Cuomo’s budget comes as NY’s economy grows slowly
ALBANY— Gov. Andrew Cuomo will present an ambitious budget proposal next week that promises to turn deficits into surpluses even as he doles out tax breaks.
One trick will be doing it in a time of slow economic growth.
Cuomo will release his proposed budget Tuesday for the state fiscal year that begins April 1. But he has already said that the state can amass its first budget surpluses in years as long as lawmakers agree to limit spending increases to 2 percent. The governor said that would allow surpluses to grow to $2 billion in three years.
“This year, within the 2 percent spending cap, we can increase our investments in education, health care, economic development and still provide more tax relief,” Cuomo said this month in his State of the State address.
Cuomo’s claim that economic “arrows are pointing up” is generally true. New York, like the rest of the country, is slowly making up ground lost in the recession. The amount collected in taxes by New York state has grown each year since 2010. The state has been helped during that time by a temporary surcharge on New York’s wealthiest residents that brings in almost $2 billion a year.
So far this fiscal year, New York’s overall tax collections of $49 billion are up 5.6 percent, but still below projections, according to a report issued Friday by state Comptroller Thomas DiNapoli. The comptroller sees mixed revenue results, with business taxes lagging and sales taxes healthy.
“The state started the fiscal year strong but it is not clear if we will end the year that way, given that some state revenue streams are slowing down,” DiNapoli said.
Lucy Dadayan, a senior policy analyst at the Rockefeller Institute of Government, noted that despite higher overall tax revenues, New York and other states still have not caught up to where they were before the recession.
“Yes, we are recovering. But we are recovering at such a slow pace,” Dadayan said.
This is the atmosphere in which Cuomo promises to reverse a trend of budget deficits and create three years of surpluses that will grow to $2 billion by the fiscal year that begins in April 2016. He will have to do this even though two of the largest-ticket items — Medicaid and school aid — are tied to economic indicators that are growing faster than 2 percent.
Robert Ward, deputy comptroller for budget and policy analysis, said New York is doing better than several years ago when it comes to matching spending with revenue. But he still sees challenges for Cuomo’s budget makers under current conditions.
“The relatively modest growth in the economy is going to be a limit on revenue growth,” he said.
The Cuomo administration expects revenue to grow faster than 2 percent, meaning spending growth below that level will lead to surpluses. But given the higher growth rates of Medicaid and school aid, other parts of the budget would have to continue to remain flat.
It’s also possible that New York could get financial help from the federal government. The administration has been seeking a Medicaid waiver worth $10 billion over five years that would free up money for investments elsewhere.
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