“The Comptroller’s report pointed out that the receipts here today are substantially below last year. But they’re actually slightly above what the state was projecting, really kind of meaning things are bad, but August collections didn’t make it any worse,” said Citizens Budget Commission Director of State Studies David Friedfel.
Governor Andrew Cuomo has said if the federal government doesn’t pass a stimulus with aid to states, schools, hospitals and localities could see 20 percent cuts. Due to a temporary “less than 1 percent” withholding of school funding, some school districts started announcing cuts. After backlash, state officials announced Wednesday that there would be no withholding on September payments for schools.
“First and foremost, it’s important to say that the federal government should be providing the states and localities with additional aid because we’re in the middle of an economic and public health crisis that we haven’t seen in lifetimes. That being said, the state and everyone that relies on state aid, including those school districts, would have been better served if the state had released the public plan,” Friedfel said.
Friedfel said lining out exactly how to close the budget gap if additional federal aid didn’t materialize could have allowed for better planning. He also said there are other options that can be utilized.
“Like utilizing cash that was previously earmarked for capital spending, using debt to fund those projects instead. There could be some targeted cuts to school aid, but those cuts could allow high need districts to continue to get their aid, and then leveraging the state’s rainy-day reserves, because the state has over $5 billion in those reserves, and it’s raining,” he said.
Friedfel also said, while finding new revenues like legalizing and taxing recreational marijuana or mobile sports betting may help, it takes a while for those revenues to accrue.
There has also been chatter about raising taxes on “ultra-wealthy” New Yorkers. Thursday, New York State Budget Director Robert Mujica put out the following statement:
“There is much discussion about the state and nation’s economic condition and the options available to New York State. Let’s make sure the discussions are informed. New Jersey has announced they will pass a millionaire’s tax that raises the tax rate on millionaires to 10.75 percent. Some have suggested New York raise the top tax rate for billionaires and millionaires to 12 percent. The overwhelming majority of billionaires and millionaires in this state live or work in New York City. The combined state and city income tax rate is already 12.6 percent — which is higher than New Jersey’s new top rate or a proposed 12 percent ‘billionaire/millionaire tax rate.'”
Another report from the State Comptroller also found that local sales tax collections dropped by “7.8 percent in August compared to the same period last year.”