Gotham Gazette

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What the New State Budget Means for New York City

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Senate Majority Leader Stewart-Cousins & Mayor de Blasio (photo: Michael Appleton/Mayor's Office)

Governor Andrew Cuomo and the Legislature approved a $212 billion state budget this week, an immense spending plan bolstered by new state tax increases on the wealthy and massive federal aid, with major investments in education, infrastructure, the green economy, rent relief, benefits for undocumented immigrants, child care, and more. The budget includes direct and indirect support for New York City, aimed at reviving its economy and aiding its residents as the city begins to claw its way out of the throes of the coronavirus pandemic.

From rent relief to support for small businesses and tax credits for property owners and tourism, the state budget contains a great deal of aid for New York City and its residents, as well as a number of policy initiatives that impact the city. The state budget adoption now sets the stage for the city to move ahead with its annual budget process, with an updated spending plan for next fiscal year due from Mayor Bill de Blasio later this month, and a new city budget due by the July 1 start to the new fiscal year.

The highlights of the state deal -- reached among the two Democratic legislative majorities and the third-term Democratic governor embroiled in several major scandals -- include:

Education Aid
Education activists cheered the state budget deal for including increased funding for schools. The budget directs $29.5 billion to schools statewide, including a $1.4 billion increase in Foundation Aid to the neediest schools. Though the aid will be phased in over three years, New York City alone stands to receive as much as $1 billion more annually.

“Generations of parents, community leaders and students across New York State, year after year, have led the advocacy to hold New York to the promise of a sound, basic education for every child,” said Jasmine Gripper, executive director of Alliance for Quality Education, an education advocacy group. “Parents, educators and students put their bodies and hearts into this difficult, but necessary fight. This victory shows the power of the people, the power of never giving up, the power of ‘we,’ and it belongs to all of us.”

The budget also adds other streams of funding, largely from the federal government, that should benefit the city including $13 billion in federal funds to help schools across the state reopen and $500 million for emergency assistance to nonpublic schools and reimbursements to school districts for transportation costs.

Colleges and universities also saw an increase in the budget with $7.7 billion in funding, up by $283 million compared with last year, and a tuition freeze imposed on CUNY and SUNY over three years. There are also increases in state tuition assistance for low-income students, and other programs to bolster New York’s public universities and their students. This is on top of billions headed to New York higher education institutions from the federal government’s American Rescue Plan.

Still, the state budget is short of the “New Deal for CUNY” that some advocates and legislators had been pushing, funded by major tax increases that did not occur.

“But in a year that cried out for bold investment in public higher education and an end to racist austerity for the Black and brown communities CUNY serves, Albany missed the opportunity to pass a transformative budget for CUNY,” said Barbara Bowen, president of the Professional Staff Congress at CUNY. “Rejecting a tuition increase without adding the funds to replace the lost revenue will ultimately undermine the quality of education CUNY can offer. CUNY needs investment on a larger scale if it is to recover from decades of underfunding and realize its potential for the people of New York. A fully funded CUNY would be a linchpin of a recovery that not only rebuilds New York, but reimagines it.”

Tax Increases and Cuts
Though Governor Cuomo has long opposed increasing taxes on the wealthy, his politically tenuous position this year made it possible for the Legislature to override his wishes, though not nearly to the extent that the Invest in Our New York coalition had been pushing for, with a series of tax increases on individuals, corporations, and transactions that it said would raise tens of billions of dollars in new revenue.

The budget includes a personal income tax surcharge on the state’s highest earners to raise $2.7 billion and a corporate franchise tax to raise $750 million in the first year, according to the governor. The corporate franchise tax will be in place for three years and the surcharge for six years. Wealthy New York City residents will effectively pay the highest marginal tax rate in the country because of the additional local income tax, sparking warnings of flight (or lack of return) by some number of top earners.

The budget also includes the next step in a multi-year middle-class tax cut that the governor estimated will save more than $2.2 billion for 4.8 million New Yorkers. And it provides pass-through of $2.3 billion in federal funds to expand the child care tax credit. It also includes $440 million in tax credits for homeowners with incomes up to $250,000 if their total property tax exceeds a fixed percentage of their income.

“By raising essential revenue from the wealthiest New Yorkers to support low-income, immigrant and Black and brown communities, we are starting to build a state where all of us can afford to live,” said Invest in Our New York Coalition campaign manager Rebecca Bailin. “This revenue will make possible historic investments to fund our public schools, create a first-in-the-nation fund for excluded workers, and stop many of the dangerous cuts that Governor Cuomo imposed on our communities.”

“However, our state leaders failed to raise anywhere near the full extent of revenue within reach. Many of the investments necessary to build a New York that lets us all thrive were left unfunded,” Bailin continued, going on to specifically cite a lack of attention on reducing and preventing homelessness. She also said that by not going further on tax increases, the state is not on sound long-term fiscal footing given much of this budget relies on federal stimulus.

That structural medium- to long-term state budget question is shared across the political spectrum, even as the proposed solutions differ greatly, as did the responses to the tax increases that are in the new budget.

In its reaction to the budget, Citizens Budget Commission, a nonprofit think tank and watchdog, praised many of the state actions to help suffering New Yorkers, but questioned the tax increases.

“Unfortunately, the State’s leaders did not appropriately leverage the opportunity provided by the infusion of funds to stabilize New York’s fiscal picture and maintain its economic competitiveness, which would best sustain the State’s ability to help all New Yorkers over time,” said CBC President Andrew Rein. “Despite having $22 billion more in funds available over the next two years than when the Governor proposed the budget in January, leaders agreed to raise personal income and business taxes and to use some portion of federal funds to inflate spending that likely cannot be supported in the out-years.”

“The tax increases simply are unnecessary and economically risky,” Rein continued. “Sufficient resources already are available to New York’s governments, people, businesses, and institutions to address the continued substantial needs. Additionally, the tax increases both provide incentive for highly taxed New Yorkers to leave or not return to the State, and increase the cost of doing business here. Furthermore, using temporary federal funds to support recurring spending sets the stage for future budget cuts or tax increases when the federal aid is exhausted.”

Transit Funding
The state budget restored hundreds of millions of dollars to the MTA that Cuomo had planned to redirect to the state’s general fund even as the transit authority was facing fiscal ruin and proposing a fare hike.

“By restoring transit funding, the budget saves riders from service cuts and fare hikes,” said Danny Pearlstein, policy and communications director for Riders Alliance, a transit advocacy group, in a statement. "Now that legislators have stopped governor's raids, and with $15 billion in federal aid, there is no excuse for hiking transit fares or cutting service. The governor must work with legislative leaders to protect fares and service while ridership recovers,” he added.

The MTA is also getting about $6 billion from the federal government in order to retain staff and keep service levels up despite massive reductions in subway, bus, and commuter rail ridership and thus revenue.

Renter and Homeowner Relief
The budget creates a $2.4 billion program using state and federal funding to help New Yorkers pay back-rent and utility bills for the last 12 months. The program will be invaluable for city residents who owe as much as $1 billion in rent in sum, according to a survey by Community Housing Improvement Program (CHIP), an organization that represents more than 4,000 landlords in the city.

Additionally, the budget includes $600 million in homeowner assistance and $25 million for blighted home rejuvenation.

“This program will deliver more than $2 billion to renters in need, while also helping housing providers who have been struggling to make ends meet,” said Jay Martin, Executive Director of CHIP, in a statement. “It is a product of thoughtful work by State Legislators, under difficult conditions, to deliver for New Yorkers. This program is also a thorough rejection of the #CancelRent movement and rightly seeks to help property owners continue to provide safe affordable housing. We encourage the Office of Temporary and Disability Assistance (OTDA) to quickly implement this program so renters get help in weeks, not months.”

Housing and Homelessness
The budget invests $100 million for converting distressed and unused hotels and office buildings into affordable housing, which could make an impact in New York City where those buildings have emptied as people transitioned to working from home and tourism came to a standstill.

The budget also includes $200 million for the New York City Housing Authority, a sum advocates and some legislators called far too paltry for the housing authority home to about half-a-million people and in need of roughly $40 billion in capital upgrades.

There was also significant disappointment among advocates and some legislators that the new state budget does not include new funding for housing vouchers to help people leave home lessness.

“This budget provides no meaningful relief to the over 92,000 New Yorkers sleeping in shelters and streets across the state, nor did it make critical investments to reverse historically high overdose deaths that continue to grow,” said Bailin of Invest in Our New York. “The budget does not guarantee the state can continue to fund schools, healthcare and housing for the long-term.”

Small Business Relief
The state budget contains $1 billion in relief for small businesses, arts, entertainment, and restaurants, all industries that have been decimated by the pandemic, and on top of the billions in federal aid headed to New York for such businesses and programs. About $800 million of that funding will be awarded in grants to small businesses, including arts and cultural institutions. Another $25 million will be granted to restaurants that provide food to “distressed and under-represented communities,” according to the governor’s office.

The budget also includes $35 million to provide tax credits to restaurants and $40 million in grants for nonprofit arts and cultural organizations.

Relief for Undocumented Immigrants
Progressive lawmakers scored a massive victory with the approval of a $2.1 billion “excluded workers” fund to provide direct cash payments to some number of the estimated 500,000 undocumented immigrants who are ineligible for unemployment insurance or federal stimulus relief.

“New York’s Fund for Excluded Workers will be the first entirely State run and State funded program in the nation to bring relief to individuals excluded from government-issued economic relief,” said a press release from Queens State Senator Jessica Ramos, who pushed for the fund and also credited Assembly sponsor Carmen De La Rosa of Manhattan, and the many groups who advocated for it, an effort that included a hunger strike over the past few weeks.

According to Ramos’ office, eligible New Yorkers can receive a $15,600 payment or a $3,200 payment, depending on what they can prove about residency and income loss.

“From Brooklyn to Buffalo, hundreds of thousands of immigrant New York families will now have access to unemployment assistance  through the first-of-its-kind program in the nation,” said Murad Awawdeh, interim co-executive director of the New York Immigration Coalition, in a statement. “Because of the Excluded Worker Fund, immigrant New York families will be able to to pay their rent, feed their families and buy diapers, formula and other essentials to help their families get through this challenging time. Additionally, the 2022 budget ensures that countless low-income New Yorkers will have access to a lawyer when they face the country’s immigration courts.”

The budget also includes a $10 million Liberty Defense Fund for free legal assistance for undocumented immigrants.

The budget funds a $311 billion infrastructure program, according to Cuomo, which includes funding toward a massive redevelopment proposal for Midtown West in Manhattan. It includes a $16 billion proposal to renovate Penn Station, eight new tracks to expand its capacity, and an extension of the High Line to the recently opened Moynihan Train Hall. 

Among the major investments is $29 billion for public and private green energy projects.

Low-Cost Broadband
As part of the budget, the Legislature approved the Comprehensive Broadband Connectivity Act, which directs the Public Service Commission to study broadband access across the state. The budget also mandates that low-income households should receive broadband plans for as low as $15 a month. Those low-cost plans will be particularly helpful in New York City where almost 20% of residents don’t have access to high-speed internet at home or on a mobile device.

A crucial industry for New York City, tourism all but disappeared during the pandemic. In 2019, the city saw tourism peak with 66.6 million visitors, according to the city-run NYC & Company. Last year, the number of tourists decreased to just 22.3 million. The state budget aims to boost those numbers with $100 million set aside over two years for the New York City Musical and Theatrical Production Tax Credit.

Public Safety
As part of the budget, the Legislature approved the Community Violence Intervention Act, which declares gun violence a public health crisis and provides funds for violence intervention programs.

“In an historic statement, New York became the first state to officially declare gun violence a public health crisis, and is responding accordingly by establishing a fund for violence intervention and interruption programs that serve our communities,” said a press release from State Senator Zellnor Myrie, a Brooklyn Democrat.

“Today, we are sending an unmistakable message: gun violence is an epidemic in communities across New York State, and we must take a proactive approach to address it,” said Myrie. “Violence intervention and interruption programs have a research-based, proven model for breaking the cycle of handgun violence that plagues our streets and takes the life of an estimated one in forty Black boys in America.”

Myrie reported that the budget includes “$10 million to hospital-based violence intervention programs and community-based violence interruption programs, and dedicates ten percent of New York’s federally-funded Victims of Crime Act funding to these groups in future years. These programs provide a credible, non-police response to gun violence, and have a remarkable track record of success in the communities most vulnerable to gun violence.”

The budget also provides an additional $25 million for the Securing Communities Against Hate Crime Program and $15 million for health and safety outreach to communities disproportionately impacted by the COVID-19 pandemic.

Amid spikes in hate crimes against Asian-Americans, Myrie reported that the new state budget includes “a $19.5 million investment in additional support for the Asian-American community,” including “$10 million to Asian-American community-based organizations to support short- and long- term programming to address inequalities, support racial healing and promote relief and recovery from the pandemic. The Budget further provides $2.5 million for enhanced data disaggregation at the State Health Department, to better assess the needs facing New Yorkers of Asian descent.”

Elections, Voting and Democracy
The budget includes $25 million in capital funding to modernize state and local voting infrastructure. It also gives $2 million to local boards of elections and $1 million to the state BOE to enact voting reforms.

It also allocates $4 million to the Independent Redistricting Commission, which will begin the process of redrawing legislative and congressional districts this year based on data from the 2020 Census.

by Samar Khurshid, senior reporter, Gotham Gazette

Read more by this writer.

Ben Max contributed to this story.

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