January 19, 2021
Following is a very limited summary of some budget proposals discussed in the Governor’s Budget Briefing book that we shared earlier today. Below the summary is information from the Governor’s Budget Briefing today.
Unfortunately the actual budget bills have not yet been posted to the DOB website, so our analysis is limited at this time.
Here are a few highlights from the Budget Book:
- Withholds: See the attached slide. The Budget Director discussed the fact that NYS has withheld $2.9B as of 12/2020. Some economic indicators are better than expected and so, absent the full $15B in federal funding the state expects to reduce local aid payments by 5%, not 20%. If enactedthe withholds will be reconciled and repaid in the final quarter of SFY 2021.
- Establish Crisis Stabilization Centers. The Budget authorizes the launch of Behavioral Health Crisis Stabilization centers. This effort will streamline stabilization and reintegration for individuals in crisis. Unclear as to whether the proposal will be for these centers to be run by voluntary providers, or the state/counties.
- Convert Rockland Children’s Psychiatric Center (PC) to a Comprehensive Children’s Center. The FY 2022 Executive Budget includes a plan to develop an innovative, voluntary-operated center for children and youth in need of brief, intensive community-based care, including residential treatment. This will provide much-needed community-based and home-based care for youth in this region.
- Create an Office of Addiction and Mental Health Services.
- The budget proposal also instructs OMH, OASAS and DOH to establish a single, integrated license for outpatient mental health, addiction, and physical health services.
- State Takeover of Local Medicaid Costs. The Budget continues the Governor’s commitment to relieve local governments of Medicaid expenditure growth.
Legalization of Marihuana: Creates a regulatory system to control the cultivation, distribution, marketing and selling of the drugs to people age 21 and over. Cuomo Budget Director stated marijuana market won’t be fully mature for four years from enactment of this provision. Cuomo stated verbally that he is inclined to earmark $100 million to a “social equity fund” with the remaining $250 million going to the state’s general fund.
Mobile Sports Betting: Cuomo also included in his budget the legalization of mobile sports betting run through computer servers at several upstate commercial casinos and Native American-owned casinos. It could bring Albany $500 million annually.
The Governor Cuomo went into great detail during his budget presentation regarding what would happen if the federal government fully funds NY’s ‘ask’ for $15B from the total $350B President-elect Biden will propose as part of his American Recovery act.
$15B could be used in areas including (but not limited to):
$130 million Pandemic Recovery and Restart
- $50 million for a small business rehiring credit
- $50 million to aid impacted restaurants
- $30 million to aid musical and theatrical productions
- Continues to pay for $1.6 million additional recipients added to Medicaid rolls since 2012
- $100 million for 400,000 low income New Yorkers
- $420 million for services for essential plan enrollees
- $200 million for essential plan quality pool
- $1.3 billion to address rental assistance crisis
- $250 million for a 15 year goals of 20k affordable homes with supportive services, with some 7,000 already created
- $128 million for Homeless Housing and Assistance Program (HHAP)
Miscellaneous to include:
- $15 dollar/month cap on broadband service
- $ 150 million to address food insecurity
- $600 million for state labor agreement
- Restore 5% across the board reductions $ 900 million
- Implement a middle class tax cut at $400 million
Notes from the Gov’s Budget Presentation today:
Governor Cuomo Presents Overview of 2021-22 Executive Budget
Governor Cuomo presented his 2021-2022 Executive Budget proposal this morning in Albany. While we expect more details to come as the budget is published tonight, below is a summary of the Governor’s presentation.
The Governor began his presentation by noting that this budget is defined by COVID-19 and the reconciliation of responsibility for “the battle” and winning the war on the pandemic while next year will be about reconstruction post-pandemic. “The bill for the battle has come due and the question is who is responsible the fiscal liability and responsibility.”
Uniquely the Governor said his budget will include appropriations with two options – one assuming with $6 billion in Federal aid to NYS, and the other with $15 billion in Federal Aid coming to NY, which we detailed BELOW. NOTE: Both scenarios address the $15 billion current state budget deficit and $39 billion four year deficit.
The Governor tallied the cost of COVID-19 on New York State to $15 billion, which “is beyond what we can do” and will need assistance from the federal government through the “American Rescue Plan” which includes funding for testing, vaccines, schools, stimulus and $350 billion in aid to state and local governments. The distribution of the $350 billion is not yet known, but the budget is dependent on how much New York will receive. The budget has been constructed on two scenarios: one with the state receiving $6B in federal aid, the other on the state receiving $15B in federal aid.
In the $6B scenario, which the Governor deemed the “worst case scenario”, the state would only receive about 1.7% of the federal state and local aid. Should that happen, the state would need to raise revenue, cut the budget and borrow money to generate the remaining $9 billion in needs. Cuts would include $2B in school aid, $600 million in Medicaid as well as $900 million in across-the-board cuts.
In addition, the State would be forced to move the top income tax rate to 10.86% for the State and to 14.7% rate for NYC residents.
The Governor also repeated his pledge to legalize sports betting which can raise $500M, and legalize adult-use cannabis which will bring in $350M with $100M going to a social equity fund.
The Governor continued his presentation calling on the repeal of the cap on SALT deductions. Additionally, if Washington does not provide New York it’s “fair share” of $15B the Governor announced that the state will pursue litigation.
Finally, should the budget not be completed by April1, there will be no pay raises for the Executive and Legislative branches. The Governor concluded his budget presentation with optimism that the federal government under the incoming Biden Administration, incoming Senate Majority Leader Chuck Schumer and Speaker Nancy Pelosi will deliver for New York.