New York Tax and Budget Deadline Converge With Cuomo Scandals

(Bloomberg) -- Emboldened New York lawmakers could take on a politically weakened Governor Andrew Cuomo to push their own budget agenda, including a more progressive tax policy targeting the ultra-wealthy.

With just four weeks until the state budget deadline, many Democratic lawmakers have been eyeing a tax package that would go further than the hike on high-income earners that Cuomo proposed in his worst-case-scenario executive budget. The Legislature also could pressure Cuomo to send additional recreational marijuana tax revenues to communities hardest-hit by anti-drug laws, said Assemblyman Ron Kim, a Queens Democrat.

“I think the Legislature is going to seize the moment to set the priorities,” said Democratic state Senator Brad Hoylman. “They're not going to come from the governor. This is a chance for us to look at fixing decades of under-investment in infrastructure, schools, arts and protecting the most vulnerable.”

Cuomo and his administration face federal investigations for how the coronavirus spread in nursing homes was handled. Lawmakers have blasted the administration for withholding data showing the true extent of the Covid-19 death toll in nursing homes.

In the latest twist, Cuomo's administration said Thursday that officials had altered a July report of data on Covid-19 deaths of nursing-home residents to exclude those who died outside the facilities. The administration was responding to reports in the New York Times and Wall Street Journal that said these changes show that the state Health Department had a fuller accounting of nursing-home deaths at the time, the papers said. Cuomo's office had resisted requests from lawmakers and the media for that data.

“While early versions of the report included out-of-facility deaths, the Covid task force was not satisfied that the data had been verified against hospital data and so the final report used only data for in-facility deaths, which was disclosed in the report,” Health Department spokesman Gary Holmes said in response to the Times report.

The governor, a third-term Democrat, also is facing a sexual harassment investigation, conducted by an outside attorney selected by the state attorney general, into allegations from two women who worked for him. A third woman says Cuomo, 63, inappropriately touched her at a wedding.

The dual scandals have also revived talks of challengers to Cuomo in 2022, when the governor is up for re-election. John Catsimatidis, a Republican whose Red Apple Group owns the Gristedes supermarket chain, told the New York Post on Thursday that he is mulling a gubernatorial run. Catsimatidis had been looking at another run for New York City mayor but could now switch gears. “We have to fix our city and state,” he said in a later interview with Bloomberg.

Budget Priorities

No one is reveling in the governor's problems, but to the extent that they allow the Legislature to reset priorities for spending, “that's a good thing,” Hoylman said.

Cuomo, in response to a growing list of state lawmakers who have called for his resignation, on Wednesday said he would not step down, and apologized for making the women feel uncomfortable. He denied touching anyone inappropriately.

Lost in the talk of scandals surrounding Cuomo, the state's $193.3 billion spending plan for fiscal 2022 and a projected $10.2 billion gap have been footnotes to the conversation in recent weeks.

“Our focus shouldn't be: When will the next allegation come out,” said Senator Gustavo Rivera, a Democrat who chairs the Senate health committee.

Rivera, who has called for Cuomo to resign, said he would rather discuss proposed cuts to hospitals and Medicaid, but “instead I'm talking about whether he's a creep.”

There may be an opportunity in the chaos, however, for lawmakers to push more of their own agenda in state budget negotiations. “His individual leverage would be lessened by the fact that he's trying to manage his crisis and his reputation,” Rivera said of Cuomo.

Unbalance of Power

The state constitution gives the governor final say over the budget; lawmakers can remove or reduce spending on items with the governor's approval. Budgets are expected next week, kicking off negotiations in earnest.

The lion's share of negotiations take place behind closed doors among Cuomo, Assembly Speaker Carl Heastie and Senate Majority Leader Andrea Stewart-Cousins, all Democrats.

“Under normal times, the effectiveness of the governor is at least partially tied to how popular they are,” said Craig Burnett, associate professor of political science at Hofstra University. Cuomo can raise money for himself and others, and he can support a candidate who might be running against a lawmaker, Burnett said, all of which can influence inside negotiations.

But, Burnett said, Cuomo's popularity will likely take a hit as the investigation drags on, weakening his position.

“The Legislature, I think, is emboldened by all of this and certainly the rank-and-file legislators are clamoring for action,” said Blair Horner, executive director of the New York Public Interest Research Group. They could influence where dollars are spent, and non-budget policy that's embedded in the budget, he said, adding that a lot still depends on how much the state receives in federal aid.

Rebuking Cuomo

The Legislature flexed its muscles this week, introducing legislation to repeal temporary emergency powers afforded to Cuomo at the start of the pandemic. The bill is expected to be acted on as early as Friday.

This newfound legislative strength is going to continue through budget negotiations, “because we now have supermajorities in both houses and a governor that's mired in scandal,” Hoylman said. The supermajority allows the Legislature to override a Cuomo veto.

The state needs sustained revenue to rebuild the economy, he said. Hoylman said he hopes leaders seek a package of revenue raisers that injects sustained investment in health, education, and housing.

The Legislature also is likely to refuse when it comes to last-minute additions from the Cuomo administration, which in the past have come in the middle of the night as the bills are printed, giving lawmakers little choice in passing them. The government would shut down if the budget isn't passed by deadline.

“There's a lot of eyes watching the budget process, so I don't think the executive would put in at the last-hour toxic bills, like corporate immunity,” Assemblyman Kim said.

The administration last year added a controversial law providing civil liability protections to nursing-home and other health-care workers during the pandemic.

“I think there will be much more transparency and accountability,” Kim said.

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