The U.S. House of Representatives is scheduled to vote Friday on the $3 trillion “HEROES Act,” which would provide critical funding to states, counties, cities and towns.
Even if the enormous spending package passes in the U.S. Senate (where the bill is not yet scheduled for a vote) and even if the president doesn’t issue a threatened veto, relief may not come in time to save New Yorkers from deep spending cuts.
Comptroller Tom DiNapoli estimates that state revenues are down 14%. The recently passed state spending plan gives Budget Director Robert Mujica the power to cut mid-year spending if revenues indicate they are needed.
With 14% less money flowing into state coffers, cuts are needed.
During Friday’s press briefing, Governor Andrew Cuomo stated his belief that “political self-interest” will force politicians in Washington to pass a relief package for states during this election year. That very well may be the case. But there are two questions: When will Congress pass a relief package, and can the state wait for Congressional passage before making cuts.
One Washington DC insider told Spectrum News that Senate Majority Leader Mitch McConnell wants to “slow walk” the HEROES Act until late June. Here’s why: Several members of his conference are in re-election danger. McConnell wants to allow these incumbents to “play the hero” by bringing home relief money from Washington just before their states’ fiscal years begin on July 1.
According to The Hill, the list of endangered Republican Senators includes Cory Gardner of Colorado; Susan Collins of Maine; Thom Tillis of North Carolina; Martha McSally of Arizona; Joni Ernst of Iowa; and Steve Daines of Montana.
Each of the states’ fiscal years begin on July 1. New York is an outlier, with its fiscal year beginning on April 1.
With Budget Director Mujica indicating he would announce spending cuts by the end of May, it’s clear Washington and New York are on two very different timetables.
Progressive groups are calling for increased taxes on the very wealthy to mitigate the pain.
“You’re looking at tens of thousands of jobs lost, on top of the jobs that we’ve already lost,” said Michael Kink, executive director of the Strong Economy for All Coalition. “Public school teachers, professors and instructors at CUNY and SUNY, nurses, front line healthcare workers, folks that work at food banks and senior outreach projects that are more essential than ever” would see cuts unless Washington comes to the rescue, or the state hikes taxes on the rich.
“One of the taxes we talked about implementing was an ultra-millionaires tax,” explained Ron Deutsch, executive director of the Fiscal Policy Institute. “That would be on incomes above $5 million, $10 million, and $100 million. In this environment, if you’re making that kind of money, clearly you’re doing very well and can afford to pay a little bit more.”
Both groups also want the governor to avail New York of new very low interest borrowing provided by the New York Federal Reserve.
But the most straightforward way to counter budget cuts is with tax hikes. Kink says there are a few ways to do it.
“The billionaires tax, the ultra-millionaires tax, the pied a terre tax. $10 billion from the super-rich who can afford to pay to prevent $10 billion in cuts to public services, seems like a fair way through this crisis. And those taxes are supported by nine out of 10 New Yorkers in public polling,” he said.
Once the budget director announces cuts in state spending, the legislature will have 10 days to modify the cuts or accept them. What can’t lawmakers do? Reject the cuts.