Worst Timing
Cuo’s meltdown spells trouble for NY budget
GOV. Andrew Cuomo’s political meltdown couldn’t have happened at a more critical time in New York state’s budget process. Cuomo kicked off the cycle in mid-January with a presentation of the fiscal 2022 budget. Since then, his office’s cover-up of nursing-home deaths have come to light. The actions of his coronavirus task force are under federal investigation, and the state attorney general has begun probing the governor’s alleged sexual harassment of at least two women on his staff.
Yet even under fire from legislative leaders in his own party — one of whom, Senate Majority Leader Andrea StewartCousins, called for his resignation on Sunday — Cuomo remains in a commanding position to shape the next state budget.
With Cuomo retaining strong constitutional leverage over spending and taxes, the Legislature’s only option is to muster a two-thirds vote in each house to override his vetoes, if it comes to that. But Stewart-Cousins’ veto-proof supermajority only has two votes to spare, and her members from affluent swing districts in Long Island and Westchester suburbs can’t be in a hurry to push an agenda their constituents will pay dearly for down the road.
Then there’s this: Thanks to President Biden’s stimulus and a booming stock market, Albany is now awash in cash — a surplus, in fact. At the same time, the state faces a yawning longterm structural gap, rooted in Cuomo’s and the Legislature’s failure last year to adjust spending once it was clear that the coronavirus would clobber the economy and the tax base.
The US Senate confirmed Cuomo’s good fiscal fortune when it approved the state and local aid provisions of a $1.9 trillion federal stimulus package that will hand $12.6 billion in unrestricted funding to Albany. This is more than twice what he was counting on to balance next year’s budget — enough, in fact, to balance his next two budgets.
The bill also will funnel nearly $10 billion to New York’s public schools and billions more to municipalities across the state, including a whopping $6 billion to Gotham.
Even before all that federal aid became a sure thing, Cuomo acknowledged that state tax receipts through next year, while still well below pre-pandemic projections, would exceed his January budget forecast by at nearly $5 billion. Far from offering the “doomsday” plan hyped in some headlines, Cuomo had crafted an opening budget proposal with modest holes he knew he could probably fill without much trouble in legislative negotiations. In the contentious area of K-12 education funding, Cuomo tapped federal aid from a previous stimulus bill to underwriter a record aid increase, wrapped around a cleverly rejiggered school aid formula that left many upstate and suburban districts facing cuts, which the Legislature could be expected to restore.
To placate legislative leaders feeling pressure from “tax the rich” zealots among their members, Cuomo also proposed a temporary income-tax surcharge targeted at multimillionaires, a move he previously had resisted.
Crucially, one of the governor’s appropriation bills stipulates that any unrestricted federal aid above $6 billion “shall only be available [to spend] in the event that . . . the state receives no less than $15 billion” in total no-strings-attached COVID-19 relief from Washington.
Cuomo knew full well he was unlikely to receive $15 billion; the “no-less-than-$15-billion” reference in his budget language was intended as a placeholder, ensuring that the Legislature must negotiate with him on how to spend it.
As the governor appropriately warned Sunday, the federal aid “is actually the ultimate one shot . . . a sugar high.” The money, he noted, “is non-repetitive, so how you spend it, where you spend it, how quickly you spend it is going to be very important, because this is not a sustainable level of spending.”
This is exactly what lawmakers need to hear, although at this point they may no longer be listening. Nonetheless, the premise of New York’s strongexecutive budget system is that the governor is the only player in this game with the incentive to care about the long-term outlook — at least beyond the next legislative and gubernatorial election, which happens to be next year.
The big question now is whether Cuomo will continue to care much about the long term when he is looking more and more like a lame duck.
E.J. McMahon is a Manhattan Institute adjunct fellow and an Empire Center senior fellow.