ALBANY – Governors and legislative leaders have long known that the most difficult negotiations over the state budget occur not in years with big deficits, but in times when the state’s finances are flush with money.
More money, more requests to spend it.
As he proposes his plans for the 2014 state budget this afternoon, Gov. Andrew M. Cuomo, with a fiscal surplus on the horizon, is about to find out the complexities of creating a new budget at a time when every possible special interest will want him to use the better fiscal times to either send more money to their causes or cut their taxes.
Add the dimension of Cuomo facing his first re-election bid this year and with all lawmakers also running their own re-election campaigns and a simple reality emerges: what Cuomo proposes Tuesday will not quite resemble the finished product when the state’s fiscal year begins April 1, after lawmakers and their political allies get their say.
It will be a test for Cuomo to avoid the potential pitfalls to his reputation if he were to abandon his self-described fiscal moderate philosophy by giving in to groups and lawmakers wanting sizeable spending hikes.
“Whenever the word ‘surplus’ comes up, people’s eyes light up. They want to spend and it changes the conversation of everything to ‘where can we add?’ ’’ said Elizabeth Lynam, the vice president and director of state studies at the Citizens Budget Commission, a budget watchdog group.
Lynam warned that it will be two years before any major surplus of cash – projected at $2 billion – is really in the state’s hands and that state officials, led by Cuomo, should avoid making promises now for spending programs that can’t yet be paid for until down the road. “The governor is going to have to work very hard to keep the lid on spending,’’ Lynam said.
In fact, more than 90 percent of the budget is not up for negotiation, either because the money is automatically targeted for some mandated service, such as Medicaid or other social services, or goes to fund dozens of state agencies.
Still, billions of dollars are fought over, and for the past month Albany influencers have rolled out their wish-lists in hopes of influencing what makes it into the thousands of pages of budget documents that Cuomo will unveil today.
Leading the list are those seeking more money for the state’s 700 public school districts, who say the state has never abided by the terms of a historic 2006 court decision that said the state had been vastly underfunding schools. Various groups, led by the New York State United Teachers union, are pushing state officials to add $1.9 billion in spending to the $20.8 billion provided to schools this past year. The Board of Regents has said $1.3 billion is needed.
Groups believe Cuomo will go beyond $1 billion extra for schools – a symbolically significant level – but they insist that is far less than is needed, which puts pressure on local property taxpayers in a climate when there is a property tax cap law.
“What I hope it would be is $1.9 billion and an equitable way of spreading the money out that includes fixing the targeted tax cap,’’ said Richard Iannuzzi, NYSUT’s president.
Education funding advocates have been helped in their push by last week’s report from state Comptroller Thomas DiNapoli who said that 13 percent of the state’s public school districts face fiscal stress; a dozen, including Lewiston-Porter, Niagara Wheatfield and West Seneca, are in situations of “significant fiscal stress,’’ he reported.
Cuomo already has said schools are due to get about a 4 percent state aid increase this year, and last week he dismissed the calls from those asking for a major hike beyond that level. He called the more-money rhetoric “propaganda’’ by school “industry lobbyists who frankly get paid to generate more money for the industry,’’ Cuomo told a public radio station that New York already spends the most of any state on public schools.
“It’s not about the money,’’ he said of calls for more money that he says has not achieved better classroom results.
Given the broad effect on everything from classroom programs to property taxes by the state’s school aid funding, Iannuzzi said he expects Cuomo to propose a school aid figure that he knows will get pushed higher by lawmakers in an election year.
Some education groups, and lawmakers, want Cuomo to use his budget to address the much-criticized Common Core school curriculum, which detractors say is causing classroom disruptions for both teachers and students. “It’s clearly a budget item,’’ said Iannuzzi, who believes the program needs to be put on hold while the state re-works it and makes a “significant infusion’’ of dollars in teacher-training and technology programs to help the Common Core principles work.
Cuomo’s budget will also explain how his plan, pushed by New York City Mayor Bill de Blasio, will fund a statewide prekindergarten program and the specifics for his $2 billion borrowing he will ask voters to approve in order to improve technological classes and provide the space needed for new prekindergarten classes.
The governor has sent no signals for his plans to handle failing schools, especially in urban areas such as Buffalo. Last year, Cuomo told The Buffalo News he would address the issue in his State of the State speech; he did not.
Cuomo will reveal how much taxpayers can expect this year in relief on their property taxes and, for businesses, the timing of cuts in everything from utility to state income taxes. Cuomo has called for a $2 billion tax cut package, but has said much of the program won’t be fully in place until 2016.
A Siena College poll out Monday showed, not surprisingly, that New Yorkers want their taxes cut. Cuomo last week said the state has the highest taxes in the nation. The poll, though, did not give respondents much in the way of specifics. For instance, one question asked if they favored “instituting a property tax circuit breaker that would provide up to $1 billion of property tax relief for low and middle income taxpayers.’’ Seventy-seven percent said they liked that idea.
Dueling spending and tax cut demands are many. AARP, for instance, is calling for $26 million that the senior citizen advocacy group says is needed to help with shortages of caregivers for elderly people while a retired state government workers’ group wants Cuomo to scuttle additional health insurance premiums they had to pay starting in 2011.
Michael Durant, director of the state chapter of the National Federation of Independent Business, says its small business members were hurt by a minimum wage hike approved last year and got no relief from a program that promises no taxes to new companies that locate on or near certain college campuses.
“What we need 2014 to be is broad impact for small businesses,’’ he said.
Corporate income taxes Cuomo will propose are fine, Durant said, but he noted that 80 percent of small businesses pay their corporate tax obligations through their personal income taxes.
“New York State has gotten into trouble when most of economic development is in a narrow vision. The more broad the focus on economic development, the more likely we are going to have an organic economic climate for small and large businesses,’’ he said.
Cuomo over the weekend leaked some portions of his budget, including plans to include taxpayer-funding of political campaigns. Given the strong legal authority over budget language held by New York governors, such a route means a couple of possibilities: he can almost force lawmakers to go along with his plan if they want to have an on-time budget or he can use the proposal as trade bait for other things he wants with the Senate Republicans, who say they won’t OK taxpayer-funded political campaigns.
Legislators whose parties control the Assembly and Senate have preempted Cuomo’s budget plan with their 2014 demands.
Senate Republicans have called for making permanent certain tax cuts on the books and a quicker and total elimination of energy taxes imposed on consumers that help to make electricity bills in New York among the nation’s highest.
A group of four Democrats that control the Senate with the GOP wants to increase what employers pay workers for maternity and family leave, build more affordable housing, provide more child care tax credits, give $300 checks to seniors to pay for utility bills and let parents lock in current tuition levels for their child’s college education.
In the Assembly, Democratic leaders say their priorities in the budget will be the nursery school program for all four-year-olds in the state, college financial aid funded by the state for children of illegal immigrants and the tying of the state’s minimum wage to annual increases in the inflation rate.