand that protecting the lifestyles of the rich in the long-term means to protect the most vulnerable New Yorkers now, not keeping the wealthy’s taxes low in the short-term.

A bill introduced in the New York Legislature would address this problem by changing the way our state’s billionaires are taxed to provide direct relief to families excluded from unemployment benefits. The proposed billionaires tax would raise an estimated $5.5 billion per year and could provide direct aid to the most vulnerable New Yorkers in a flat amount that matches what other low wage workers receive in unemployment insurance.

While the rest of the state struggles to stay afloat in this crisis, New York’s 119 billionaires have increased their net worth by leaps and bounds since the start of the pandemic, with some estimates reaching $600 billion.

We have more billionaires than anywhere else in the world, and yet they pay lower state and local tax rates than New York’s teachers and truck drivers. This should be an easy call. Our state could finally, after all these years of ignoring the growing problem, start to bridge the gap between the two of us if we just tax those billionaires to fund excluded workers.

Morris Pearl is the Chair of the Patriotic Millionaires. Ajay Puranis a member of Desis Rising Up and Moving (DRUM). On Twitter: @Morris_Pearl & @DesisRisingUp.

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A Wall Street Investor and an Unemployed Immigrant Cook Agree: Tax Billionaires, Support Excluded Workers Sun, 16 Aug 2020 04:00:00 +0000
No to Austerity, Yes to Efficiency and Fairness: Getting Our Budget Priorities Straight for a Strong Post-COVID New York exec bud 18

Major budget questions loom as coronavirus takes its toll (photo: Edwin J. Torres/ Mayor's Office)

As we work to show COVID the door, tough budget decisions are ahead. Governments at every level are grappling with the unprecedented toll this pandemic has had on the economy. 

COVID has laid bare structural inequities too stark to ignore. While some work comfortably from home, others put themselves in danger on the front lines. While some flee to the Hamptons, others pass the virus between family members in cramped New York City apartments.

These choices become even more stark when we take a cold, hard look at post-coronavirus state and municipal budgets. New York State is facing a $10-$15 billion budget deficit. New York City projects a $7.4 billion loss in tax revenue. 

Where should we go to fill the budget gaps? 

Our executives have given us hints of what they want to do. We are told that painful cuts are necessary, that sacrifices must be made.

Mayor de Blasio already took a scythe to just about every program with the prefix summer including the Summer Youth Employment Program, a program that provides summer jobs for at-risk teenagers. He has also cut services that affect our daily lives, like trash pickup days and electronics recycling.

Governor Cuomo pushed to cut health-care funding in this year’s budget, even as our public hospitals struggle to treat an influx of coronavirus patients, and we’re told to wait with baited breath for more cuts to come.

The mayor continually refuses to lessen property tax burdens on low- and middle-class homeowners and renters, many of whom are bearing the brunt of COVID’s pain, while the governor has refused to consider revenue raisers on ultra-millionaires, billionaires, and large corporations, many of whom are left unaffected by the virus’ scourge.

We believe these are misguided decisions. We reject the choice between austerity budgeting and a tax burden shouldered by low- and middle-income New Yorkers.

Instead, we need an honest assessment of how we can raise revenues by looking to those who can afford to pay their fair share.

The very wealthiest New Yorkers will not face eviction or foreclosure, like so many other New Yorkers. They will not struggle to access unemployment benefits. They will wait out the storm in second homes.

As a matter of basic fairness, these individuals less impacted by COVID can and should contribute more.

We should also look at corporations that have profited specifically because of this pandemic. These large corporations can and should pay more to rebuild our economy when this is all over.

Passing austerity budgets that cut essential services will only doubly punish our frontline workers and those struggling to make ends meet during and after this pandemic. After all, our essential workers — EMS, police, firefighters, Parks Department employees, grocery store workers, transit workers, nurses, doctors, and so many others — are about 40% people of color; 75% of whom live in the so-called outer boroughs. One-third of our frontline workers are from low-income households.

An austerity approach will inevitably push our city deeper into recession and make it even harder to dig out of this financial hole.

In addition to revenue raisers on those who can afford it, we need substantial federal funds and can borrow up to 20% of the budget from the Federal Reserve’s COVID-19 emergency lending program.

Finally, we also must take a hard look at the waste in our budgets. The New York City budget has ballooned by $20 billion in the last six years alone. The state budget is certainly not immune to wasteful spending either. 

Instead of making cuts to hospitals, CUNY, and summer employment, we need to look at the programs with unproven impact, the spending that doesn’t go directly into communities.

For example, procurement contracts make up nearly 40% of the city budget’s recent growth. These contracts should be reviewed and scrapped or renegotiated as necessary. In 2018, the Independent Budget Office suggested that simply switching to open source software could save the city $30 million per year.

For every wasteful or unproven program we know about, there may be many more that we haven’t yet identified, in part for lack of looking close enough. These budgets need to be scrutinized and every revenue-raising option must be explored before we cut a single dollar to any program that working-class New Yorkers rely on. 

This pandemic has put us through the wringer in the most brutal way. All of us are reflecting on what kind of society we want to be when we emerge from this dark time. 

Our post-COVID government budgets will demonstrate our values. We stand for a New York City and State that cares for its people and lifts up those who need it most.

State Senator Andrew Gounardes and City Council Member Justin Brannan represent parts of Brooklyn. On Twitter @agounardes & @JustinBrannan.

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No to Austerity, Yes to Efficiency and Fairness: Getting Our Budget Priorities Straight for a Strong Post-COVID New York Thu, 21 May 2020 04:00:00 +0000
Letter to the Editor: Raising Revenue for Medicaid and More mid hudson valley

(photo: Governor's Office)

To The Editor,

I read with interest Gerald Benjamin's op-ed, Minding the Medicaid Gap, published on January 24, 2020. It's an excellent deep dive into the funding and administration of Medicaid at the state and local level.

I disagree, however, that raising taxes is necessarily unpalatable. Experts have identified ways to raise $40 billion in revenue, per year, by taxing New York's wealthiest individuals and corporations. Here's what we can tax, all without hurting Medicaid recipients, low- and middle-income families, and local governments:

-Second homes worth over $5 million
-Vacant luxury homes and commercial properties
-Annual Income over $5 million with additional tax brackets
-Carried interests (so hedge fund managers can't duck income taxes)
-Stock transactions
-Stock buybacks
-Companies that overcompensate CEOs
-Foreign companies that benefit from Trump tax breaks

Unlike a regressive sales tax, these revenue-raisers would only tax big corporations and the ultra-wealthy. This is how we can meet our state's needs for healthcare, housing, education, transportation, and climate justice. All we need is political courage on the part of Governor Cuomo and the New York State Legislature.

For readers who would like to learn more,,, and all offer information about these revenue-raising options.


Carolyn Kelly

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Letter to the Editor: Raising Revenue for Medicaid and More Mon, 03 Feb 2020 05:00:00 +0000
What's The [DATA] Point? $81.3 billion, with New York Tax Commissioner Michael Schmidt whats the data point

What's The [Data] Point? Episode 83 -- $81.3 billion, with New York State Department of Taxation and Finance Commissioner Michael Schmidt [You can download What's The [Data] Point? wherever you get your podcasts, including on iTunes]

michael schmidt dataAppointed to be the new Commissioner of the New York State Department of Taxation and Finance by Governor Cuomo earlier this year, Mike Schmidt joined the podcast to discuss the work of his department, his priorities for improving how effectively it collects tens of billions of dollars in taxes and the customer experience with government, and more.

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

by Ben Max, Gotham Gazette

Read more by this writer.

What's The [DATA] Point? $81.3 billion, with New York Tax Commissioner Michael Schmidt Thu, 24 Oct 2019 04:00:00 +0000
After Major Tax Revenue Drop, a ‘Positive Note’ & Much Uncertainty for State Fiscal Picture govandcuomo albany

Budget Director Mujica, Gov. Cuomo, Comptroller DiNapoli (photo: governor's office)

New York’s tax revenue fell by $3.7 billion, a 4.7% decline, in the 2019 fiscal year that ended March 31, according to the cash report released Friday by State Comptroller Tom DiNapoli. A drop was expected in projections made last year, but not to the degree it occured, setting off alarm bells earlier this year as the state started to see apparent effects of New York taxpayer behavior resulting from the new federal tax code. The state's latest projections from February did, however, more accurately account for the decrease in revenue as the fiscal year came to an end.

The drop in revenue largely stemmed from lower personal income tax receipts, though the comptroller said the year ended on “a positive note” because revenues came in higher than expected in March. Part of the decline was also related to the MTA payroll tax, which brought in $1.4 billion last year, being shifted out of the budget as a revenue source, and the new federal tax law led to many filers and employers moving their payments to the 2018 fiscal year, creating the appearance of a  drop in payments that doesn't reflect the larger economy, according to the state Division of Budget. But fiscal watchdogs are nonetheless concerned that the state could quickly face a cash crunch if revenue is lower than expected in April, the month that not only starts the new state fiscal year but is also home to the tax filing deadline.

The drop in personal income tax was first evident in data from December and January, raising a red flag for the state economy and creating uncertainty about future spending as Governor Andrew Cuomo and the state Legislature negotiated the budget for the 2020 fiscal year. In a February news conference called to discuss the startling numbers, Cuomo and DiNapoli pointed to the 2017 federal tax overhaul as the culprit, chiefly a provision that capped the deductibility of State and Local Taxes (SALT) at $10,000 and how New Yorkers may be responding to it. They said much more would become clear in the following months.

The governor and Legislature had to take that uncertainty into consideration when making revenue projections for the new fiscal year and that if those projections are significantly off they may need to restructure the state budget. 

The comptroller’s latest report noted that personal income tax revenue by the end of the fiscal year declined by $3.4 billion in total, or about 6.6% from the previous year, though other forms of tax revenue increased, including consumption tax, business tax, and miscellaneous revenue that included massive monetary settlements with financial and other corporations. March was a good month, with taxes coming in about $812 million higher than the state Division of Budget had projected in February.

“After months of concern over lower-than-expected tax collections, the state ended the fiscal year on a positive note,” DiNapoli said in a Friday statement. “The sharp revenue declines in December and January, however, remind us to take nothing for granted. With expectations of a slowing economy and ongoing concerns regarding federal fiscal policies, a strong commitment to building robust reserves in preparation for the next economic slump is essential.”

After a recent allocation of $250 million, the state’s current rainy day reserves stand at $2 billion, and are expected to increase to $2.5 billion by the end of the 2020 fiscal year. This sum pales in comparison to the recently-adopted $175.5 billion state budget for the fiscal year 2020.

The crucial period lies ahead as the state begins to take stock of tax returns that New Yorkers file in April. In February, the governor and state DOB projected that April would show an additional $1.4 billion in personal income taxes, and total collections of about $8.2 billion. In comparison, the state averaged between $5 and $7 billion in April tax revenues between 2016-2018. It’s not totally clear why the projection is so optimistic.

“When they made that adjustment in February, they said, we came in really low for January, but some of that money we think is gonna come in in April. And we don’t know if it’s going to or not,” said Dave Friedfel, director of state studies at Citizens Budget Commission, a nonprofit watchdog. “If it doesn’t, if they made a mistake in making that assumption, then suddenly the fiscal year 2020 budget could be in trouble only one month into the fiscal year.”

Should revenues come in below projections, the state could be in for tough times ahead.

“Depending on how that number comes in, if it’s significantly short, the state may need to tighten its belt a little bit further,” Friedfel said, noting that at minimum it would put a damper on conversations around increasing capital spending as the rest of the legislative session progresses. Cuomo and legislative leaders passed the new state budget without adding new capital expenditure plans, though many were carried over from prior plans.

E.J. McMahon, research director of the Empire Center for Public Policy, a think tank, agreed that if the April revenue doesn’t meet expectations, it would be “a sign of trouble.”

“However, even if it’s above the forecast, it’s not necessarily solid proof that things are much better because...the real number to watch this year, that has a bigger reflection of the economy, will be the quarterly estimated payments in June and especially September,” he said, pointing out that higher-earning New Yorkers have more complicated tax returns and may be filing for extensions.

The new budget does give the state Department of Budget, which is under the governor, the ability to make mid-year changes to spending in case of a $500 million deficit below projections, in which case the Legislature would have 30 days to respond or the DOB adjustment would take effect.

But a bigger issue is the state’s paltry reserves. CBC’s Friedfel said the state should at bare minimum have 10% of the operating budget in reserves, closer to about $10 billion. “That would be enough to really absorb the shock for one year and even more than that would be beneficial,” he said.

“The state has gotten about $12 billion in monetary settlements over the last six or seven years, certainly during the governor’s tenure, and they’ve put very little of that into reserves,” Friedfel continued. “They’ve actually used some of that for operations which sets up kind of a higher base of spending, which makes it harder to fill those gaps in the future.”

by Samar Khurshid, senior reporter, Gotham Gazette

Read more by this writer.

Note - This article has been updated to clarify that the state Division of Budget's latest projections did expect revenues to drop as much they did though they did not originally. Additional context was also added about the MTA payroll tax and early filing of payments in the 2018 fiscal year.  

After Major Tax Revenue Drop, a ‘Positive Note’ & Much Uncertainty for State Fiscal Picture Sun, 21 Apr 2019 04:00:00 +0000
Federal Tax Reform is Shaking Up New York’s Finances But Flow of Bank Settlement Money is Bailing Out the State Budget cuomo salt weather

(photo: governor's office)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Federal Tax Reform is Shaking Up New York’s Finances But Flow of Bank Settlement Money is Bailing Out the State Budget Thu, 11 Apr 2019 04:00:00 +0000