New York State’s $177 billion budget for the fiscal year that began April 1 includes a small package of tax provisions, but it left the big issues untouched in deliberations colored by the new coronavirus public health emergency.
The revenue bill (A.9509B/S.7509B), approved as part of a broad deal announced Thursday between Gov. Andrew M. Cuomo (D) and legislative leaders, didn’t include the governor’s January proposals for tax relief to small business and farmers.
Efforts by progressive Democrats to raise taxes on the wealthy also fell short, despite a state revenue hole of at least $10 billion created by the impact of the Covid-19 pandemic. The fourth annual phase-in of middle-class tax cuts set in 2016 remained unchanged.
Cuomo and lawmakers also gave up on regulating and taxing recreational marijuana this year, although the $300 million in revenue it was supposed to eventually deliver was to have been earmarked for legalization-related spending anyway, not the state’s general fund.
The budget deal, which Cuomo said was “balanced,” with “no new taxes,” gives the governor and the state budget director broad powers to cut spending over the course of the fiscal year, in consultation with legislators, as they face falling revenue. One provision allows the state to issue up to $8 billion in short-term bonds and to take out up to $3 billion in credit or revolving loans to help bridge the anticipated revenue gap.
The annual budget exercise is where most of the state’s legislative business is conducted, including substantive measures in addition to spending levels.
Cuomo Lauds Passage
Getting the budget done this year during the pandemic was “an extraordinary feat of government accomplishment,” Cuomo said Thursday at a briefing. It compares favorably with any budget passed “in any normal year,” he added.
Progressive groups that pressed for higher taxes on the wealthy, however, expressed disappointment. “The budget passed today imposes billion-dollar cuts on public schools, higher education, and health care while protecting billionaires and multimillionaires from any new taxes,” said Michael Kink, executive director of the Strong Economy for All Coalition.
“This is not the budget we had hoped to pass at the beginning of Session, or even the budget we had envisioned just a month ago,” Senate Majority Leader Andrea Stewart-Cousins (D) said in a statement. “Our state’s financial situation has been thrust into a true economic crisis due to the coronavirus pandemic. Yet even in this crisis we managed to achieve a balanced budget that includes victories for the people of New York.”
No Breaks for Small Businesses
The small business tax cut proposed by Cuomo in January would have lowered the current rate to 4% from 6.5% for some 36,000 corporate taxpayers with fewer than 100 employees and less than $390,000 in income.
“Unfortunately, the just-passed state budget, negotiated and completed under unprecedented circumstances, appears to be a missed opportunity,” said Greg Biryla, the National Federation of Independent Business’s state director for New York. The final agreement, he said, eliminated “long-awaited tax relief targeted to true small businesses.”
Under the tax changes that were included in the budget:
- The state’s Excelsior tax credits program will be extended, setting new credit caps through 2029 (extended from 2024) and allowing use of outstanding credits through 2039 (extended from 2029). A new Green Projects feature will provide enhanced tax credits for making products, providing supply-chain components, or developing technologies to reduce greenhouse gas emissions or support renewable energy.
- Lawmakers extended the $420 million annual film production tax credit program by one year, through 2025, while trimming it and setting new eligibility minimums.
- Taxpayers eligible for the earned income tax credit will get checks from the state even if they haven’t applied for it.
- The existing tax credit for long-term care insurance will be capped at $1,500 and won’t be available to taxpayers with $250,000 or more in state adjusted gross income.