Cuomo, New York State Lawmakers Head for Clash Over Tax Increase
January 24 2021 - 7:29PM
Dow Jones News
By Jimmy Vielkind
The debate about raising taxes as part of New York's budget is
shaping up to be a test of how far Democrats in the state
Legislature will go to take on their party mate Gov. Andrew
Cuomo.
After last year's elections, Democrats have the two-thirds
majority in both the state Assembly and Senate -- enough to
override a gubernatorial veto. Advocates of raising taxes are
pushing rank-and-file lawmakers to flex their muscles during the
budget process, which will dominate the Capitol until the next
fiscal year begins April 1.
Mr. Cuomo proposed a $193 billion spending plan that includes
$1.5 billion from raising taxes on people reporting $5 million or
more in annual income. But one breath after describing the plan, he
fretted about its potentially negative consequences if wealthy
people leave the state. Mr. Cuomo said the plan can be avoided if
the U.S. Congress approves more aid for the state.
Senate Majority Leader Andrea Stewart-Cousins, a Democrat from
Yonkers, said last week that she would push for a tax increase
regardless of the amount of federal funding. Assembly Speaker Carl
Heastie, a Democrat from the Bronx, has previously voted to approve
tax increases and fruitlessly pushed to boost rates in
December.
If neither side budges, the result could be the first bicameral
veto override during Mr. Cuomo's three terms in office.
"We're going to assert ourselves and see where that takes us,"
said Deputy Senate Majority Leader Mike Gianaris, a Democrat from
Queens. "We have some tools at our disposal, and we intend to take
advantage of them."
Many legislators have groused for months about feeling
diminished since the Covid-19 pandemic forced them to make most of
their operations virtual. They approved a law in March that gave
Mr. Cuomo unilateral power to issue directives related to the
pandemic emergency that had the force of law.
Mr. Heastie insists that he hasn't ceded power, explaining that
his chamber passed a law in the last week of 2020 to extend
eviction protections not just because they believed it was sound
policy but also because "legislators want to show that they want to
do their jobs."
A group of unions and activist groups has been steadily pushing
for higher taxes to fund schools and other social programs, and say
New York lawmakers should impose new levies on financial
transactions and wealth in addition to the income-tax surcharge Mr.
Cuomo has proposed.
"You cannot be afraid of this governor. The governor is one
man!" said Jamell Henderson, an organizer with the activist group
New York Communities for Change, which supports tax hikes. "If he's
trying to stop the progress, then you all and we the people come
together to collectively make the change."
Mr. Cuomo said last week that raising taxes shouldn't be "a
political statement," and Cuomo's senior adviser Rich Azzopardi
called Mr. Henderson's statement deranged. Just over half of New
York's income taxes are generated by the highest-earning 2% of
filers, and Mr. Cuomo and state Budget Director Robert Mujica said
they are afraid higher rates will prompt the wealthy to leave. Tax
advocates say this fear is overblown.
After the budget was introduced Tuesday, Mr. Mujica said: "Some
in the Legislature take the position that you shouldn't do any
spending cuts unless you do a tax increase. So, this is an attempt
to deal with that, and to start a dialogue about it."
The governor has spent months postponing the conversation on
raising taxes, and instead smoothed out the state's cash flow by
holding back payments to municipalities, social-service providers
and school districts as well as postponing raises for public
employees.
Reframing the tax debate with federal funding allows Mr. Cuomo
to channel the ire of groups seeking more government spending from
Albany to Washington. He can also disclaim responsibility if taxes
eventually do rise.
Andrew Rein, president of the Citizens Budget Commission, a
nonpartisan watchdog, said Mr. Cuomo could have plugged his budget
hole without increasing taxes by, for example, reducing
economic-development spending and trimming state aid to wealthy
school districts.
Mr. Cuomo is counting on $1.5 billion from the tax increase to
help bridge the $10.2 billion deficit in the coming fiscal year; a
combination of spending reductions, better-than-expected tax
receipts and federal aid filled the $4.7 billion gap for the
current fiscal year.
E.J. McMahon, research director of the Empire Center for Public
Policy, a fiscally conservative think tank, agreed that Mr. Cuomo
could address the deficit without raising taxes. Mr. McMahon said
putting a tax increase on the table increased the likelihood of its
adoption.
"The Legislature is itching to do this tax increase," he said.
"They can barely contain themselves. So, if you put it there, they
will grab on and cling to it."
THE QUESTION: How many times did the Legislature override a veto
by Gov. Mario Cuomo?
-- Know the answer? Write me an email!
THE LAST ANSWER: The last New Yorker to lead a chamber of the
U.S. Congress was Theodore Pomeroy of the upstate community of
Auburn. He served as speaker of the House of Representatives in
1869 -- for one day. (Congrats to U.S. Senate Majority Leader Chuck
Schumer for already breaking that record!)
Write to Jimmy Vielkind at Jimmy.Vielkind@wsj.com
(END) Dow Jones Newswires
January 24, 2021 19:14 ET (00:14 GMT)
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