NEW YORK (Reuters) - New York Mayor Michael Bloomberg vowed on Wednesday not to raise taxes, despite a significant budget gap that must be closed for the upcoming fiscal year.
Bloomberg made the pledge a day after New York Governor Andrew Cuomo announced a deal with the legislature that would raise the state’s top income tax rate for those earning more than $2 million a year, while cutting taxes for those earning $40,000 to $150,000 a year.
“We are still in the process of implementing $2 billion annually in cuts, and we still have a significant deficit to look at, but we’re working on that, and we have no intention of raising taxes,” Bloomberg said.
New York City’s $66 billion budget for the current fiscal year, which ends June 30, is balanced, but the city faces around a $2 billion deficit for the next fiscal year, partly because of the struggles of Wall Street, the city’s economic engine.
A hitch to the mayor’s financial plan for next year arose on Wednesday when the governor did not send an amendment to the legislature for a bill that would raise $1 billion for the city through the sale of more taxi medallions.
A Cuomo spokesman had no immediate comment. The governor and mayor have clashed over how many of the new taxis should be modified so that they can easily handle wheelchairs.
Micah Lahser, director of state legislative affairs for the city, in a statement said: “While the mayor, along with legislative leaders, was prepared to support that amendment, it is not necessary to achieve the goals of the legislation.”
If the state legislature, as expected, swiftly enacts the deal thrashed out by Cuomo and lawmakers, New York City will benefit indirectly because greater revenue for the state will minimize the need to cut aid to municipalities.
Cuomo’s deal to raise the state income tax for top earners was an about-face for the governor.
Bloomberg has repeatedly warned that raising taxes on the wealthy would cause them to move out of the city to nearby, lower-tax locations in the Tri-State area, which includes New Jersey and Connecticut as well as New York.
Under the deal announced by Cuomo, the top income tax rate in New York state would be 8.82 percent, compared with a top rate in Connecticut of 6.7 percent.
In New Jersey, where Governor Chris Christie allowed temporary income tax increases to expire and has blocked the Democratic-led legislature from raising rates, the top income tax rate is 8.97 percent.
Reporting by Chris Francescani and Joan Gralla; Editing by Leslie Adler and Andrew Hay