Earlier this evening, New York State Budget Director Robert F. Mujica, Jr. was a guest on Inside City Hall with Errol Louis to discuss the FY 2021 Budget signed by Governor Andrew M. Cuomo.
AUDIO is available here.
A rush transcript of the interview is below:
Errol Louis: Thank you for joining us.
Robert Mujica: Good evening, Errol. Thank you for having me tonight.
Errol Louis: I noticed that one item here that I'm sure is going to get a lot of attention is that up to $10 billion in budget cuts have been authorized in this budget although what they will specifically be is yet to be determined. How is that process going to work?
Robert Mujica: We anticipated that our revenue shortfall would be between 10 and $15 billion and what we did was we waited until last week of the budget to see if we were going to get any additional revenues from the federal government. Those didn't materialize so in the absence of that we have to recognize that we could lose between 10 and $15 billion so what we'll do is throughout the year we are going to look at revenues, look at the spending forecasts, and reduce our spending to reflect what we think the revenues are going to look like. If the federal government steps up and is able to provide us with additional revenues or our revenue forecasts are more optimistic then we will spend more but we'll have to make the adjustments as we go so there will be rolling reductions in spending as we go throughout the year and then we will either come up with a budget that's balanced at $95 billion and in the worst case scenario where we have to reduce it by $10 billion or closer to the original proposed forecast of about $105 billion.
Errol Louis: Will those subsequent cuts be done in consultation with legislative leaders or is that ultimately your call?
Robert Mujica: We'll make the first evaluation. If revenues are short then we will put together a package of reductions, we'll send that to the Legislature, they will have 10 days to review it and adopt jointly an alternative proposal. If there is an alternative proposal that works we'll execute on that proposal or in the absence of the Legislature acting then we will execute on the original proposal.
Errol Louis: As you can imagine many of my viewers are wondering or assuming frankly this is going to mean higher tuition for SUNY and cuts to SUNY, that this is going to mean cuts to K-12 education so that the $28 billion allocated for school aid isn't necessarily going to be what the local districts end up getting.
Robert Mujica: I think we have to look at this budget in the context of the overall COVID-19 pandemic. When the Governor proposed a budget in January it was balanced. We can't print money like the federal government can. We have to pass a balanced budget so we are going to operate based on the resources that we have. As it relates to school aid, as it relates to SUNY and CUNY, we're going to do our best to make sure that services are delivered. We need the federal government here really to step up and provide us with the additional resources remembering that the revenues are not coming in. We have basically, the economy is on pause as the Governor has said. People are starting to lose their jobs and this is the time we need the federal government most to step up and provide the state with the resources. This is not about State budget or State spending - this is about getting the resources we need so that we can provide the services to the citizens of New York State at the time when they need it the most.
Errol Louis: You're going into the credit markets real soon if you haven't already begin, right, in order to tide you over, since the tax deadline was pushed back there's almost a whole quarter of commercial and other taxes you're not going to be receiving. While you're borrowing the money, is it conceivable you could borrow some in order to help fill this gap?
Robert Mujica: So, we have to be careful about the choices that we make as we go forward this year. When the federal government changed the tax filing deadline from April 15 to July 15, we are going to lose about $10 billion in revenue that we would normally receive during that period. The federal government has authorized the Treasury Department to purchase state debt, so we would be able to issue some debt to tide us over until we get the additional revenues. But as far as doing long-term borrowing for current-year operating, that's not something, we have that option and we authorized that option in the budget, but it's not something that we are looking forward to doing because we really need to make sure that we are living within the budget, otherwise we create a bigger hole for ourselves next year. If we enact a budget one shots, if we don't take the reductions necessary this year, then we'll have larger gaps to deal with next year. But this could easily be solved with the federal government acting. They've acted on three bills - the first bill was a $8.2 billion, the state got $14 million. The second bill provided some money in Medicaid funding but then it had restrictions, which particularly impacted New York State. And then the third bill, which we thought would provide up to $5 billion for the state ended up providing resources only for COVID-related expenses. So, so far we don't have any money to deal with the shortfall. But there's another bill they're talking about, a fourth bill, all the leadership in Congress and the President have indicated they want to help the states, so that would be the opportunity to do so. And if they do so, then it would severely mitigate any of the reductions that would have to be made throughout the year, and that's why we crafted the budget this way.
Errol Louis: I have a question for you about the unemployment fund. At the end of 2019 we were already very much behind the eight-ball. The fund didn't have very much in it. We've now seen skyrocketing claims for unemployment. Is covering the expected shortfall in this budget? And if not. how do you plan to deal with it?
Robert Mujica: We increased the appropriations as one of the final changes that we have made In the budget in the last hour to deal with the unemployment claims. We've had over 400,000 new claims in the first three weeks of the year. We know that more are coming nationally. The numbers went from 3 million new claims to over 6 million new claims. So we increased the appropriation so that we can make sure that there's enough throughout the year so we can fund them. But also we'll be looking for the federal government, as they did after 9/11, to step up and provide the resources necessary to deal with individuals who lose their job, solely because of the pandemic.
Errol Louis: Even in such an austere budget, there are some items I wanted to call some attention to. Ten million dollars for school districts to deal with mental health services, related to the unusual and extraordinary situation in which so many kids are being homeschooled for the next few weeks if not months. I also though did want to ask you about why there are tax cuts in this budget? There are some middle class tax cuts in there where families making between $43,000, which I think everybody would agree deserve a break, but it goes all the way up to people making over $300,000 a year. Is this the time to be doing that?
Robert Mujica: So the tax cuts you're referring to, the middle class tax cuts, were enacted over 3 years ago. This is just a phase-in of those tax cuts. And what we didn't want to do, and what the Governor has insisted on, is we wanted to make sure that government was functioning now more than ever. We're continuing to enact the tax cuts that were enacted three, four years ago; as we're continuing with the spending that we've enacted over those years. As we go forward, if we have to make adjustments to things we'll look at them, but we now when people are out of work who are losing their jobs, people are home, now is not the time to raise taxes on those folks.
Errol Louis: Another piece of good news I think for a significant segment of New Yorkers is that you're capping the co-pays for those who have prescriptions requiring insulin every month. What's the expected price tag for that?
Robert Mujica: I don't have the exact price tag there, but that was also something prior to the pandemic. This is something we saw, a lot of pieces in the budget like this where consumers were being impacted by high co-pays for something that they need to survive. That's the rationale for this proposal. And again the budget reflects, it's not an austere budget. It's not a budget that is a barebones budget as some people thought that we should do. It's a budget that continues the services that New Yorkers need and reflects the challenges that New Yorkers face.
Errol Louis: Okay. Budget Director Robert Mujica, thank you for spending some time with us. I know you've been up all night, so we'll let you get a little bit of rest. Thanks for joining us.
Robert Mujica: Thank you very much, Errol. Stay healthy and be well.
Errol Louis: You too, sir.