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New York governor and lawmakers reach budget deal
New York Governor Andrew Cuomo presents his 2011-12 budget proposal in Albany, New York February 1, 2011.
Credit: Reuters/Hans Pennink
NEW YORK |
NEW YORK (Reuters) - New York Governor Andrew Cuomo and top lawmakers agreed on Sunday evening to a $132.5 billion budget that includes massive spending cuts and possibly 9,800 layoffs for state workers to bring some order to the cash-strapped state's finances.
The fiscal 2012 budget is largely a victory for the freshman governor, a Democrat who utilized a number of unique tactics and raised the specter of a government shutdown in order to convince lawmakers to make steep cuts to schools and the state's Medicaid program.
The six percent cut in the state's work force -- to be implemented if public employee unions don't concede $450 million in savings -- is the result of Cuomo's opposition to raising taxes to fill a $10 billion deficit.
The budget cuts overall spending by 2 percent.
New York is one of several big U.S. states working their way through the worst budget crunch in decades after the 2008 financial crisis and resulting recession squeezed tax collections, forcing tough decisions across the nation on spending. As the home of Wall Street, New York was among the hardest hit in the credit crisis.
Cuomo's anti-tax stand contrasts with strategies of some other cash-poor states, such as California and Connecticut, where governors want to raise some taxes. Illinois in January raised personal income taxes 67 percent to shore up what many consider the weakest state finances in the nation.
"I have said that New York is at a crossroads -- one road leading to further dysfunction and decline, the other toward fiscal responsibility and government efficiency. I believe this budget puts us on the right path," Cuomo said.
Cuomo and lawmakers said a handful of details still needed to be worked out, but that the complete budget would be voted upon by its April 1 deadline, and perhaps one day earlier.
Albany has not seen an early budget since 1983, when Cuomo's father, Mario Cuomo, was serving his first year as governor. Last year's budget was passed in August.
One of the few concessions made by Cuomo was the rejection of a proposed $250,000 cap on non-economic medical malpractice damages. The cap was supported by the Senate's Republican majority, but strongly opposed by Assembly Speaker Sheldon Silver.
$15 BLN MEDICAID SPENDING CAP
Other health care proposals by the governor, including a $15 billion cap on annual Medicaid spending and an increase in the minimum wage for health care workers, are in the deal.
"We were able to achieve critical restorations which will soften the cuts affecting working families, our senior citizens, our most vulnerable populations and the children in our classrooms," said Silver, who has been at the helm of the Democrat-dominated Assembly since 1994.
Cuomo had proposed a $1.5 billion cut in state aid to schools, but the deal includes the restoration of $272 million. That includes a partial restoration of the $98 million to fund private schools for deaf and blind children that Cuomo had sought to shift to local school districts.
A proposal to eliminate 3,700 prison beds, mainly in upstate Republican districts, will also be in the final plan. The Senate GOP had sought changes to the plan, which will give Cuomo the power to decide which prisons to close, but those attempts were spurned.
Senate Majority Leader Dean Skelos, a Republican, did not immediately address the prison plan, saying only that he was pleased that some cuts to higher education had been restored.
"This budget agreement keeps our commitment to reduce spending, cut taxes and empower the private sector to create jobs, and will begin to put New York on the path to fiscal recovery," Skelos said.
Policy changes folded into the budget will tie education spending in future years to growth in personal income -- currently about 4 percent -- and increases in Medicaid spending to a national health care index.
Those moves, Cuomo said, decrease the projected budget gap for fiscal year 2013 from $15 billion to $2 billion.
The plan will also merge the existing Departments of Banking and Insurance into a Department of Financial Services with greater regulatory muscle on Wall Street.
"I hope this is a template for a new era of cooperation and productivity between the executive and the legislature," Cuomo said.
(Editing by Chris Sanders and Todd Eastham)
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1) Exxon Mobil made $19 billion in profits in 2009. Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings.
2) Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.
3) Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.
4) Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009.
5) Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year.
6) Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction.
7) Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department.
8) Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury.
9) ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2007 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction.
10) Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.
@Taxpayer101…please read article completely before commenting next time…”The six percent cut in the state’s work force — to be implemented if public employee unions don’t concede $450 million in savings –”…He is only making the job cuts if the workers (unions) dont agree to the cuts/increased pay into health/pension. Now you amy not agree with this but your statement of “Lets pat the back of someone who just made 10,000 people unemployed, GOOD JOB!” is just plain wrong.
Now IMO some revenue should be added, but I still think this type of leadership should be applauded, negotiation and give and take is part of governing effectively. Many other Republican/tea party governors, most notably WI’s, MI’s and OH’s, need a lesson in this.
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