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15 Questions for the Final Week of State Budget Negotiations

Cuomo de Blasio press conference 2014

De Blasio & Cuomo in 2014 (photo: The Governor's Office)

The New York State budget, which is expected to be delivered on time, is due April 1, but as state government leaders enter the final week of negotiations there are many questions left open for New York City.

These include the fate of more than $100 millions in state-to-city funding cuts proposed by Governor Andrew Cuomo; whether more than $1 billion in affordable housing funding will be released; final budgetary allocations toward city schools and NYCHA; whether mayoral control of schools will be extended; and where the stand lands on multiple tax policies, including Mayor Bill de Blasio’s proposed “mansion tax.” An added transactional surcharge on buyers of New York City property at more than $2 million, de Blasio would use the revenue to subsidize affordable housing for seniors. Cuomo said Monday during a NY1 appearance that the mansion tax has gone nowhere since the mayor proposed it in January.

There are also statewide proposals that are of interest to the city, such as voting reform and Cuomo’s Empire State Trail, among others, that are being debated.

The “three men in a room,” which this year is actually four -- Cuomo, Assembly Speaker Carl Heastie, Senate Majority Leader John Flanagan, and Senate Independent Conference Leader Jeff Klein -- will meet frequently this week behind closed doors to negotiate the final spending and policy details of the $150-plus billion budget.

Klein, of the Bronx, leads the eight-member breakaway group of Democrats who form a ruling coalition with the Senate GOP, led by Flanagan. Heastie, also of the Bronx, leads the Assembly Democratic majority and is the only ally of Mayor Bill de Blasio of the four men in the negotiating room, though there are issues on which Klein or Cuomo and de Blasio agree.

Cuomo, a second-term Democrat, unveiled his $152 billion executive budget plan in January following a six-stop State of the State tour, during which he promoted his big ticket infrastructure projects, budget items, and policy agenda.

De Blasio, testifying before a joint legislative budget committee in late January, laid out his concerns with certain cost shifts to the city in Cuomo’s budget plan and outlined New York City’s needs from the state in terms of education, healthcare, affordable housing, and more. Heastie, whose majority conference is dominated by New York City-based legislators, is seen as something of a surrogate for de Blasio and the city’s interests during budget negotiations.

Heastie and his conference back passage of the “mansion tax,” though it is seen as a long shot. It has been de Blasio’s main focal point of public advocacy related to the state budget, including his participation in an Albany rally this past week. In conversations with reporters, de Blasio has also referenced several areas of state funding to the city that are priorities as well as policy goals like permission to install more speed cameras and to use design-build contracting.

As the Senate and Assembly presented their one-house budget resolutions earlier this month -- their formal responses to Cuomo’s budget proposal and their declarations of priorities heading into final negotiations -- several sticking points emerged.

For residents of New York City, there is much at stake.

1. Will the final budget include more than $100 million in cuts and cost shifts to New York City, primarily related to placement of foster children and special education services?
Gov. Cuomo has proposed more than $100 million in cuts and cost shifts to New York City, primarily related to placement of foster children and special education services, according to Cuomo’s 2017-2018 financial plan.

"There are several cuts in the State Executive Budget that are going to have an effect on thousands and thousands of New Yorkers,” de Blasio said during his budget testimony in February.

According to the de Blasio administration, funds earmarked for New York City programs that hang in the balance based on Cuomo’s proposed budget include $32.5 million for public health programs; $66 million for the education and care of 8,900 foster care youth; $25.5 million for senior centers; and $30 million “for more than 800 special education students who have highly specialized needs.”

The mayor and the Assembly are also calling for the restoration of $65 million in MTA funding that was slashed in Cuomo's budget proposal.

2. What will the final education aid number for New York City be?
The governor is proposing a statewide school aid increase of nearly $1 billion for the 2017-18 school year. Of the $961 million aid increase Cuomo has outlined, New York City schools would receive an aid increase of $294.9 million, a percentage of new funding that is in line with the city’s proportion of students.

Both legislative houses and the mayor, who has highlighted $1.6 billion still owed to New York City schools as part of the 2006 Campaign for Fiscal Equity decision, are calling for increased education aid in the final budget.

“We want to keep pushing for greater education aid. This is a fight that’s been going on for ten years, as you know, the Campaign for Fiscal Equity decision by our highest court in the state. We’re still not getting our fair share, nor are a lot of upstate cities and rural areas,” said de Blasio on WNYC’s The Brian Lehrer Show on Friday.

The Senate’s one-house calls for Cuomo’s proposed education Foundation Aid to be doubled, while the Assembly is calling for a $1.4 billion increase, or $1.03 billion more than the increase proposed by the executive budget.

Cuomo says school funding is dependent on revenue from the extension of the “millionaires’ tax” -- set to expire this year -- a budget measure Senate Republicans oppose and Assembly Democrats want to increase.

3. Will the “millionaires' tax” be extended?
Cuomo strongly supports extending the millionaires' tax, a Governor David Patterson policy that was implemented in 2008 in response to the economic collapse. Mayor de Blasio and Assembly Democrats have proposed expanding the tax to include new brackets for New Yorkers earning $5 million, $10 million and $100 million a year.

Early projections are that the millionaires’ tax will be extended -- Republicans have, after all, approved it before. However, chances of the additional tax brackets being added to the tax seem slim, as that expansion is opposed by both Cuomo and Senate Republicans.

4. Will de Blasio’s ”mansion tax” pass?
De Blasio has made the mansion tax the main focus of his public advocacy related to the state budget, holding about a half-dozen related events in the past two weeks. De Blasio and Assembly Democrats want the state to allow the city to add a dedicated surcharge to home purchases over $2 million to create hundreds of millions of dollars in new revenue per year to use directly for subsidies to tens of thousands of low-income senior citizens.

The mansion tax faces some opposition from within New York City, as well as questions from budget watchdogs. Senate Republicans are opposed to it, and Gov. Cuomo said Monday on NY1 that the mayor proposed it in January and "It never went anywhere in January and it hasn't gone anywhere since."

5. Will the affordable housing MOU be settled? Will there be more state aid for NYCHA? What about 421-a?
The state is still sitting on about $2 billion in affordable housing and anti-homelessness funds that were allocated last year but can only be released by a memo of understanding among Cuomo, Heastie, and Flanagan that details how the money will be spent.

The cob-webbed funds have become the ire of de Blasio, Assembly Democrats, and affordable and supportive housing providers, anti-homelessness advocates, and others.

Among the sticking points related to the aforementioned funds as well as other past and future money for housing are funding levels for NYCHA and the tax abatement program known as 421-a. Cuomo’s new 421-a proposal does not have the support of de Blasio or Assembly Democrats, and Senate Republicans are unlikely to release the housing money until a new 421-a program is in place.

Meanwhile, de Blasio and others are calling for more state investment in NYCHA as well as the utilization of $100 million set aside in the past that Cuomo had earmarked for NYCHA repairs but has not spent.

6. There are now three alternatives to Cuomo’s Excelsior Scholarship, which aims to extend tuition-free CUNY and SUNY. What version will wind up in the budget? Will whatever version of the college tuition plan that passes include The Dream Act?
Many questions were raised during budget hearings and public discussion about how the scholarship program will be paid for, but also about the program’s rigid course-load requirements and limits on how other financial aid sources, like the state’s Tuition Assistance Program (TAP) and Pell grants, could be spent.

The Assembly Majority has accepted the Excelsior Scholarship, with modifications, including an expansion of TAP benefits that loosened requirements on how aid can be spent. The Senate Majority, IDC and Assembly Minority have indicated they prefer some form of TAP expansion, which would be inclusive to students at the state’s private colleges, who they say are penalized for their schools' tuition increases under Cuomo’s plan.

7. Will the the budget extend mayoral control of city schools?
It is the third straight year that de Blasio is seeking an extension of mayoral control of city schools from the state -- he’s received two straight one-year approvals, in large part due to his icy relationships with Cuomo and Senate Republicans. De Blasio wants mayoral control to be made permanent, but he would gladly settle for the three-year extension Cuomo has included in his budget yet again or, preferably for the mayor, the seven-year extension the Assembly has called for.

Mayoral control is not in essence a budget matter and it has been kicked from budget negotiations each of the past two years, left for the legislative session to follow.

As with other de Blasio priorities, the fate of mayoral control could come down to how much the Assembly prioritizes it in negotiations. It is at least somewhat valuable to Senate Republicans as a bargaining chip.

8. Will the state extend Design-Build authority to New York City?
Design-build is a procurement and contracting strategy that streamlines the process for capital projects, avoiding multiple bidding processes and simply hiring once for the design and the building of a project, like a bridge reconstruction. The state has used design build on several projects to great success in terms of time and money savings. In another example of the home rule dynamics that frustrate city leaders, New York City is seeking needed permission to use design-build.

"If the City also had access to [design-build], similar benefits would be realized. Our capital agencies have identified $7.3 billion in projects, with around $450 million in immediate savings. If the rest of New York State has access to design-build, New York City certainly should as well as a matter of common sense," de Blasio said during his Albany budget testimony in late January.

At a recent press conference focused on their Vision Zero street safety program, de Blasio's transportation commissioner, Polly Trottenberg, said she was on the verge of travelling to Albany to advocate for more speed cameras for the city and for design-build permission. Trottenberg said she wasn't quite sure what was standing in the way of design-build passage given the virtual unanimity behind it, including from labor unions, which can be skeptical.

De Blasio added, "for everyone who wants to see us rightfully achieve more of these good capital projects more quickly that will make people safe, we need your help getting design build done. It’s going to literally free up a lot of money because things will be done a lot more efficiently. It will free up a lot of money. We’ll be able to cover a lot more ground. It just makes sense for everyone."

9. Will the budget account for funding cuts proposed by the Trump administration?
It is unlikely that there will be significant adjustments to the state budget based on funding cuts that could come from Washington, D.C., despite the fact that President Trump has indicated he is seeking major reductions in domestic spending that include key areas of funding that go to New York. Cuomo and legislative leaders have both acknowledged the uncertainty and possibility that a special session may be needed once the federal budget is more clear.

Short of that, Cuomo had inserted language in his budget proposal that would have allowed his administration to make mid-year budget adjustments based on federal dynamics without approval from the Legislature.

Criticized from inside and outside government as a dangerous power-grab, Cuomo’s proposal was denied in both the Senate and Assembly one-house budget resolutions.

“There are lump sums that are at the complete discretion of the governor,” Flanagan said at a press conference. “I don’t think that’s an appropriate way to do things,” he added of the mid-year executive-only adjustments.

Heastie has said that if federal cuts blow a hole in the state government, Cuomo will have to revisit the budget with the Legislature: “the Legislature is an equal branch of government and should be respected,” he said.

10. It appears likely some version of Raise the Age will pass the Legislature this year, but what version will wind up in the budget?
With North Carolina, New York is one of just two states that tries 16- and 17-year-olds as adults in the criminal justice system. Cuomo and Assembly Democrats have for years sought to “raise the age,” but Senate Republicans have opposed the measure. Now, at the behest of the IDC, the Senate GOP appears open to some version of raising the age of criminal responsibility, and negotiations of the details are happening.

The only thing that may hold up a raise the age deal would be if the Assembly and Cuomo are not willing to go along with what the Senate is willing to do. In other words, the devil is in the details, and we will soon see if the sides can come to a compromise. Senate and Assembly Democrats have warned that they are skeptical of a watered-down deal that keeps too many offenses in criminal court as opposed to family court, or that has a too-long timeline for implementation.

11. Governor Cuomo proposed allocating $200 million in this budget for the multi-year construction of the Empire State Trail, but has been met with limited enthusiasm -- can he salvage the project?
The Empire State Trail is to some one of Cuomo’s most exciting 2017 proposals; proponents of the project say it will put New York on the national biking and hiking map and give a boost to state tourism and coffers. The Senate has rejected the Empire State Trail plan to make room for “other funding priorities," and the Assembly allocated only $20 million for the project.

If Cuomo makes the funding enough of a priority in negotiations, his desired allocation is likely to be there when the votes are cast at the end of the week.

12. Will ride-hailing apps be legalized for areas outside New York City?
The push to expand ride-hailing -- apps like Uber and Lyft -- has the support of the governor, Republicans and Democrats in both houses who argue the expansion would be good for local economies while reducing drunken driving and expanding transportation options.

The Senate has approved a bill to expand ride-hailing apps outside New York City, where they are currently legal. The major sticking point in negotiations is the same as last year, when a deal was elusive: the insurance requirements that companies will be forced to meet.

13. Will government ethics, campaign finance and/or voting reforms be included in the budget?
Though Cuomo’s executive budget includes an ambitious ethics and electoral reform agenda, much of which has the support of the Assembly majority, Senate Republicans have indicated that they will block the measures. The governor, who has not publicly pushed for reform in these areas since his State of the State, has indicated that he will negotiate them after the budget is passed.

“We are going to try like heck. It’s not necessarily a budget discussion. The budget is primarily finances. If there’s a policy matter that  related to the finances then I try to include it because it’s good to reconcile as much as you can. Many of the democracy issues that you talk about we are going to take up after the budget,” Cuomo said during a press conference last week.

One thing both houses reject is the establishment of new inspectors general, which are appointed by the executive branch, at the state education department and Port Authority. Both houses also are pushing for increased disclosure and transparency measures for Cuomo’s Regional Economic Development Councils (REDCs), but it is unlikely Cuomo will agree.

14. Senate Republicans seem intent on reforming workers’ compensation, will they get anywhere?
The governor included mention of workers’ compensation reform in his budget proposal, and Senate Republicans, who last year compromised with their Democratic colleagues on minimum wage increases and paid family leave, are emphasizing sweeping changes to workers’ compensation as a top priority this year. The Senate’s one-house budget included a number of workers’ compensation reforms, like updates to duration caps, streamlining measures, and independent medical examinations.

“High workers' compensation costs threaten New York’s future. These high costs are already holding down wages across the state, but further increases in premiums will negatively impact job growth and could ultimately result in hardworking men and women losing their jobs,” said Flanagan at a March 15 general budget conference committee.

The business community says the rising cost of workers’ compensation has become unsustainable, while labor groups argue that arbitrary caps on how long recipients may receive payments put at risk those who are permanently injured on the job.

15. Will the budget include provisions to protect New York’s immigrant and LGBTQ communities in the face of threats from the Trump administration?
With a new federal administration that has wasted no time implementing a crackdown on immigrants and a calling for the removal protections for LGBTQ Americans and women, among other groups, the Assembly passed a series of measures to foster state-level safeguards. The Liberty Act prohibits city and state officials, including law enforcement, from needlessly inquiring about someone’s immigration status and GENDA (the Gender Expression Non-Discrimination Act) -- which has the support of the IDC -- bars discrimination based on gender identity.

There are also questions around funding for immigrant legal services, but most items in these categories are not priorities for Senate Republicans, who almost exclusively hail from outside New York City.

by Ben Max and Rachel Silberstein

by Ben Max, Gotham Gazette

Read more by this writer.

by Rachel Silberstein, State government reporter, Gotham Gazette

Read more by this writer.

Note: this story has been updated to reflect Cuomo's Monday comments on the mansion tax.

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