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Democratic State Senators Call for Raising Taxes on Wealthy, Passing Coronavirus Relief Measures

state senators

Senators Ramos and Gounardes (photo: NY Senate)

A group of Democratic state senators, mostly from New York City, gathered in a digital forum Wednesday night to discuss the government’s COVID-19 response. The virtual event, held in partnership with the Fiscal Policy Institute (FPI), a nonprofit liberal think tank, covered topics including the state budget, impending cuts and proposals to raise revenue, and legislation to address ramifications of the virus.

Eight senators, or a fifth of the Democratic majority in the 63-seat chamber, participated in the online discussion.

New York’s new state budget, passed in early April by the Legislature in partnership with Governor Andrew Cuomo, a third-term Democrat, was a main topic of conversation, including critical comments from the senators about the governor. Many state legislators, mostly in the Assembly, voted against budget bills this year, despite the fact that they were representative of compromise among two Democratic majorities and the Democratic governor. Some senators voted against certain pieces of the budget, while others criticized the deal but voted for it anyway.

The budget included significant cuts to planned spending as the state faces a massive drop in tax revenue -- estimated at roughly $10 billion to $15 billion - due to the coronavirus fallout, which comes on top of a roughly $6 billion budget gap that the state had to close leading up to adoption of the spending plan.

The budget agreement included no significant new revenue-raising measures, such as tax increases on higher earners, nor did it include as grave cuts as some feared. But it also gave the governor significant leeway to make budget changes throughout the year, depending on the tax revenue picture (the Legislature retained the right to overrule the governor, but it would have to come up with its own plan to slash spending).

And on April 25, the Cuomo administration announced an additional $10 billion in cuts, mostly -- at $8.2 billion -- in aid to localities, a category that covers education and much more, as well as a $1.6 billion cut to state agency operations and $293 million to debt service, according to information provided during the senators’ event.

“It’s very bleak, it’s very difficult,” Queens Senator John Liu said of the budget situation.

“The Cuomo cuts are fake austerity, and we’ve been living with this fake austerity for a while,” said Queens Senator Jessica Ramos. “Before the pandemic, we were already in a deficit. There’s nothing worse than saying we don’t have the money when we’re not proactively wanting money.”

Brooklyn Senator Andrew Gounardes agreed, saying that now is “not a time to practice and preach austerity politics, this is not a time to be cutting budgets, this is a time to be investing in people.”

Ron Deutsch, the executive director of FPI, blamed the “austerity” on Cuomo’s “arbitrary” 2% cap on annual state spending increases.

“We’re still maintaining this austerity mindset, this scarcity mindset that we can’t possibly spend more than 2%,” Deutsch said. “This 2% is an arbitrary figure, it has no basis in reality. It’s just something the governor wants and pushes for. And what has it resulted in. It has decimated human services programs across this state. We’ve seen a significant reduction in human services.”

The participants moved from the state budget to federal stimulus money with senators discussing why they believe New York didn’t get more aid from the $2 trillion package, and if New York could receive more aid going forward.

“The state cannot pull us out of the hole that we are in, we’re not allowed to run a deficit, we have to balance the budget,” said upstate Senator Rachel May. “And when we’re talking about $13 billion that we’re in the hole, even with the great ideas people have mentioned about raising revenue, we need help from the federal government.”

The recent $2 trillion federal aid package provided $150 billion for state aid, which was distributed based on population. This, many of the senators agreed, was the inherent issue with it.

“We got anywhere from $6-7 billion out of the $150 billion, and that’s the problem, we didn’t get treated fairly,” said Liu. “How do you allocate state aid based on population when at the time we had between one-third and one-half of the [coronavirus] cases. If we had gotten one-third of the $150 billion, we would have gotten $50 billion. And that right there would have solved many of our problems. Not only to provide enough aid to our state government and to localities, for schools, for firefighters, for teachers, for police officers, for ambulances. It also would have helped us in our programs to cancel rents, and with mortgage payments. That is the kind of assistance, real assistance, we need in a federal stimulus package. We are a very rich state, that’s for sure, but even the richest state can't get out of this humongous disaster by ourselves.”

Manhattan Senator Robert Jackson agreed, saying, “when you talk about fair share, you can talk about population, but when you talk about that, New York City and New York State as the epicenter of this pandemic, that’s where the resources should have come to.”

“We need assistance from Washington,” said Liu. “I don’t want to take away from that argument, I don’t want to be negotiating against ourselves. We absolutely need the aid from Washington in the form of unrestricted state aid. But we also need our own proposals, because [the federal government] might not give us enough to fill the $13 billion hole we’re in. Rather than suffer ridiculous cuts to schools and healthcare and other vital state services, we need to think of these proposals as quickly as possible and keep them on the front burner.”

The conversation then turned to ways in which the state could raise revenue to help plug its deficit and avoid making huge cuts to education, health care, and more. The most heavily discussed revenue raising policy was an ‘ultra-millionaire tax.’

“The wealthiest 1% pay a smaller percentage of their income in taxes than do the poorest 20% of New Yorkers,” said Deutsch. “How do we justify that in a state with so much wealth. Our tax system is completely upside-down and we need to reverse that. We are behind numerous other states when it comes to the progressivity of our income tax structure.”

Such an action would be far from unprecedented, it was noted. After September 11, 2001 the Republican leader of the Senate and the Democratic leader of the Assembly came together to propose higher taxes on the wealthy, overriding Governor George Pataki’s veto, according to Deutsch.

Similarly, after the financial collapse in 2008, the state was facing a huge budget gap. Governor David Paterson led the institution of higher taxes on millionaires, which became known as the first “millionaires tax” surcharge, which has been in place since, renewed several times despite the original notion that it would be temporary.

Ramos added that she introduced, and is working with partners on a soft rollout of, a worker bailout that would tax billionaires’ asset growth. “It could generate $5 billion for us every year,” Ramos said. “So this year we would want to use it to help those who don’t have any safety net,” and give $3,300 per month during the pandemic to those who aren’t eligible for or don’t qualify for a wage assistance program, she said. Liu called it a good proposal on top of the revenue raising proposals that have already been put forward.

He added that taxing millionaires more in New York is not out of the question, reiterating what Deutsch had said previously, that New Yorkers are not taxed as high as top earners in other states. In California for example, top earners are taxed 5% more than top earners here, he said.

Cuomo and the Senate Democratic conference have been against raising taxes on higher earners, and as the coronavirus recession set in just before the budget was negotiated, there appeared to be little discussion of it as a possibility.

Liu also emphasized what he sees as the importance of a pied-a-terre tax and that it should be “at the very top of the list,” imposing a tax on non-primary luxury homes, which Liu pointed out are owned by wealthy people and are often not lived in. He says it could raise many millions of dollars per year. Brooklyn Senator Julia Salazar and Bronx and Wechester Senator Alessandra Biaggi agreed with Liu.

Biaggi also made a push for two policies that would bring in state revenue and have been discussed in Albany for quite a while -- legalizing adult use of marajuana and legalizing mobile sports betting. She said both would be good opportunities to use well-considered legislation to raise revenue in a time when it is necessary.

Salazar said there are more than a dozen serious proposals to raise revenue and it’s a “shame that in the budget these revenue sources were not considered.” During this crisis, she said, the Legislature has an “ethical obligation” to help New Yorkers make ends meet.

Biaggi mentioned her push for a bill that is a constitutional amendment that would allow the Legislature more power to amend the budget before its adoption. New York’s budget law and process is notoriously governor-dominated, what Biaggi called “an inordinate amount of power over the budget.”

She said her bill seeks to equalize the power between the executive and legislative branches of government, and rebalance the power. Before it can be put into the constitution, the amendment needs to pass through two consecutive legislative sessions and go to a public vote.

Gounardes agreed with the importance of Biaggi’s bill and said that in the current system “we don’t have the ability to submit our own budget document” and it “ties our hands when it comes to the budget.” May added that “the other articles in the constitution say the Legislature shall provide for basic education or all our children, for roads and bridges, all kinds of things -- it’s our responsibility, but we don’t have the power to put together a budget that can allow us to carry out our responsibility.”

Jackson said he is putting forward a bill that would allow for tenants to use their security deposits to pay rent during the pandemic. “If your situation is such that you can’t afford to pay you rent, the first thing you should do is communicate with your owners,” said Jackson. “If the landlord says no, then it’s our job to pass the legislation.”

Salazar has also put forward a rent bill, the Emergency Coronavirus Affordable Housing Preservation Act, colloquially known as Relief for All.

“What this bill proposes is not only relief for residential tenants and also commercial tenants, making sure that for property owners whose tenants have been impacted they will also have relief,” she said during the digital forum. “Additionally, and this is to address the concerns of nonprofit affordable housing, we are also providing relief to them, looking out for them, because they are going to be experiencing long term effects from the economic crisis that we’re facing.”

Another senator, Queens’ Michael Gianaris, who the deputy majority leader and was not part of the event, has been leading a “cancel rent” push, with his own legislation to enact a rent moratorium for those significantly impacted financially by the coronavirus fallout, with the state stepping in to help make landlords whole. Gianaris has also said he wants to see the federal government step up so the state doesn’t have to shoulder the burden on top of its existing budget hole.

Brooklyn Senator Zellnor Myrie, who also participated in the forum, has put forward a bill, the Do No Harm Act, to “prevent disproportionately impacted populations from being further victimized in the wake of budget cuts resulting from the COVID-19 pandemic,” according to the bill text.

“This has not begun with COVID-19, this was a process decades in the making, particularly for black and brown communities where we refused to invest in preventative care, we refused to invest in affordable housing, education, nutrition,” Myrie said. “All of those comorbidities were brought into sharp relief at the advent of this crisis.”

His bill “requires that any budget cuts due to the COVID-19 pandemic that disproportionately affect certain populations identified by disparities in rates of infection and death due to race, age and zip code based on demographic data provided by state and local departments of health be accompanied by a remediation plan to offset the disproportionate impact of those cuts.”

Myrie also said he has a bill pending that would provide the New York Attorney General more investigatory power to look into nursing homes during this pandemic. Myrie explained that nursing homes “have been their own epicenter” and in need of more oversight.

Senators also mentioned a variety of worker protection bills. Jackson said he put forward in January an amendment to labor law, seeking to redefine employment. The bill seeks to “reclassify more workers as employees rather than independent contractors in order for them to receive benefits such as healthcare and retirement,” Jackson said, also connecting the definition to times of crisis with so many independent contractors also losing work but having a harder time with unemployment benefits.

Ramos mentioned her legislation to expand the whistleblower law. There have been cases in the news of healthcare workers saying they don’t have enough personal protective equipment (PPE) and getting fired. Ramos said she wants to ensure that these individuals don’t suffer consequences for speaking out.

“We have not been physically in Albany, but that does not mean we have not been at work,” Liu said. “Answering constituents’ requests everyday, talking amongst ourselves about the legislation that has been proposed.” Either virtually or physically in Albany, he said, “Either way we are going to get work done and pass bills that are needed.”

by Katie Kirker, Gotham Gazette

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