Progressives see budget windfalls among Cuomo scandals

With dual nursing home and sexual harassment scandals engulfing Gov. Andrew Cuomo, combined with still-high rates of COVID-19 and a sometimes chaotic vaccination program, one might forget that a state budget is due in less than a month. This budget season may present an unprecedented opportunity for Democratic supermajorities in both chambers to flex their influence in the traditionally executive-heavy process. But even with an emboldened Legislature and a potentially weakened governor, Cuomo still holds most of the cards in negotiations. 

Much remains unknown about this year’s budget dealings, and not only because the state is in such unprecedented times. Neither chamber has even passed their one-house budgets, the nonbinding resolutions in which legislative leaders lay out their own priorities and the changes (usually more spending) they want to see in the executive budget. And that’s where the negotiations between Senate Majority Leader Andrea Stewart-Cousins, Assembly Speaker Carl Heastie and the governor really begin. Until then, observers who are not in the room where it happens are really left to speculation. “We are in uncharted territory when it comes to negotiating the budget under these circumstances,” state Sen. Liz Krueger, chair of the powerful Finance Committee, said in a statement to City & State. “I’ve been around too long to think I can predict the future.”

Some observers expect something of a change in dynamics between the Legislature and the executive branch. The budget is generally where the governor has the most control during the legislative year and where he attempts to pass his own biggest policy agenda items. But some on the left are hoping that the new supermajorities and the scandals will embolden legislative leaders during the budget process to pass priorities for the Democratic caucuses – which lean a bit to Cuomo’s left – including higher taxes on the rich and legal marijuana. “It seems that both Leader (Stewart-)Cousins and Speaker Heastie are kind of comfortable going beyond what the governor has proposed,” said Charles Khan, organizing director for the Strong Economy for All Coalition, which advocates for new taxes on the wealthy. “They're really leaning, in ways that they haven't before, into their own leadership.” Khan referred specifically to Stewart-Cousins’ call for Cuomo to resign, and Heastie’s statement soon after that echoed her sentiments, although he did not explicitly call for resignation. And before that, they reached an agreement – albeit one that was still viewed as a compromise between different factions of their chambers – to curtail some of Cuomo’s expanded pandemic authority. Now Khan is hoping legislative leaders will push the governor on some of the new taxes, including a wealth tax and tax on second homes, as part of the budget. “Cuomo is in his weakest bargaining position that we've ever seen him in – kind of unimaginable the way it looked a couple months ago,” Khan added.

Melissa Moore, state director at the Drug Policy Alliance, is hopeful that Cuomo’s vulnerability will help get the Legislature’s version of marijuana legalization passed, which still remains quite different than the governor’s version on issues of social and racial justice. The governor for the first time this year committed to using a portion of tax revenue to reinvest in communities harmed by prohibition, a significant shift on his part, but legalization advocates have said his proposal still falls short. “It seems as though there is a shift in the tenor and in the dynamics from where we generally would be,” Moore said. “I think the next few weeks are going to be wildly interesting.” Assembly Majority Leader Crystal Peoples-Stokes, who sponsors the bill to legalize marijuana, recently suggested that it could get passed before the budget. “That’s how close we are to completing a deal” with the governor, she told The Buffalo News.

For his part, Cuomo is insisting that the recent allegations of sexual harassment and the nursing home scandal will not affect his work on the budget. When asked about whether the scandals weaken Cuomo’s negotiating position, a spokesperson for the state Division of Budget referred to comments the governor made at a March 3 press conference. “I’m going to cooperate with the attorney general’s investigation and do the budget,” Cuomo said at the press conference. “Remember, we did a budget last year in the spring in the heat of COVID, where it was the most intense period of my life, of this government’s life, of this state’s life, and we did both, and we’ll do both here.” 

Camille Rivera, partner at the progressive political consulting group New Deal Strategies, said that it’s hard to deny that the governor’s position this budget season has been weakened. “It's pretty clear that the dynamics have changed and are going to change within the budget negotiations,” Rivera said. “Whether or not the governor seems to want to admit that is entirely up to him, but you're going to see a stronger and bolder Legislature.”

Before the COVID-19 nursing home death scandal really broke open, and before multiple women accused the governor of sexual harassment, there was already evidence of Cuomo at least nominally caving to legislative pressure. Since last year, both Stewart-Cousins and Heastie said they supported increasing taxes on New York’s wealthiest residents to raise money to address the coronavirus crisis and the revenue shortfall resulting from it. Through most of the pandemic, and the rest of his time as governor, Cuomo has resisted any increase in the state income tax and the slew of other taxes on the rich that some lawmakers are proposing.

He changed his tune when he presented his executive budget in January, which included a proposal to raise taxes on those who make over $5 million. It would raise $1.5 billion annually, less than any of the taxes proposed as part of the Invest in Our New York Act supported by progressives. He still expressed reluctance about the idea, but proposing it at all represented a pivot.

In January, Cuomo said that if the state got its full $15 billion request for unrestricted federal aid, then the tax hikes wouldn’t be necessary, even as legislative leaders doubled down on commitments to pass new taxes on the wealthy regardless of federal aid. Initially, he presented a budget that assumed just $6 billion in federal aid split over two years. Now, with the state set to receive about $12.6 billion, Cuomo still said that tax increases are “on the table.” E.J. McMahon, founder of the conservative think tank the Empire Center, said that now that the governor has proposed the tax hikes, and did not remove them when he submitted his 30-day amendments, they’re all but guaranteed to remain. “He proposed it as a tactic to basically – he did that as a favor to the leaders, in effect,” McMahon said. McMahon suggested that better-than-projected tax receipts in the past year and other federal dollars would have allowed Cuomo to present a balanced budget without any tax increases at all, even with a low-ball estimate of unrestricted funds. Earlier this month, a report from state Comptroller Thomas DiNapoli suggested the state could even end the current fiscal year on March 31 with a $1.6 billion surplus.

One long-time Albany insider suggested that regardless of the more recent scandals, Cuomo was always going to budge on some big-ticket progressive items, like having some sort of new millionaire’s tax, coming around to where legislators stand on marijuana legalization or breaking his own 2% cap growth of the size of the budget. But for all the talk of supermajorities and scandals, New York’s constitution still gives the governor the bulk of the negotiating power when it comes to the budget. “Regardless of all this stuff, the governor still maintains extraordinary authority in terms of the budget process,” Democratic consultant Jake Dilemani said. Even with everything happening, that doesn’t change. 

Unlike normal legislation, budget bills are written and introduced by the governor, without legislative sponsors, putting Cuomo in a position of control from the very beginning. Legislators have little recourse when it comes to changing spending bills – they can’t amend any of the language and can only add spending through individual line item additions, which are subject to the governor’s approval. And spending bills make up half the budget, with the other half, called language bills, used to make any statutory changes necessary to enact the budget. Since he’s been governor, Cuomo has used these to introduce and pass any number of high-profile pieces of his policy agenda. While lawmakers theoretically have more control over these language bills, Cuomo’s control over the actual appropriations gives him an advantage in negotiations. 

Even if lawmakers tried to push through policy changes that Cuomo doesn’t support, they would need to override his veto of the language bills. Moderate Democrats aren’t likely to want to do that, and there is no indication that the Legislature has reached the point of attempting to cut Cuomo out of the process. And no one wants to be blamed for a late budget if politics gets in the way of timely passage. “I think everyone in state government is keenly aware of the fact that they want to pass a budget, and they want to do it as on time as possible, given the situation that we're in,” Dilemani said. Spokespeople for Heastie and Stewart-Cousins did not return a request for comment for this story.

Dilemani suggested that the scandals could prove to be something of a distraction for lawmakers, eating up limited bandwidth during budget crunch time, and that some lower-tier priorities, or complex policy that doesn’t directly relate to the actual budget, could fall out of the bill as a result. That could include marijuana legalization, which has been dropped from the budget the past two years due to negotiations that couldn’t be resolved. But if issues shift away from the budget to the regular legislative process, legislators might again have the advantage of addressing them on their own. For example, both chambershave passed bills to increase oversight of nursing homes in the wake of the pandemic, something that Cuomo has also proposed getting done as part of the budget. 

Another fact to consider is that Cuomo is a masterful negotiator, and, according to McMahon, Cuomo had already begun planting seeds for greater leverage even before his scandals emerged. He pointed to a provision buried in one of this year’s spending bills. Based on existing language in Cuomo’s proposed budget, the state can only spend $6 billion in unrestricted federal aid. That amount is the estimate from the state of the minimal amount of money it would get from Washington. Cuomo balanced his budget proposal based on that worst-case assumption, but he was asking the federal government for more to reduce the use of cuts and tax hikes. The proposed budget language has a provision to appropriate an additional $9 billion, but only if the state receives $15 billion or more in unrestricted funds from the federal government. McMahon interprets that to mean that, even with the state set to receive $12.6 billion in unrestricted aid, the Legislature can’t spend a cent more than $6 billion without the governor agreeing to resubmit the bill with updated language. Power over use of that money alone puts Cuomo in a strong negotiating position. “He’s totally in the driver’s seat,” McMahon said. “He’s controlled the narrative from the start.” When asked about the appropriations budget provision, as well as the inclusion of tax hikes even with greater than projected federal aid, Division of the Budget spokesperson Freeman Klopott said in a statement: “The Governor made very clear the state … needs $15 billion from Washington. The federal legislation provides approximately $12.6 billion to the state, however we are evaluating the bill and seeking further guidance from the federal government to better understand how this funding can be used.” He added the funds are nonrecurring, and the executive branch will work with the Legislature to find solutions for the current future projected budget gaps. The combined budget hole for the current fiscal year and the upcoming one is estimated at $15 billion by the state, although other estimates are lower. 

The budget negotiation is always an opaque process, and often observers don’t know how negotiations play out until the day the budget is passed. With everything happening in Albany right now, the state budget might get less attention from outsider observers than it usually does, but for the very same reasons, it may be an especially interesting budget season to watch.