Three questions for Cuomo’s budget address

Gov. Andrew Cuomo is giving his annual budget address Tuesday in Albany amid a number of challenges to making legislative deals on some big fiscal and policy issues.

The new budget will detail the governor’s approach to addressing a $6 billion budget deficit as well as how he intends to pay for the legislative agenda he unveiled at his Jan. 8 State of the State address without raising taxes. There will be plenty of give and take in the coming months with lawmakers, but the governor’s budget – which he will unveil at 1 p.m. at The Egg on Empire State Plaza – will provide a framework for upcoming negotiations between the governor and legislative leaders as they work towards reaching a budget deal before an April 1 deadline. 

Assembly Speaker Carl Heastie has suggested that tax increases should be considered before spending cuts. State Senate Majority Leader Andrea Stewart-Cousins, however, has emphasized that tax increases are best avoided. Cuomo is also insistent as ever on sticking to a 2% cap on spending increases. 

Much remains to be determined, but budget negotiations start with the release of Cuomo’s spending plan. Here are three key questions to keep in mind. 

Where is he going to find $6 billion?

Perhaps the biggest question concerns how Cuomo is planning to close the deficit. At the heart of the issue is a philosophical debate about whether the deficit represents a spending or revenue problem. The answer to that question depends on who you talk to, but Cuomo and lawmakers will likely end up addressing the deficit through a mix of spending cuts and revenue increases. An audit by the office of state Comptroller Tom DiNapoli finds $790 million in potential savings by cutting Medicaid payments and getting rebates from drugmakers.

The governor has already signaled some ways of how he will close the deficit, which has been largely blamed on increased Medicaid spending. Plans are already underway to deal with this year’s $4 billion shortfall in Medicaid funding by shifting $2.2 billion in payments from this fiscal year into the next. If Cuomo opts to do that again, that could deal with about a third of the upcoming year’s deficit. Cuomo could also make cuts to Medicaid spending and he suggested at his State of the State that he will try to make local governments pay a bigger share of Medicaid. That could give him another $2 billion or so to work with. 

There are ways to raise revenue in the years to come without increasing existing taxes. Significant amounts of revenue could be raised through expanding gambling in the state, legalizing recreational marijuana (though revenues would take time to materialize) or other means. If Cuomo and lawmakers get really lucky, tax receipts will continue to exceed projections. That alone has given the governor an extra $1.3 billion to work with in the past week. Last year showed though that revenues can also be less than expected, which created an unexpected multi-billion shortfall last year. 

How is Cuomo going to realize his policy agenda?

A lot of the ideas that the governor proposed in his State of the State address have little to no budget impact. This includes cracking down on vaping products, banning sex offenders fromNew York City subways, and even letting more people have a beer while they watch a movie. New York state law allows these proposals to pass along with the budget. This dynamic not only lets the governor – who has formidable budgetary powers compared to the state Legislature – pass a lot of legislation at once, it also allows lawmakers to avoid tough votes on controversial issues. They do this by saying that they had to vote for the budget, despite their objections to specific proposals, because they wanted to keep funding schools and the like. 

The governor’s fiscal plans will also reveal how he wants to pay for proposals that do have fiscal implications – like his vow to increase spending for homeless services. Public authorities have already been given a big role in pursuing some policy goals, such as redeveloping the Erie Canal, which will allow costs to go on the budgets of each authority rather than the state budget. Once the Cuomo administration releases the actual legislative language that would enact his budget, the political feasibility of his proposals will be easier to assess.

What will lawmakers do?

If the past is a guide, Heastie, Cuomo and Stewart-Cousins will hammer out a budget behind closed doors sometime towards the end of April. But a lot goes into reaching that point. Cuomo wants to enact his policy agenda and close the deficit as he sees fit. The two legislative leaders also want their way and they have to represent the wishes of their respective Democratic conferences. 

Some Democrats want to raise taxes on the rich. Others lawmakers want to limit taxes as much as possible. Many Democrats want big increases in education funding. But that idea is opposed by Cuomo – and not just because of the budget deficit. Most Democrats support legalizing recreational marijuana in principle, but there are a lot of outstanding issues to resolve before the idea can pass the budget process. Ditto for lower-profile issues like legalizing gestational surrogacy. 

A lot of these issues come down to the specific phrasing of the forthcoming budget bills. Lawmakers might reconsider their opposition to raising taxes if its effect on their constituents doesn’t pose a political danger to them. Others might drop their opposition to one policy proposal or another if they get what they want elsewhere in the budget. Some issues, like bail reform, do not even need to be in the budget to affect the political mood within the Capitol – though some lawmakers undoubtedly wouldn’t mind it being there in the end.