As we move into mid-March, the New York state legislature is now fully entrenched in New York's budget season, which will culminate in a final budget agreement on April 1. In late February, the Assembly and Senate released their respective revenue forecast reports for the state’s upcoming fiscal year. In the past week, two issues have risen to the top as the hottest budget-related policy items—the paid family leave and minimum wage increase proposals that were included in the governor's executive budget proposal back in January. Legislative "one-house" budget proposals are expected any day now, which will establish the framework for the negations between the leadership in the Senate and Assembly and the governor in the final weeks ahead.
Legislative revenue forecasts
In late February, the state Senate and Assembly released their respective revenue forecasts for the end of this fiscal year and the coming one, which begins April 1. The Republican majority in the state Senate projected there was an additional $752 million, while the Democratic majority in the Assembly projected an extra $679 million. Meanwhile, the Democrat minority in the Senate forecast an additional $181 million, while the Republican minority in the Assembly estimated an additional $55 million. After a legal process that included meetings between respective legislative leaders, the state lawmakers agreed on a consensus revenue forecast of $225 million more revenue than the Cuomo administration had projected. While this forecasted revenue surplus will almost certainly be reflected in the "one-house" budgets to be released any day now by the Senate Republicans and Assembly Democrats, it is only a rounding error relative to the state's $140 billion budget. One-house budget proposals are due to be passed by March 14.
Hot button issues
The paid family leave and minimum wage proposals at the core of the policy provisions in the governor's budget appear to be developing into potential sticking points in the upcoming budget negotiations. The proposals are expected to receive widespread support from the Democratic-dominated Assembly, but will almost certainly receive pushback from the Senate Republican leadership at the negotiating table.
The governor's paid family leave proposal calls for up to 12 weeks of employee-funded paid leave to allow individuals to care for ill family members. The plan calls for employees to contribute to a fund through weekly paycheck deductions starting at 70 cents and increasing to $1.40 when fully implemented.
The Assembly has passed its own proposal in past years which also calls for up to 12 weeks off; however, the program would instead be funded by employee paycheck deductions through the state’s Temporary Disability Insurance. Senator Jeff Klein, the head of the Republican-allied Independent Democratic Conference (IDC), also introduced his own paid family leave proposal that goes further than the governor or the Assembly proposals—including provisions that would allow employees to earn two-thirds of their average weekly wage by 2017. Senate Majority Leader John Flanagan (R) has publicly stated that his members are "highly sympathetic" to the issue; however, he has cautioned that his members still have questions about the policy.
The governor's minimum wage proposal, which would gradually raise the minimum wage to $15 an hour in New York City by 2018 and elsewhere in the state by 2021, is also developing into a potential sticking point for budget negotiations. The governor is in the middle of a state-wide tour, holding a series of rallies across the state in an attempt to garner support for both the minimum wage and paid family leave proposals. The minimum wage proposal has received strong resistance from certain members of the Senate Republican Conference as well as an array of business groups.
Finally, both the Senate and Assembly will be advancing their own policy priorities in their soon-to-be-released "one-house" budgets. Senate Majority Leader Flanagan recently unveiled a collection of tax credits and cuts that will be included in their budget proposal. The plan would trim middle-class income tax rates, which are scheduled to re-set in 2018. New Yorkers reporting between $20,000 and $200,000 in income would see a slight increase in their rates, with those reporting over $1 million seeing a significant cut. The Senate Republican proposal looks to reduce the tax rate for single New Yorkers reporting between $20,000 and $150,000 to 5.14 percent from either 6.45 or 6.65 percent in the long term.
In the other house, Assembly Speaker Carl Heastie's (D) Democratic Conference submitted a bill that would increase taxes for millionaires and create an even higher tax bracket on New Yorkers reporting over $5 million in income. Both Heastie and Flanagan have indicated that their tax proposals will be included into one-house spending resolutions.
As expected, the governor's budget proposal to shift substantial portions of the cost of the CUNY system onto New York City was met with stiff resistance from the downstate-dominated Assembly. This week, the Assembly announced that their one-house budget would reverse the governor's proposal to shift $485 million of state support to the New York City budget. The Assembly proposal would also freeze tuition for the next two years.
The Assembly also indicated this week that the education tax credit, which would create a credit for donations to schools and scholarship funds, would not likely be included in the Assembly’s one-house budget. The proposal, championed by Senate Republicans and included in the governor's executive budget, has traditionally met resistance from pockets of the Democratic majority in the Assembly. Senate Majority Leader Flanagan has also made clear that he is not willing to pass the Dream Act, which would extend college tuition assistance to undocumented immigrants, in exchange for the controversial education tax credit. With both legislative leaders digging in on the two high-profile education policy proposals, it is expected that neither issue will make it into the final state budget.
The next three weeks will be consumed by budget negotiations, as the leadership in the Senate and Assembly huddle with the governor in an effort to iron out a final budget before the April 1 deadline. Early indications of the direction of the negotiations will be provided in the legislative "one-house" budgets due March 14. The Dentons New York Public Policy Team will be following developments closely and will be providing weekly updates from Albany, so stay tuned.