The results of this week’s Georgia Senate runoffs, assuring Democrats will soon control both houses of Congress, as well as the White House, had to come as a huge relief to Gov. Andrew Cuomo.
Cuomo spent the last nine months assuming, expecting and finally hoping desperately for a fresh multibillion-dollar infusion of unrestricted federal aid — on top of billions already steered to the Empire State by a $2 trillion federal CARES Act stimulus last March.
Sen. Mitch McConnell and his fellow Republicans had dug in against “blue-state bailouts.” If the GOP had retained a Senate majority, New York’s Democratic governor would have been forced to confront a fiscal crisis made worse by his delaying tactics since the pandemic began to unfold.
But based on the governor’s sour tone the day after Tuesday’s elections, you would never have guessed he had just heard very good news. In remarks that would soon be overshadowed by the Capitol riot, Cuomo claimed federal policies since 2016 amounted to “theft” from the Empire State, turning New Yorkers into “crime victims” entitled to compensation from the feds.
The governor turned his ire against a favorite target: President Trump’s tax-reform law, enacted at the tail end of 2017.
Cuomo asserted that the new tax law “raised our property taxes $4 billion per year” and “an average family’s property taxes . . . [by] $2,600 per year for three years.” He went on to claim that the tax bill had “cost New Yorkers $30 billion” in “pure cash” over the last three years. “We now have a $15 billion deficit,” he added. “They took $30 billion. At a minimum we need to get $15 billion this year to cover our deficit.”
All of which was — and is — simply untrue.
In fact, New Yorkers’ total federal income-tax payments decreased by $3.4 billion in 2018, according to Internal Revenue Service data. At that rate, the three-year impact of the Trump tax bill won’t be a $30 billion tax hike but a $10 billion savings for New York residents.
As for New York’s current budget needs, the state doesn’t now have a $15 billion deficit. As of Oct. 31, Cuomo’s own financial-plan update indicated a gap closer to $8 billion for the fiscal year ending March 31.
That’s still huge, of course. But based on stronger-than-expected tax receipts through September, state Comptroller Thomas DiNapoli credibly forecasts that revenue this year will be $3.8 billion higher than the governor’s last estimate, which would reduce the hole to $4.2 billion.
The additional stimulus bill passed by Congress in December will translate into at least $4 billion more in budget relief for Albany, in the form of added K-12 school aid (technically subject to a “maintenance-of-effort” provision that the Biden administration is sure to waive if Cuomo requests it).
Between that added federal cash, the improved revenue outlook and perhaps $2 billion or more in still-unrecognized budget relief from the CARES Act, it’s likely the state has no deficit, if not a small surplus — for now, that is.
For fiscal 2022, which begins April 1, Cuomo’s financial plan points to a historically large $16.7 billion gap. Even assuming that number is a bit inflated, the combined impact of the pandemic recession and Cuomo’s failure to cut spending appears to have left the state facing a “structural” gap of $8 billion to $12 billion — or worse, if the economic recovery is hampered by a fresh wave of regulations and taxes from Albany.
Any help in Biden’s expected stimulus bill will only put off Albany’s day of fiscal reckoning for another year or two. Assuming he seeks and wins a fourth term in 2022, Cuomo could end up reliving the experience of 2011, his first year as governor, when he had to close an $10 billion gap once President Barack Obama’s stimulus aid ran out.
If Cuomo wants a better federal deal for New York on a wide range of issues, from taxes to health care to infrastructure, he will need to stop hectoring and start persuading his fellow Democrats in Washington that it’s in the national interest.
After all, to whatever extent they were arguably skewed against New York’s interests, Washington’s Trump-era policies weren’t “theft” but democracy in action — which, thankfully, has resumed in our nation’s capital.
This piece originally appeared at the New York Post
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E.J. McMahon is a senior fellow at the Empire Center for Public Policy and a Manhattan Institute adjunct fellow. Follow him on Twitter here.
This piece originally appeared in New York Post