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Cuomo, Legislature clash over new taxes on wealthy

Gov. Andrew Cuomo speaks at a briefing in New York City Wednesday

With one week to go before the state budget deadline, Gov. Andrew Cuomo and legislative leaders are at odds over key points of the spending plan, including whether to raise taxes on the wealthy and corporations by $7 billion.

Meanwhile, Assembly Speaker Carl Heastie is refuting a claim by Cuomo that the speaker’s COVID -19 diagnosis might make the budget late.  

Cuomo said his budget office has identified $5 billion in new sources of revenue that they were not previously aware of. His budget director, Robert Mujica, said that, combined with the $12.5 billion coming to New York from the recently enacted federal stimulus measure, will be enough to avert raising any new taxes in the new state budget and to avoid spending cuts.

“We have the resources necessary so that there would be no cuts in the governor’s budget,” Mujica said on March 22. “So you wouldn’t require any significant level of tax increases to pay for the restorations.” 

The budget office said tax revenue is $2.5 billion higher than initially projected, and the state will be receiving an additional $1.5 billion in federal Medicaid funding, as well as another $1 billion in unanticipated federal aid.  

The new resources will restore $3.7 billion in proposed cuts to schools and local governments and end a wage freeze for state workers. 

Cuomo proposed a temporary income tax increase on New Yorkers making $5 million or more a year, but has worried that raising taxes on the wealthy will cause them to leave the state. He said that tax hike is no longer needed.  

Democrats, who lead both houses of the Legislature, want to enact $7 billion in new taxes on the wealthy and corporations, including new higher income tax brackets for multi-millionaires and billionaires, higher capital gains and inheritance taxes, and a pied-a-terre tax for luxury second homes. 

Senate Leader Andrea Stewart-Cousins said she’s grateful to the state’s congressional delegation for delivering the funds. But she said the federal money runs out next year, and the state needs a more permanent and stable source of revenue. 

“It takes care of what happened to us during COVID,” said Stewart-Cousins. “It does not account for the deficit that we had before and our ability to make sure that we have the funding for education and health care and the things that we really care about.”  

Two hundred and fifty New York business leaders, including all of the state’s Chambers of Commerce and many of New York’s largest employers, wrote a letter to Stewart-Cousins and Heastie, asking them not to raise taxes, saying it will delay the economic recovery from the pandemic. In the letter, they said “significant corporate and individual tax increases will make it far more difficult to restart the economic engine and reassemble the deep and diverse talent pool that makes New York the greatest city in the world.” 

Stewart-Cousins said rebuilding a vibrant economy isn’t just about keeping taxes low -- it’s also about making investments in communities that are struggling and providing needed services.  

“We are asking those who have a little more to do a little more,” Stewart-Cousins said. “So that we are not looking at the same inequities, year after year.” 

A coalition of labor unions and left-leaning advocacy groups who favor increasing taxes on the wealthy recently released a study that found New York’s 120-plus billionaires increased their wealth by $88 billion during the pandemic. At the same time 4.5 million New Yorkers lost their jobs, many permanently.  

Since the governor first introduced his budget plan in January, the power dynamics between himself and the Legislature have shifted. Cuomo is engulfed in multiple scandals, including eight women accusing him of sexual harassment and inappropriate behavior. He is also under federal investigation for a potential cover-up of nursing home deaths during the pandemic.

Stewart-Cousins has called on the governor to resign. Heastie has launched an impeachment inquiry. Both houses have supermajorities of Democrats that could potentially override any objections the governor might have to their budget proposal. 

But Cuomo on Wednesday said it might be the fault of the Legislature if an agreement falls through and the budget is late. 

Heastie said Tuesday that he has a mild case of COVID-19 and will continue budget negotiations remotely as he recovers. The governor said some of the speaker’s top staff will now have to be in quarantine, and that will “complicate” the budget process. 

“I’m not going to risk public heath to get it done April 1,” Cuomo said.

Heastie, in a tweet, immediately disputed Cuomo’s assertion that his illness could make the budget late, saying: “My COVID diagnosis and any quarantine of staff will not affect budget negotiations.”

A spokesman, Mike Whyland, added that Heastie is feeling “very good.” 

Cuomo, asked about Heastie’s response, backed down from his claim, saying he meant that because of COVID-19 restrictions, not as many people can gather in a room to hash out a budget plan.

Karen DeWitt is Capitol Bureau Chief for New York State Public Radio, a network of 10 public radio stations in New York State. She has covered state government and politics for the network since 1990.