Gov. Andrew M. Cuomo proposed a modest hike in state spending with a $142.6 billion tentative budget with no sweeping policy proposals or tax increases to close a $1.2 billion deficit in the next fiscal year.
State-funded spending would increase 1.9 percent to $136.4 billion with the remaining $6 billion coming from the federal government to help the state recover from Superstorm Sandy. In contrast to the fiscal crises confronting the state in the past two years, Gov. Cuomos proposal does not include any dramatic shifts in spending but instead offers several smaller initiatives.
His proposal to help municipalities save money by stretching out payments to the workers compensation fund is already being greeted with some skepticism from the Civil Service Employees Association, the states largest public employees union. Comptroller Thomas P. DiNapoli stopped short of an opinion, while E.J. McMahon, senior fellow with the Manhattan Institute, called it a gimmick.
The plan would let local governments stabilize payments to the state pension fund by locking in a rate for 25 years. It would avoid the wild fluctuations in contributions from almost nothing in economic boom times that yield high investment returns for the fund to skyrocketing increases when returns plummet. Local governments, though, would be unable to take advantage of savings in future years.
While proposing possible savings there, funding for unrestricted state aid to municipalities would remain flat at $715 million in the governors budget. Local governments will have to find ways to reduce costs or pass on increased expenses to taxpayers, which will make it even more difficult to operate within the property tax cap limits.
St. Lawrence County officials will find good news in the governors proposal to have the state Legislature relinquish its control over county increases in their sales tax rate. The county Legislatures request for hiking the rate from 3 to 4 percent has been stymied by the refusal of state legislators to introduce home-rule legislation clearing the way for the increase.
The governors budget does not seek tax hikes, but he proposed raising $780 million in new revenue by closing some tax loopholes and extending some fees. He proposed a $1.50 minimum wage hike to $8.75 an hour effective July 1 that will be passed onto consumers. Gov. Cuomo noted that would add $1 billion to the pay of low-wage workers this fiscal year, which would boost spending and sales tax revenue, but it also means a $1 billion increase in the cost of doing business in New York.
His proposal might win over some opponents by dropping a previous provision linking future increases to inflation. Sen. Dean Skelos, Republican co-leader of the Senate, did not endorse the plan but said dropping the link would make it a lot easier to support the increase.
Gov. Cuomos budget hikes school aid by 4.4 percent overall to about $21 billion, but that also includes $200 million in one-shot revenue to help districts with fixed costs such as pension growth. However, for districts its not just a matter of an increase but how the state aid will be allocated especially if operating aid loses out to about $70 million the governor is seeking to fund new initiatives he outlined in his State of the State message, among them a full-day prekindergarten in poorer districts and longer school days.
Among new initiatives, the governor wants $36 million to implement the states just-enacted gun law. He included $1.25 million to fund technology incubators in five of the states 10 Regional Economic Development Councils.
The state has had two consecutive on-time budgets. Gov.Cuomos budget plan will undoubtedly meet with opposition. However, his working relationship with the Legislature and the reasonable budget increase should make it possible to find compromises for a third on-time budget.