Don’t Let the Pandemic Shortchange Our State Budget Process

For Immediate Release: March 31, 2020

 

(Albany, NY) Today the Fiscal Policy Institute (FPI) released a set of recommendations to safeguard New York’s budget process and ensure a just budget for all. Predictions of a budget shortfall preceded the unforeseen economic impact of the pandemic and FPI urged leadership to think beyond the continued use of the same austerity budget measures put in place year after year. Now, faced with the urgent needs of our community members, FPI urges Governor Cuomo and state leadership to act for all New Yorkers.

Statement from Ron Deutsch, Executive Director:

“New Yorkers are counting on our state leaders to step up and meet the pandemic’s economic challenge with creative and thoughtful measures, rather than redoubled efforts to cut our way to solvency. Workers and families are reeling from sudden job losses and the fear of an extended recovery while those bearing the brunt are our already marginalized community members. New York must raise revenue from those best positioned to afford it as we fight to stabilize our economy and look to make the necessary investments to meet the growing public needs.”

Statement from Jonas Shaende, Chief Economist:

“Necessary actions to protect life and the health of New Yorkers have affected our economy in ways never before seen. While the impact on the state budget is unavoidable due to the sudden economic downturn as well as the expected long-term recovery, we must not allow this to completely hijack our state budget process. We can’t limit our options to austerity spending alone, our legislature must retain the power to act democratically for the people of New York State and we must explore raising revenue. Our state demands visionary thinking to improve the lives of New Yorkers now and for the future.

FPI Budget Recommendations:

New York is dealing with a pandemic that demands sudden societal changes to protect the health of everyone in the state. As the necessary disruptions to our regular routines of work, school, and family life continue, we know that paying for this health crisis will have a profound economic effect.

Governor Cuomo claims the state is broke, and that our only recourse is to make substantial budget cuts. We understand the COVID-19 pandemic has affected every aspect of our economy, but it is possible to look for ways to raise revenue, not only institute cuts to programs that New Yorkers depend on. As the governor and legislature leaders negotiate the budget, we call on them to:

Raise revenues:

New York is facing revenue shortfalls resulting from the COVID-19 pandemic mitigation measures (to the tune of $4-$7 billion according to the state comptroller and $9-$15 billion according to the Division of Budget). To prevent massive cuts in services to the very people who will be most impacted by COVID-related issues, we must raise revenues.

New York has a history of responsibly raising taxes on those who can most afford to help the state in times of crippling crises. After the 9/11 terror attacks, the state imposed a temporary surcharge on New Yorkers earning over $100,000 per year. More recently, after the global financial crisis and the Great Recession, another temporary surcharge was imposed in 2009.

Even before the coronavirus crisis, there was serious discussion about increasing top marginal income tax rates on those making over $5 million per year. Such a tax, depending on how it is structured, could raise billions in additional revenue. Since this tax is based on income it would only impact those doing exceptionally well in this environment. Taxing those with the most to help those with the least is not be a radical idea. It is a foundational principle of a just and compassionate policy. Recent polls clearly show: New Yorkers get it.

Don’t reject the federal COVID Medicaid funding:

Despite the restrictions in the bill that would prevent the governor from continuing to make cuts to the program or shift costs to local governments, the state should accept the $6.7 billion in federal funds and use them to address immediate COVID-related issues. The governor and legislative leaders should hit pause on implementing the Medicaid Redesign Team II recommendations and not cut Medicaid during this period of economic upheaval and pandemic. Many more New Yorkers will need Medicaid to get them through this crisis and cutting funding to hospitals and denying services to families in need is unacceptable.

Do not grant the governor unilateral power to make budget cuts:

The pandemic has created the need to rethink “business as usual,” but it is crucial that we preserve our democratic system of government. The governor is seeking unilateral authority to impose rolling budget cuts as a result of the economic upheaval caused by this health crisis. The legislature should not grant the governor this authority. The assembly and senate should be part of any process in deciding how to deal with future shortfalls and other budgetary issues. Our legislature must remain relevant and engaged in any process to adjust the budget throughout the year by ensuring the people of the state, have a voice in how to address future shortfalls.

 Do not cut services to New York’s most vulnerable:

The pandemic will impact most severely those who already have the least. New York must protect our most vulnerable community members. Homeless services, social services, education, public services, child care, and other vital support programs to low-income New Yorkers need to be strengthened, not cut. Even before COVID-19 hit, our state led the nation in income inequality and was faced with tens of thousands of homeless residents, staggering child poverty rates in many of our major urban centers, and a severe statewide housing crisis with almost half of all New York’s renting families being rent-burdened. Immigrants, people of color, and single-family households are disproportionately affected by shortfalls in the state’s economy and services. It is irresponsible and cruel to cut essential programs at a time of crisis. If we need to make cuts, perhaps, we should start by looking at the state’s speculative but expensive economic development programs that have been riddled with corruption and provide a negligible return on public investment.

Conclusion: 

Big problems require big solutions, and we won’t be able to cut our way out of this hole. While the federal government will play a significant part in our recovery, our state’s responsibility is clear. After years of austerity spending, it is time to think creatively and logically with a close examination of all our state’s policies, not only our Medicaid system. It is up to all of us to not only set New York on the path to recovery but also to strengthen us for the future.

 

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