A missed opportunity: Gov. Andrew Cuomo’s proposed budget needs to firmly invest in the Empire State

February 15, 2015. Gov. Andrew Cuomo’s budget proposal takes some positive steps forward in clearly acknowledging, for the first time in his tenure, the incredible child poverty and income inequality that exist in our generally affluent state. He also wisely recognizes the need to give greater property tax relief to those who need it most rather than spreading it too thinly.

However, for every step forward the governor takes in addressing some critical issues, he takes two steps back by continuing his austerity spending at a time when we need to be investing in New York and by conditioning positive proposals on toxic and often unrelated requirements.

The governor should scrap his self-imposed two percent state spending cap. State tax revenues, total wages, and personal income are projected to grow by four to six percent annually over the next four years. There is no reason to hold annual spending growth below two percent if it means that we are under-investing in education and poverty reduction.

The sheer magnitude of continued “unspecified” spending cuts forced by the two percent spending cap—$1.7 billion in fiscal year 2017, $3.3 billion in 2018, and $4.8 billion in 2019—will inevitably starve our schools and public universities and prevent our state from making the investments needed to expand opportunities for those struggling to lift themselves out of poverty.

In the governor’s “Let’s Make a Deal” budget proposal, too many of the otherwise good public policy initiatives are linked to the acceptance of bad policy that in some cases undermines the initial proposal and in others is utterly unrelated to it. This represents Albany wedge politics at its worst.

The governor proposes increasing education funding by $1.1 billion (only half of the $2-plus billion that nearly every education and student-focused organization in the state is demanding), but only if the Legislature agrees to draconian education reforms that mistakenly blame teachers for poor student outcomes in underfunded, high need, low wealth districts. We need more education funding in high needs districts and a serious investment of state funds in combatting child poverty if we are to improve graduation rates.

The governor proposes a property tax relief plan — a circuit breaker — that wisely ties a family’s property tax burden to its income level, targeting meaningful relief to over one million New Yorkers that need it the most. However, he destructively links this relief to local compliance with a misguided property tax cap, and he funds the needed tax relief with future surpluses predicated on billions of unspecified future spending cuts that will be required by his self-imposed two percent state spending cap.

Similarly, the DREAM Act is a clear win for the state, with a modest cost and a strong return on investment. But, rather than support it outright, he ties it to the misguided and controversial Education Investment Tax Credit, which provides the greatest economic benefits to the wealthiest New Yorkers and allows private interests to dictate education spending.

This year, New York state faces the extraordinary situation of having a surplus of $5.4 billion, funds resulting from settlements related to banking industry malfeasance. The governor proposes allocating a portion of the $5.4 billion in bank settlement funds to much-needed infrastructure repairs, as is highly appropriate. However, the executive budget also includes a proposal to divert $1.5 billion of this money to a “cut throat” competition among the seven upstate Regional Economic Development Councils, with all seven competing for three pools of $500 million. Upstate economic development is a crucial state priority, but what’s needed is a smart overall strategy for development, not an approach that pits one region against another.

The governor dubs his budget an Opportunity Agenda for New York. There are, however, far too many missed opportunities in this budget proposal. What New York really needs is a Shared Opportunity Agenda, one that will benefit all New Yorkers. We must devote more resources and apply less politically encumbered policy to our schools, to our communities, and to strengthening our safety net if we are to truly combat income inequality in our state.

Ron Deutsch
Executive Director

New York State Economic and Fiscal Outlook 2015-2016

February 10, 2015. In its 25th annual New York State briefing book, the Fiscal Policy Institute analyzes and comments on Governor Andrew Cuomo’s 2015-2016 Executive Budget.

Governor Andrew Cuomo’s Executive Budget proposal takes some positive steps forward in clearly acknowledging, for the first time in his tenure, the incredible child poverty and income inequality that exist in our generally affluent state and recognizing the need to give greater property tax relief to those who need it most rather than spreading it too thinly. However, for every step forward the governor takes in addressing some critical issues, he takes two steps back by continuing his austerity spending at a time when we need to be investing in New York and by conditioning positive proposals on toxic and often unrelated requirements.

The governor should put his austerity budgeting behind him by scrapping his self-imposed two percent state spending cap. Otherwise, his proposed new measures to address poverty will necessarily be paid for by cutting elsewhere in the budget important human services spending and state programs that serve the middle class. Weakness in the upstate economy continues, and its recovery is hampered by struggling local governments. Hardships affecting many with low and moderate incomes have mounted in recent years, and yet the state has turned its back. New anti-poverty initiatives must go hand-in-hand with meaningful funding restorations in human services, focusing school aid on high-needs districts (without making such aid dependent on reforms), expansion of opportunities in higher education, and new resources for fiscally stressed local governments.

State tax revenues, total wages, and personal income are projected to grow by four to six percent annually over the next four years. There is no reason to hold annual spending growth below two percent if it means that we are under-investing in education and poverty reduction. The sheer magnitude of continued spending cuts forced by the two percent spending cap—$1.7 billion in FY2017, $3.3 in FY2018, and $4.8 in FY2019—although particular program areas are unspecified today, will inevitably starve our schools and public universities and prevent our state from making the investments needed to expand opportunities for those struggling to lift themselves out of poverty.

In the governor’s “Let’s Make a Deal” budget proposal, too many of the otherwise good public policy initiatives are linked to the acceptance of bad policy that in some cases undermines the initial proposal and in others is utterly unrelated to it. This represents Albany wedge politics at its worst.

The governor proposes increasing education funding by $1.1 billion (only half of the $2.2 billion that nearly every education and student-focused organization in the state is demanding), but only if the legislature agrees to draconian education reforms that mistakenly blame teachers for poor student outcomes in underfunded, high need, low wealth districts. As our report suggests, we need more education funding in high needs districts and a serious investment of state funds in combatting child poverty if we are to improve graduation rates.

The governor proposes a property tax relief plan (Circuit Breaker) that wisely ties a family’s property tax burden to its income level, targeting relief to over one million New Yorkers that need it the most. However, he destructively links this relief to local compliance with a misguided property tax cap, and he funds the needed tax relief with future surpluses predicated on billions of unspecified future spending cuts that will be required by his self-imposed two percent state spending cap.

Similarly, the DREAM Act is a clear win for the state, with a modest cost and a strong return on investment. But, rather than support it outright, he ties it to the misguided and controversial Education Investment Tax Credit, which provides the greatest economic benefits to the wealthiest New Yorkers and allows private interests to dictate education spending.

This year, New York State faces the extraordinary situation of having a surplus of $5.4 billion in funds resulting from settlements related to banking industry malfeasance. The governor proposes allocating a large portion of the $5.4 billion in bank settlement funds to much-needed infrastructure repairs, as is highly appropriate. However, the Executive Budget also includes a proposal to divert $1.5 billion of this money to a “cut throat” competition among the seven upstate Regional Economic Development Councils (REDC), with all seven REDCs competing for 3 pools of $500 million. Upstate economic development is a crucial state priority, but what’s needed is a smart overall strategy for development, not an approach that pits one region against another.

In the 1960s and early 1970s, toward the end of the three decades after World War II when the middle class was growing and living standards were rising, the minimum wage was half of the average wage. The governor’s proposed $11.50 minimum wage for New York City and $10.50 for the rest of the state is a good first step, but it would lift the minimum to about 30 percent of the average wage in New York City and statewide. We should aim higher, as several states and large cities are doing, as well as making sure that the minimum wage is automatically adjusted in the future to prevent inflation from eroding its value.

The governor dubs his budget an Opportunity Agenda for New York. There are, however, far too many missed opportunities in this budget proposal. What New York really needs is a Shared Opportunity Agenda, one that will benefit all New Yorkers. We must devote more resources and apply less politically encumbered policy to our schools, to our communities, and to strengthening our safety net if we are to truly combat income inequality in our state.

Also see:

Testimony at the Joint Legislative Public Hearing on the 2015-2016 Executive Budget – Taxes

Testimony at the Joint Legislative Public Hearing on the 2015-2016 Executive Budget – Human Services

Op-Ed: A missed opportunity: Gov. Andrew Cuomo’s proposed budget needs to firmly invest in the Empire State

Policy Brief: Education Tax Credit

Policy Brief: Property Tax Relief (Circuit Breaker)

Policy Brief: Comparison of the Executive, Assembly, and Senate Property Tax Relief Proposals FY 2015-2016

Policy Brief: Comparison of the Executive, Assembly, and Senate Education Proposals FY 2015-2016

 

Testimony at the Joint Legislative Public Hearing on the 2015-2016 Executive Budget – Taxes

February 9, 2015. Executive Director Ron Deutsch testified before the Senate Finance and Assembly Ways and Means Committees on the Governor’s 2015-2016 Proposed Budget and Financial Plan.

Governor Andrew Cuomo’s Executive Budget proposal takes some positive steps forward in clearly acknowledging, for the first time in his tenure, the incredible child poverty and income inequality that exist in our generally affluent state and recognizing the need to give greater property tax relief to those who need it most rather than spreading it too thinly. However, for every step forward the governor takes in addressing some critical issues, he takes two steps back by continuing his austerity spending at a time when we need to be investing in New York and by conditioning positive proposals on toxic and often unrelated requirements.

PDF of Testimony

Living Wage and Minimum Wage Efforts

July 30,  2015. Given the long-standing gap between the growth in wages and productivity that has eroded living standards for most workers and their families in New York and around the country, raising the wage floor has become an economic policy imperative. FPI has been at the forefront in efforts in New York State and New York City to raise wages for low-wage workers.

FPI played an important role in efforts to convince the New York Fast Food Wage Board in June and July 2015 to recommend a $15 wage floor for 136,000 workers in large fast-food chains. FPI testimony, supplemental comments, op-ed, and related data are available here.

Together with the Federation of Protestant Welfare Agencies, FPI spearheaded a successful campaign to establish an $11.50 wage floor for 80,000 nonprofit sector workers providing social services under contract to the City of New York, and to have this wage floor funded in the FY 2016 City budget. The FPWA-FPI campaign also secured a commitment from the City to fund the development of a sector-wide education and training system to provide career advancement opportunities and supports for nonprofit social service workers. More information on the Social Services Career Ladder Project are available here.

In a legislative hearing on January 7, 2016, FPI’s James Parrott testified at a New York State Senate Standing Committee on Labor hearing. In his conclusion, Parrott asserts that it would be sound public policy for New York State to phase in a $15 an hour minimum wage.

In its annual New York State budget briefing book for FY 2017, a chapter is included on increasing the state’s minimum wage to $15.

2015 State Budget Briefing in NYC

On Tuesday morning, February 12, 2015, the Fiscal Policy Institute will present a New York State Budget briefing to the Economic Justice and Social Welfare Network at the Federation of Protestant Welfare Agencies. The briefing presentation will be from 9:30 a.m. to 11:00 a.m. The briefing is open to the public. To register for this free event, please click here.

The briefing will examine various aspects of the governor’s Executive Budget including such topics as:

  • Austerity Budgeting/Financial Plan: What are the impacts of continued austerity spending resulting from the governor’s self-imposed 2 percent state spending cap?  Is it necessary to continue this austerity spending which will result in billions in unspecified cuts in out years when incomes and tax receipts are growing 4-6 percent per year?
  • 2015-16 Executive Budget: What are the major policy issues that the governor addresses in the Executive Budget? Are there any glaring omissions in the issues being addressed? What is the overall impact of the governor’s proposed budget on the ability of the state to meet its major social and economic challenges and opportunities such as the exceptionally high child poverty rates in the major Upstate cities?
  • Shared Opportunity Agenda for New York: FPI will outline progressive public policies that can be adopted to ensure that we create more “shared opportunities” to help lift New Yorkers out of poverty and provide avenues for upward mobility.

If you have any questions about the February 12th briefing or about any budget or economic policy issues, please contact us by telephone at 518-786-3156 or by e-mail at info@fiscalpolicy.org. For more information on FPI and its work, and for copies of all of FPI’s publications, please visit our website at www.fiscalpolicy.org.

Please register by Tuesday, February 10, 2015.

Testimony at the Joint Legislative Public Hearing on the 2015-2016 Executive Budget – Human Services

February 4, 2015. Submitted by Elizabeth McNichol, FPI Senior Fellow. Testimony includes: recommendations for the 2015-2016 state fiscal year; a summary and analysis of actual and proposed reductions in Human Services spending; use of federal Temporary Assistance for Needy Families (TANF) funding in the 2015-2016 Executive Budget; and, the impact of decline in the purchasing power of the monthly cash assistance grant.