Gov. Andrew Cuomo and state lawmakers reached a deal on the state’s budget this week.
The final, $212 billion budget includes a number of measures to aid industries and sectors that have been hardest hit by the pandemic. Additionally, the enacted budget closes the state’s deficit and invests in the ongoing response to the pandemic and recovery efforts.
Highlights of the budget include:
• A record $29.5 billion in aid to schools;
• $29 billion in public and private green economy investments;
• $2.4 billion for rent and homeowner relief;
• $2.4 billion for child care;
• $2.1 billion for excluded workers;
• 1 billion for small business recovery;
• A first-in-the-nation plan to make broadband internet affordable;
• Legalizing mobile sports betting; and
• Implementing comprehensive nursing home reforms.
“New York was ambushed early and hit hardest by COVID, devastating our economy and requiring urgent and unprecedented emergency spending to manage the pandemic,” Cuomo said in a statement Tuesday. “Thanks to the state’s strong fiscal management and relentless pursuit to secure the federal support that the pandemic demanded, we not only balanced our budget, we are also making historic investments to reimagine, rebuild and renew New York in the aftermath of the worst health and economic crisis in a century.
“This budget continues funding for the largest-in-the-nation $311 billion infrastructure plan, establishes a groundbreaking program to provide affordable internet for low-income families and enhances public safety through police reforms, all while continuing to provide relief to New Yorkers and small businesses as we recover from the pandemic,” Cuomo added. “I thank the legislative leaders — Senate Majority Leader Stewart-Cousins and Assembly Speaker Heastie — for their partnership in helping make this critical budget a reality and delivering results for the people of this state.”
The budget comprises New York’s $311 billion infrastructure plan, which includes the governor’s $211 billion 2020-24 plan and his $100 billion 2015-2019 plan. The evolving plan increased by $36 billion in the budget with the inclusion of new development plans in New York City, a $3 billion environmental bond act, transportation programs and additional supportive, affordable and public housing support, as well as incremental increases to existing capital programs.
The budget includes legislation requiring internet service providers to offer an affordable $15 per month high-speed internet plan to qualifying low-income households. The state also will require providers to advertise the plan to ensure programs reach underserved populations statewide. To further bridge the gap, New York has partnered with Schmidt Futures and the Ford Foundation to launch ConnectED NY, an emergency fund to provide roughly 50,000 students in economically disadvantaged school districts with free internet access through June 2022.
The enacted budget directs $2.3 billion in federal child care resources to expand the availability, quality and affordability of child care. Child care providers would receive $1.3 billion in stabilization grants to support expenses, as well as additional funds for cleaning and safety. Further investments would be made to increase capacity in child care “deserts” and help parents find the child care provider that’s right for them.
The budget creates a $2.4 billion Emergency Rental Assistance Program (ERAP) to ensure residents can make rent and remain stable in their homes. The program will support households in rental arrears that have experienced financial hardship, are at risk of homelessness or housing instability and that earn less than 80 percent of area median income.
The enacted budget includes comprehensive nursing home reform legislation to help ensure facilities are prioritizing patient care over profits, officials said. The reforms establish minimum thresholds for nursing home spending of 70 percent of revenues on direct resident care and 40 percent of revenues on resident-facing staffing, capping profits at five percent, and targeting unscrupulous related party transactions. Excess revenues recouped by the state will be deposited into the existing nursing home quality pool for further investments for nursing homes to meet high-quality standards.
The budget includes a $1 billion small business, arts, entertainment and restaurant relief package to help businesses and other organizations recover from the impacts of the pandemic:
• COVID-19 Pandemic Small Business Recovery Grant Program: Provides $800 million in grant funding for small businesses including for-profit arts and cultural institutions impacted by the COVID-19 pandemic.
• New York Restaurant Resiliency Grant Program: $25 million in grant funding to support restaurants that provide meals to distressed and under-represented communities.
• Arts and Cultural Organization Recovery Grant Program: $40 million to provide grants through the New York State Council on the Arts to eligible arts and cultural nonprofit organizations to assist in the recovery from the COVID-19 pandemic.
• Restaurant Return-To-Work Tax Credit: Provides up to $35 million in tax credits to support restaurants hard hit by the pandemic through 2021.
• Extend and Enhance the Musical and Theatrical Production Credit for four years: In order to support musical and theatrical productions that occur in the state but outside of New York City, the budget extends the credit for four years through 2025 and increases it by $4 million to $8 million.
The 2022 enacted budget continues to lower personal income tax rates for middle-class New Yorkers. In 2021, the fourth year of the multi-year tax cuts enacted in 2016, income tax rates have been lowered from 6.09 percent to 5.97 percent for taxpayers filing jointly in the $43,000-$161,550 income bracket, and from 6.41 percent to 6.33 percent in the $161,550-$323,200 income bracket. The cuts are expected to save 4.8 million New Yorkers more than $2.2 billion this year, officials said. When the cuts are fully phased in, middle-class taxpayers will have received an income tax rate cut of up to 20 percent, amounting to a projected $4.2 billion in annual savings for six million filers by 2025. As the new rates phase in, they will be the state’s lowest middle-class tax rates in more than 70 years.
The enacted budget includes new revenue resources that provide the revenues needed to make the investments that will support New York’s ongoing response to the COVID-19 pandemic and New York’s recovery from it, according to the governor’s office, including:
• The budget deploys the first $5.5 billion of the $12.6 billion provided for in the federal American Rescue Plan Act 2021. These funds are integrated throughout the budget in accordance with available federal guidelines.
• The budget includes appropriation authority for local governments to receive federal support. The package of $10.8 billion in federal aid for local will help support essential workers and government employees, assist the vaccination efforts, boost local economies and support the network of local government services that New Yorkers depend on.
• The budget implements a surcharge on high earners through tax year 2027 that sets a top rate of 10.9 percent for all filers earning more than $25 million. The surcharge raises $2.8 billion in FY 2022, rising to $3.3 billion in FY 2023.
• The budget implements a surcharge on corporate tax rate that increases the business income tax rate from 6.5 percent to 7.25 percent for three years through tax year 2023 for taxpayers with business income greater than $5 million. It also increases the capital base method of liability estimation to 0.1875 percent from the 0.025 percent rate in effect last year. The capital base method increase continues to exempt qualified manufacturers, qualified emerging technology companies, and cooperative housing corporations. These changes raise $750 million in FY 2022 and $1 billion in FY 2023.
• The FY 2022 enacted budget authorizes mobile sports wagering. Once fully phased in, legalization will provide more than $500 million in revenue for the state to help rebuild from COVID-19 and grow what could be the largest sports wagering market in the U.S. into a profitable industry long-term. Once fully phased in, the program will provide $5 million annually to youth sports and $6 million to combat problem gambling, doubling the resources currently available. The remainder of this new revenue will be dedicated to education.
“While this year’s state budget includes some positive measures, such as support for struggling small businesses, tax relief for middle-class residents and significant funding for local roads and bridges, the inclusion of massive tax hikes and costly mandates poses a serious risk,” said Justin Wilcox, executive director of Upstate United, a nonpartisan, pro-taxpayer education and advocacy coalition. “Imposing $4 billion in new taxes will ultimately hurt New York’s recovery efforts. This immense tax burden will drive more New Yorkers out of the state; joining the 1.4 million former residents who have fled to other states over the last decade. Embracing a massive tax-and-spend approach over a responsible pro-growth plan is the wrong choice at the wrong time.”
The budget provides $6.2 billion for the second year of a record $12.3 billion, two-year Department of Transportation capital plan that will facilitate the improvement of highways, bridges, rail, aviation infrastructure, non-MTA transit and DOT facilities, a 38 percent increase from the final two years of the last DOT capital plan.
“This year’s state budget includes an extraordinary investment in transportation infrastructure. With the unwavering efforts of our partners in the Senate and Assembly, and the support of Gov. Cuomo, local road and bridge programs will receive more than $1 billion in the coming fiscal year,” said Joe Wisinski, president of the New York State County Highway Superintendents Association. “This essential funding will help keep millions of motorists safe and create tens of thousands of jobs.”
Funding for the Consolidated Highway Improvement Program (CHIPS) and the Marchiselli program will increase by $100 million to $577.8 million and funding for Extreme Winter Recovery is $100 million. The budget also provides $100 million of new funding to localities responsible for State Touring Routes, increases highway aid through the PAVE NY program by $50 million to $150 million and maintains funding of local bridge projects through the BRIDGE NY program at $100 million. This represents an overall year-to-year increase of $285 million and brings funding for local highway and bridge projects to more than $1 billion.
“Due to the incredibly strong advocacy efforts of our partners and advocates, the overall NYSDOT capital program is the largest ever at $6.168 billion,” said Mike Elmendorf, president and CEO of Rebuild New York Now. “Within the NYSDOT capital program, state and local construction also hit a record level for the 2021-2022 budget at $4.8 billion. This significant increase in funding will allow for localities and municipalities across the state to repair decaying infrastructure and create more jobs to help our economy fully recover. New York families deserve this investment in their local communities.”
The budget provides more than $7.7 billion in state support for higher education in New York, an increase of $283 million, or 3.8 percent, from FY 2021. New York has increased funding for higher education by more than $1.7 billion, or 29 percent, since FY 2012. In addition, the enacted budget provides more than $1 billion in new capital funding to SUNY and CUNY.
“The pandemic-induced economic crisis has hit our most vulnerable students the hardest. Financial challenges, including food and housing insecurities, have disrupted their pursuit of a degree or certificate — and ultimately a rewarding, family-sustaining career in high-demand industries,” said Katherine Douglas, Monroe Community College interim president. “I’m grateful to Gov. Cuomo and our state legislators for their bold vision, leadership and support of our students. Federal and state support will eliminate hurdles to college access and completion, paving the way for more equitable, brighter futures for our students. It will also enable MCC to keep its tuition affordable. Together, we will help transform the lives of our students and the local community and revitalize our region’s economy.”
New York’s colleges and universities are expected to receive an estimated $5.4 billion in direct federal stimulus aid, including more than $3.4 billion for public colleges and close to $2 billion for private colleges. SUNY and CUNY have nearly $3 billion in remaining stimulus funds to spend over the next 2-3 years. A substantial portion of this funding will be used to provide financial aid grants to students with exceptional needs, such as students who receive Pell grants.
The FY 2022 enacted budget enacts a COVID-19 Recovery Workforce Initiative, which invests $50 million for training in high-growth industries, employer-driven training for low-income workers and funding for small businesses to re-train and hire furloughed, laid-off or new employees.
Since the beginning of the pandemic, the Department of Labor has paid out more than $75 billion in benefits to more than 4 million New Yorkers — more than 30 typical years’ worth of benefits. The budget supports reforms to the unemployment system, including upgrades to modernize technology, among other things.
The budget creates a $2.1 billion program to provide cash payments to workers who have suffered income loss due to COVID but who are ineligible for unemployment insurance or related federal benefits due to their immigration status or other factors.
“For the past few days, we have either been kept waiting on budget bills or working on them until the wee hours of the morning,” said Assemblyman Brian Manktelow, R-Lyons, in a statement Wednesday. “It seems the mindset for the Assembly Majority is that the bigger we grow the budget, the better New York will be. I feel the complete opposite, as I believe we must go to battle against the debt New York has stacked up in order for our state to get anywhere. We must speed up our debt payback. I view a successful budget as to not raise taxes but to reduce them at a rate of a percentage each year. The more money we can leave in the pockets of residents, the better shape our state will be in for future generations.”