Federal aid will determine NY’s budget; Cuomo threatens to sue without $15 billion

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Andrew Cuomo NY

Gov. Andrew Cuomo provides a coronavirus update in Albany, New York, on Oct. 21, 2020.

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ALBANY, N.Y. — It’s the tale of two budgets: Gov. Andrew Cuomo on Tuesday unveiled dual proposals for the fiscal year that account for the best and worst case scenarios New York could face depending on how much federal aid the state receives.

The caveat? If Congress does not send what the governor outlined as his best case scenario — $15 billion in unrestricted emergency COVID-19 aid — he will sue.

President-elect Joe Biden’s $1.9 trillion “rescue plan” to beat COVID-19 and steady the economy includes $350 billion in aid for state and local governments. If Congress approves the plan, Cuomo said the next question would be how much is distributed to each state.

New York is facing a dramatic loss in sales and income tax revenue in the wake of sweeping COVID-19 restrictions that jettisoned last February’s budget projections. The state is currently staring down a massive, “unmanageable” budget deficit of $15 billion, the governor said.

Cuomo’s worst-case-scenario budget counts on receiving at least $6 billion in COVID-19 aid. Closing the budget gap would require everything the state could do: billions in funding cuts to education, health care and social services; raising income tax; and significant borrowing.

“It would hurt New York dramatically and it would delay recovery,” Cuomo said of the prospect.

The governor called his second budget proposal, relying on $15 billion in federal aid, a “modest request” given all that the state has endured both through the pandemic and President Donald Trump’s four-year administration.

Cuomo has often criticized Trump’s administration for using New York as a “political pinata.”

A $15 billion shot in the arm from the federal government would allow New York to move forward with many pre-COVID budget proposals — a middle class tax cut, among them — and restore funding for education, health care, and other government services.

Cuomo also renewed his call for Congress to repeal a Trump-era reform to the SALT Act, which he said would return about $12 billion to the state.

The federal Tax Cuts and Jobs Act of 2017 eliminated full deductibility of state and local taxes and capped those deductions at $10,000. Cuomo said the reform amounts to the first double taxation in history and has cost New Yorkers $30 billion over the last three years.

The governor said if Congress and the Biden administration do not give New York what it needs to avoid drastic cuts, he will pursue litigation.

“Yes, Trump is gone but the damage to New York remains,” Cuomo said, adding that it’s the federal government’s responsibility to fix it regardless of who is at the helm.

Cuomo and state legislators have until April 1 to approve a 2021-22 fiscal budget.

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