Now things should get interesting.
With both houses of the state Legislature rolling out their own budget plans this week and the deadline for passage only two weeks away, the business of negotiating a final agreement is moving to the front burner.
From one perspective, the odds of on-time passage seem fairly good. The separate proposals approved by the Senate and Assembly are within a few hundred million dollars of Gov. Andrew Cuomo’s $132.5 billion spending plan for the 2011-12 fiscal year, which begins April 1. That’s a much smaller gap than in recent years.
But closing it still could prove difficult. In particular, Assembly lawmakers may expect the governor to compromise on the issue of higher taxes, but he seems firm in his vow not to do that.
Don’t be surprised if the Assembly’s revised "millionaires tax" becomes the focal point behind closed doors and in public debate. If Democrats had their druthers, they would extend New York’s temporary personal income tax surcharge on filers earning more than $200,000, which is slated to expire at the end of 2011.
Enacted in 2009, the surcharge increased the top personal income tax rate on these high earners to 8.97 percent from 6.85 percent. Extending it would raise an estimated $4 billion annually.
But Mr. Cuomo and the Republicans who control the Senate oppose an extension. So the Assembly offered up a "true" millionaires tax-making it apply only to those who earn more than $1 million. They say this one-year extension would raise $700 million through the rest of the 2011 tax year and $2.6 billion in 2012-13.
We think the governor should hold firm on this issue. New York increasingly relies on a small number of high earners for most of its income tax revenue-a risky practice. Extending the surcharge gives these taxpayers-many of whom live in New York City, work on Wall Street and could easily relocate to neighboring states-extra incentive to leave.
But most important, the root of New York’s fiscal problems is excessive spending, not a paucity of revenues. Compromising on this issue would be business as usual-precisely what New York does not need.
For lawmakers, the solution to closing the gap between their plans and the governor’s budget can be stated in two words: Spend less.
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