Fiscal Year 2020:
- Mujica highlights Medicaid, record school funding, then the consequences of the COVID-19 pandemic
- Consequences: $63 billion revenue loss, general fund & executive budget losses, and lost tax receipts
Economic Outlook for 2021:
- Mujica "sees a long road" before we restore employment levels
- Mujica reiterates the need for Federal funding
- There was a $8.2 billion revenue shortfall this year
- Real GDP is projected to return to normal levels by the second half of 2021
- The state is facing a $14.9 billion deficit
- Revenues into next year will be lower than they were in FY 2020
Tools for Controlling Spending:
- DOB can establish a process for permanent spending cuts and withhold spending to local aid
- The state preserved cash, fully-funded COVID expenses, and funded nearly all of school aid
- The state established a hiring freeze, froze pay raises, and temporarily withheld certain payments
- Spent less in 2021 than in 2020
FY Gap Closing Plan:
- Federal funds to offset spending, other spending reductions
- The budget presents two options to the Federal Government:
- Deliver $15 billion
- Fail us, deliver $6 billion
- New revenue sources:
- Mobile sports betting
- Adult-use Cannabis
Risks:
- SALT cap
- Sustained telework likely to continue
- Uncertainty around commercial real estate (18% drop in 2020)
- Pocket recessions (MTA, clothing retailers, restaurants)
- Revenue sensitivity to volume of commuters
- New Yorkers left during COVID - if/when will they return?
Q&A:
Will the Governor have a millionaire’s tax/stock transfer tax if the Federal Government provides $15 billion?
- Mujica: some tax proposals in the legislature are unconstitutional
- People can do business anywhere, so these proposals will encourage people to move
- There won't be a need to raise taxes if NY receives $15 billion
How optimistic is Mujica about getting $15 billion?
- Mujica: the budget currently assumes NY will receive $6 billion minimum
- $15 billion is fair because NY was impacted by COVID more than other states
- This presumes that the federal Government acts, but the federal Government has already waited a long time to act
- If they don't act by March 31st, the state will need to have contingencies
On Education, what is the difference between current education numbers and numbers if the federal Government provides more?
- Mujica: The state will not have to reduce school aid funding
- Every district is getting either flat-funding or an increase
What budget actions will take priority?
- Mujica: The Governor will have to work with the legislature and consider what will hurt the state the most
- Do we want to increase/decrease competition with other states?
- We have reduced workforce and spending dramatically without severe drawbacks
On having the highest taxes in the nation, why put that on the table?
- Mujica: the gap is $15 billion, DOB is proposing a tax identical to what the legislature posed
- It doesn't make sense to pass a tax before you know what the need is
- It is unfair to tax New Yorkers when NY annually gives more to the Federal Government than it receives
- It is a small portion of a $15 billion gap closing plan
Can we expect a 30-day amendment to this plan and how is the state funding the infrastructure plan?
- Mujica says they are not expecting amendments at this time
- Roughly 25-30% is public funding, the rest is private
On the $15 billion, is that for the current FY or 2 years?
- Mujica: we have to spread it out over multiple years (this year and the year after)
- It's not even half of the revenue loss, there's a lot of risk
On COVID recovery programs, does that depend on federal aid?
- Mujica: if the state does not receive $6 billion, we would have to revisit these programs
- There is a contingent appropriation if the Federal Government provides $15 billion
Run-down of how much NY has used in federal aid
- Mujica: $2 1/2 billion from the coronavirus relief fund and $500 million from FMAP (increased reimbursement for Medicaid)
On CLCPA, does this budget have an impact on the time table?
- Mujica says there is no slow-down
- Assuming the Federal Government provides at least $6 billion, there will not be an impact
On Governor's briefing, on what grounds would the state sue? What if the state receives federal funding?
- Mujica: we should focus on the fact that the Federal Government knew that COVID would come from Europe and that NY was a port of entry
- The lawsuit is based on the impact of SALT on the state and whether or not taking SALT away from only a few states was fair
How would small business tax credits work?
- Mujica: $5,000 credit per employee to encourage hiring back workers
- $50,000 per business for re-hiring
- Advanced funding for restaurants in areas where prohibitions remain in place
On debt picture for the state, why not propose $3 billion bond act nor additional revenues from renewable energy/taxing fossil fuel?
- Mujica: new taxes are targeted towards the wealthy
- Carbon credits are an option, but with record unemployment, now is not the right time
- $3 billion bond act depends on an agreement with the legislature
Is there language in the budget that will restore the Governor's emergency powers?
- Mujica: No, there is not
- If we do not get at least $6 billion, there are automatic triggers in place for reductions to the budget
On state court system, there are plans to force out old judges. Will the state court system continue to face a budget shortfall if the Federal Government provides aid?
- Mujica: the executive can't cut the judiciary's budget, which is the legislature's role
- The judiciary was asked to use their discretion
On health care and education cuts, why not move forward with the
1115 waiver?
- Mujica: the Trump administration has been hostile towards most proposals, but now the 1115 waiver is an option
If NY receives $15 billion, will there be a middle-class tax cut and how will this affect school aid?
- Mujica: Yes, and most districts would receive an increase in funding
