Cuomo faces $15 billion deficit challenge in budget plan

Jan 19, 2021

Governor Andrew Cuomo is due to release his state budget plan this week, as the state confronts the largest budget deficit the governor has faced in his decade in office, much of it due to the ongoing COVID-19 pandemic.


Credit Governor.NY.Gov

The state was already facing a $6 billion dollar structural deficit when the fiscal year began last April, and Cuomo had been managing some of the shortfall by practicing some bookkeeping tricks, including delaying Medicaid payments due to health care providers for a few days at the end of the past two fiscal years so that they fell into the next fiscal year.

After the coronavirus struck in March, and tax collections plummeted, the deficit grew. Cuomo says the losses total $15 billion dollars. His budget office, after taking some cost saving measures, says the amount of the actual shortfall is closer to $8 billion dollars.

For months, the governor’s main strategy has been to wait for Democrats to be elected to the White House and to Congress, and hoping that they will deliver a federal stimulus package that would include bail outs for state and local governments hard hit by the pandemic.

Cuomo has said repeatedly that Washington owes New York.      

“We were a political target. We were politically extorted by Washington,” said Cuomo, citing the state’s lowest-in-the nation rate of federal Medicaid reimbursement, and the Trump Administration’s ban, later rescinded, of the Trusted Traveler program that expedited air flights to and from New York.

Cuomo says he hopes President- elect Joe Biden, after he’s inaugurated Wednesday, will do better for New York.

“We expect the new leadership to right the wrongs,” Cuomo said.

The governor in his State of the State address on January 11, said without a bail out, the choices to close the deficit are grim, and they include tax hikes, and cuts to schools.

“Even after all of that pain, we would still need billions in cuts to health care in the middle of a pandemic,” said Cuomo. “And we would need to borrow billions at the cost of future generations. It would be devastating.”

Cuomo is under increasing pressure from the progressive wing of his Democratic Party to add new, higher income tax brackets for the wealthy. Advocacy groups are holding demonstrations outside the governor’s office and other locations, and have gained the backing of over 100 lawmakers.

Senate Leader Andrea Stewart-Cousins, in her opening address to lawmakers earlier this month, says her majority party Democrats support the proposal.

“We need to make sure that more of the millionaires and billionaires who have gotten even richer, step up, during this pandemic,” Stewart-Cousins said on January 6th.

Democrats who lead the Assembly also back raising taxes on the state’s wealthiest. Both houses now have enough Democratic members to form a super majority that could override any potential vetoes by Cuomo.

Stewart-Cousins, the first African-American woman to lead the Senate, says new taxes and other revenue raisers like legalizing marijuana and expanding sports betting, would avoid cuts that could adversely affect the state’s Black and Brown communities.

“We can do it without moving towards austerity or balancing our budget on the backs of our working families,” Stewart-Cousins said.

Cuomo has already said he will include in his budget  proposals to legalize the adult recreational use of marijuana and to expand sports gambling. Revenues could total $800 million a year when the changes are fully operational, around one tenth of what’s needed to balance the state’s budget.