He offered ‘startup’ tax breaks to General Electric, which started in 1892 and chose Boston anyway.
Gov. Andrew Cuomo’s resignation was memorable, but we shouldn’t forget his policy legacy. New York state was slowly emerging from the Great Recession when he was elected governor in 2010. Amid massive job losses and collapsing revenues, he took office in 2011 with a focus on rebuilding public finances and promoting economic growth.
During his first term, he positioned himself as a Clintonesque centrist with a pro-business tilt. He’s still often called a moderate, but the label has been inaccurate for years.
By the start of his second term, in 2015, Mr. Cuomo was promoting “economic justice” in the form of a $15 minimum wage, initially restricted to New York City. In his third term, starting in 2019, he sprinted to the left and loudly proclaimed his progressive credentials as a new generation of left-leaning Democrats assumed control of the formerly split Legislature.
Things were different a decade ago. “New York has no future as the tax capital of the nation,” he declared in his 2011 State of the State address. “Our young people will not stay. Our business will not come. This has to change.”
Within six months of taking office, Mr. Cuomo closed a $10 billion budget gap, drew a hard line in contract talks with state employee unions, and persuaded lawmakers to approve a strict 2% cap on annual growth in property taxes. The cap doesn’t apply to New York City, but it’s still among the most significant limited-government reforms ever enacted in the Empire State.
But Mr. Cuomo failed to back up the tax cap with the relief from state mandates that local governments need to manage efficiently. Instead, after a few months of tough talk, he consistently pandered to public-sector labor unions. He nurtured a close alliance with New York City’s overfed building-trades unions, whose generous contracts and inefficient work rules are largely responsible for New York’s excessive capital infrastructure construction costs.
Mr. Cuomo’s “economic development” excesses—from the “Buffalo Billion,” which ultimately engendered the federal bribery conviction of his closest aide, to the $15 million “film hub” in Syracuse—are well documented. He managed to bungle even more-modest ideas that had the potential to succeed. In 2014 he unveiled a package of tax relief and other assistance for startup businesses. The program known as START-UP NY was promising, but Mr. Cuomo insisted on exaggerating its scope and likely impact, ballyhooing it as an economic cure-all. Within a few years, he was offering “startup” tax benefits to attract the headquarters of General Electric Co., which started in 1892—and which chose Boston despite Mr. Cuomo’s blandishments.
In other areas, Mr. Cuomo straddled and prevaricated. He broke a campaign promise by repeatedly renewing a “millionaire tax” hike that had been enacted as a temporary measure under his predecessor, David Paterson. Once safely past his 2014 re-election, Mr. Cuomo outlawed hydrofracking in gas-rich Western and Southern Tier regions of upstate New York—consistently the weakest economic performers in the state. In pursuit of a radical California-style environmental agenda, his administration blocked natural-gas pipeline expansions and forced closure of the Indian Point nuclear plant, which was providing a quarter of New York City’s electricity, even as it extended ratepayer subsidies to nuclear plants upstate.
By 2019 New York was more dependent than ever on taxes and wealth generated in and around New York City. Pre-Covid, the top 1% generated more than 40% of New York state’s personal income-tax revenues—the real explanation for Mr. Cuomo’s loud and strenuous opposition to the cap on state and local tax deductions, which effectively raised New York’s combined top rate to its highest level ever.
Mindful of the budget excesses that bedeviled and defeated his father, Mario Cuomo, in the early 1990s, the second Gov. Cuomo exercised relative fiscal restraint through his first two terms. Again, however, he failed to reform the drivers of spending—especially the state’s Medicaid program, which by 2019 was running nearly $2 billion over budget. Four months ago, the Legislature and a governor who had once foresworn tax increases agreed to a $209 billion state budget that will raise taxes by billions of dollars a year on the state’s top earners and most profitable corporations—even though higher taxes were no longer needed to make up for pandemic-driven revenue losses.
Buoyed by nearly $13 billion in unrestricted federal stimulus aid, the budget raises spending to a level that won’t be sustainable once the federal cash is exhausted in a few years. For the first time ever, New York projects balanced state budgets across two consecutive fiscal years. But the fiscal hangover, starting in the second half of the 2020s, could be brutal.
Summing up what turned out to be his last budget deal with the Legislature, Mr. Cuomo declared: “This . . . will set the trajectory of the state for the next 10 years.” Unfortunately for New Yorkers, for once he wasn’t exaggerating.
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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 The Wall Street Journal