NYS $212 billion budget combined with new wealth taxes gets mixed reviews
ALBANY — New York’s $212 billion budget is a boon for a state struggling to find its footing in the wake of a global pandemic, offering residents of all classes a chance at recovery.
Or it’s a bloated spending plan that could be the death knell for a once-great Empire State.
It depends on who you ask.
The fiscal plan, the largest in state history and fully approved by the Democratic-led Legislature late Wednesday, will raise taxes on New York’s wealthiest residents and fund myriad progressive plans to assist undocumented workers, boost education and aid struggling small businesses.
Progressives applauded $2.4 billion in rent relief, more than $29 billion in school aid, $2 billion for “excluded workers,” as well as a $1 billion small business, arts, entertainment and restaurant COVID relief package that includes $800 million in grant funding for small businesses and for-profit arts and cultural institutions.
“In the wake of our recovery, New York State met the urgency of this moment and passed a budget that will provide much-needed relief to our most vulnerable communities and build for a more equitable future –– a testament to the tireless work of advocates and organizers who have been fighting for budget justice for years,” said Sen. Alessandra Biaggi (D-Bronx).
Some of the spending increases are fueled in part by an injection of federal funds in conjunction with tax increases on the rich, including two new tax brackets for those making over $5 and $25 million a year, are expected to bring in more than $4 billion in revenue.
Millionaires will see their tax rate climb to 9.65% from 8.82%, while income between $5 million to $25 million will be taxed at 10.3%. Anyone making more than $25 million will pay 10.9% in state taxes.
A separate change to the corporate franchise tax, rising from 6.5% to 7.25%, will bring in about $750 million annually. The higher income tax rates expire in 2027.
Ron Deutsch, of the nonprofit New Yorkers for Fiscal Fairness, called the tax changes “long overdue.”
“This budget makes historic investments in public services and puts the needs of the many over the needs of the few,” he said. “While we know there is still more work to do, these tax reforms are a great start in addressing New York’s worst in the nation income inequality and will begin to reverse a decade of austerity spending in our state.”
However, EJ McMahon of the conservative fiscal watchdog group Empire Center said the budget could mask long-term money problems, calling it “a mid-2020s fiscal disaster in the making: an incomplete bridge over a deepening river of red ink.”
“Depending on timing and size of some large but (so far) temporary spending commitments, apparently funded largely or entirely by one-shot stimulus aid from Washington, the budget’s short-term federal cash surplus could mask underlying structural gaps ranging from $5 billion to more than $10 billion,” he said.
Gov. Cuomo, who long resisted the idea of upping taxes, sought to assuage fears that the new levies will scare off the state’s wealthiest residents Wednesday as he promised that a possible federal repeal of a cap on state and local deductions will negate the increases.
State comptroller Thomas DiNapoli took a middle-of-the-road approach, expounding on the importance of helping struggling New Yorkers and an equitable recovery, while sharing some concerns about new taxes.
“While much of the new resources may be temporary and necessary to meet current needs, it is important that spending not grow to unsustainable levels.”
