FY 2018 Executive Budget Advances Governor’s Middle Class Recovery Act to Create Jobs and Infrastructure, Cut Middle Class Taxes and Make Education More Affordable
Spending Growth Held Below 2 Percent For Seventh Consecutive Year; State Debt Set to Decline for a Fifth Consecutive Year – First Time in Modern History of New York
Increases Education Aid to $25.6 Billion – Largest Investment in the History of the State
Earlier this evening, Governor Andrew M. Cuomo unveiled the proposed FY 2018 Executive Budget, which builds on the state’s fiscal discipline over the last six years while strengthening the middle class, reducing taxes, and making smart investments in New York's future. For the seventh consecutive year, the Budget is balanced and holds spending growth below two percent.
Highlights of the FY 2018 Executive Budget:
- State Operating Funds spending is $98.06 billion in FY 2018 – an increase of 1.9 percent. (State Operating Funds exclude Federal funds and capital).
- All Funds spending $152.3 billion for FY 2018.
- Increases Education Aid by $1 billion for a total increase of 4.1 percent, including $961 million for School Aid, bringing the new School Aid total to $25.6 billion.
- Increases State Medicaid spending under the growth cap (3.2 percent) to $18.3 billion.
- Invests $163 million to make college tuition free for middle-class families at SUNY and CUNY.
- Caps price of prescription drugs sold to Medicaid by state review board at no cost.
- Continues $20 billion investment to create and preserve 100,000 units of affordable and 6,000 units of supportive housing.
- Expands Buy American provisions to all procurement over $100,000, protecting our state’s manufacturing and construction sectors.
- Invests $2 billion over five years for the Clean Water Infrastructure Act.
- Supports New York’s middle-class families by doubling New York State Child and Dependent Care Tax Credit.
- Begins Middle Class Tax Cut for six million New Yorkers – saving households $250 on average next year and $700 annually when fully effective.
- Extends tax rate on millionaires – 45,000 taxpayers impacted, 50 percent non-residents.
A rush transcript of the Governor’s remarks is available below:
Thank you very much. First, for those of you who haven’t been here before, welcome to the Executive Mansion. There is a great sense of history here. A lot of greats have lived in this house. A lot of history and a lot of the story of New York. You can just see, by looking around this really, really beautiful house.
To Bill Mulrow and Robert Mujica and Counsel Alphonso David and Director of Operations Jim Malatras, who really worked tremendously hard and produced what I think is the best budget of my administration. I want to applaud them and congratulate them, and let’s give them a round of applause. To our Lieutenant Governor, pleasure to be with the Lieutenant Governor once again. This is now going to be her third briefing I think? She will be an expert in budget detail after this is over.
As Secretary Mulrow mentioned, I want to thank the Assembly. We briefed the Senate Republicans, we briefed the Senate Democrats in person. The Assembly was running late and we had a private briefing with them. Provided them the budget first and I want to thank them for their consideration.
I’ll go through a PowerPoint on the budget and then any questions you have, it would be my pleasure to answer. The budget obviously tracks and follows the State of the State agenda we laid out and this is a very specific, focused, target agenda. This is about helping the middle class. The middle class has felt a lot of pain for a lot of years. In real wages, they’re back to where they were twenty years ago. They’ve gotten hit on every front, and the government that was supposed to help them has become disconnected, and I think that’s what we saw throughout the Presidential Election – that’s what we saw on Election Day, and it happens to be a fact.
So, our prime focus this year is, I’m addressing the problems of the middle class, and all of the problems of the middle class. We want to cut income taxes for the middle class, reduce property taxes for the middle class, make college affordable, which is always the dream that you will be able to send your child to college and that dream has become more and more of an illusion for too many New York and American families. Creation of more jobs and reducing prescription costs, which for middle class households, poor households, senior citizens, can be literally devastating. The statewide investments and initiatives we’re pursuing are robust, but also focused. Clean Water Infrastructure Act is important to every community. Everyone will talk to you about an aging infrastructure.
We also have additional problems as we’ve seen the communities across the state with contamination of water supplies. This is especially true in Upstate New York, especially true on Long Island where you have manufacturing areas and that stain from the Manufacturing Era is still there and seeps into the groundwater. It seems like EPA is continually updating their list of dangerous chemicals and the allowable percentages. So, testing filtration to make sure water is safe and clean is important and local governments can’t do that on their own. We want to get ahead of that crisis with a $2 billion clean water infrastructure act.
Part of our strategy in developing the economy has been to find and attract the growth industries of tomorrow. That’s the story of Nano in Albany. That’s the story of photonics in Rochester. That’s the story of solar in Buffalo. We believe the life sciences field has tremendous potential for New York, building off our higher education and our hospitals which are some of the best on the planet, and we want to invest in the life sciences industry because we believe there is great potential for us there.
The Regional Economic Development Councils that have been doing great work in Upstate New York, we want to invest in another round of those economic development projects. The Environmental Protection Fund - $300 million. We have a program for college affordability, which will be the first in the nation. One of the previous occupants of this house was Franklin Delano Roosevelt. He would be proud of the college affordability program. What it says is, families up to $125,000 free tuition to a public SUNY or CUNY school, and really it’s a move towards free college overall because college is today what high school was 70 years ago. High school was free, why? Because you needed high school. If you were to be successful, you needed high school. It was not a luxury. Today, you need college. If you want to be successful, if this state wants to be successful, if this nation wants to be successful, you need a college education. Thirty years ago, we were the most college-educated population on the globe. Today we’re number eleven. College debt is crushing young people and you want to talk about the despondency of the middle class? Much of it goes back to this – that the future hope that my child is going to go to college, is no longer attainable. New York, as I said, will be the first state in the nation and we’re very excited about it.
This will continue our investment in State Parks, which also leads into tourism. Our Downtown Revitalization Initiative to revitalize many of the smaller downtown areas throughout the state. I LOVE NY, which is one of our successful stories. We invested about $150 million in I LOVE NY advertising and revenues went up about $9 billion. I’ll take that investment any day of the week. That is really in part the beauty of Upstate New York, which is where the I LOVE NY campaign really focuses. When people see Upstate New York, they love it and they come back. All we have to do is get them to go for the first time, and that’s what I LOVE NY is all about.
Empire State Trail is a proposal that we have that I’ll explain in a moment, but I’m very excited about that. It’s a riding, hiking, biking trail that will go from New York City to Canada and from Albany to Buffalo, 750 miles. You don’t have to do all 750 miles at once, but you can do it in segments. The part that goes through the Hudson Valley will go through some of the most beautiful geography on the plant. Some of the most beautiful places of history on the planet, and Albany to Buffalo, it’s a tour through the history of this nation. So, we’re very excited about that. Also, it will be an economic development generator.
Adventure New York are the DEC facilities across the state. Prescription Drugs would also be the first program like it in the country. It would have the state capping the cost of prescription drugs, which have gone out of sight, and you have many pharmaceutical companies that are raising costs exponentially, and it has a devastating cost to the health care market as well as families themselves.
We have a Buy American program, which would be the most aggressive in the country, invest in manufacturing in this country and in this state. We need manufacturing jobs. We need more manufacturing jobs. So when we get a chance to boost American manufacturing, we should.
Property taxes are the single highest tax burden in the state. It’s not even close. And I think one of the greatest obstacles this state faces, and I’ve been working on it for years. We have another way of getting at it in this presentation, which you’ll hear in a moment.
Raise the Age is to raise the age of criminal liability. New York is one of only two states that still treats 16 and 17 year-olds as adults for criminal liability, and that has to change and it has to change this year and we have more proposals.
The numbers: In an overview, the state starts with a $3.5 billion deficit. I propose funding education at $1 billion. The $1 billion is our growth cap, plus $40 million. For those of you who are new, education used to be funded at all sorts of different amounts in the past. A few years ago, we came up with a formula, an inflation formula for education and we said the state would fund education at that formula amount so local school districts across the state could then plan. This budget funds it at that growth cap which is 3.9 percent plus an additional $40 million.
The college affordability program that we spoke about is $163 million. Medicaid also has a growth formula. We increase it at the gross amount, which is 567, the remainder of the state agencies are basically flat. That’s a total state operating budget of 1.9 percent. It’s under 2 percent, which is the fiscal discipline we brought to the state and we try to bring to local governments. What they call the all funds, when you add federal funds and transfer funds, 3.4 percent.
Quick review of the spending, as I said, state operating is 1.9, Medicaid is at the cap at 3.2 percent. School aid is 4.1. I funded above the formula cap. Executive agencies, our budget is basically flat again, and remainder is basically flat. The Office of the Comptroller also comes in at 2 percent. I want to thank the Comptroller for his cooperation. The Office of the Attorney General also curbs spending and came in at 2 percent. The Office of Court Administration, I want to thank the Chief Judge, also came in at 2 percent. The state legislature is at 3 percent. I don’t control the state legislative budget, as you know. But they propose it, they submit it. They’re at 3 percent, which is obviously higher than the other offices and also higher than the benchmark that the state has set.
One of the main aspects of this budget is tax policy, and this tax policy in this budget does two things. Number one, we do not cut taxes for millionaires. Number two, we do cut taxes for the middle class. On the Millionaires’ Tax, we would extend the current millionaires’ tax rate and keep it for an additional three years. We have a $3.5 billion deficit. Frankly, we don’t have the resources to lose the millionaires’ revenue now and have this state function the way it should. The loss of revenue from the Millionaires’ Tax would be about $4 billion over two years. $4 billion is a devastating amount of revenue to lose for the state, and not only could you not do college affordability, education increase, you couldn’t do the middle class tax cut, which I think is very, very important. The Millionaires’ Tax, as they call it, is paid by 45,000 taxpayers who contribute, half of the people are not residents of the state. So you’re talking about a small number of people but you’re talking about a tremendous deficit that it would leave at $4 billion. At the same time, we do a Middle Class Tax Cut for 6 million New Yorkers. From $40,000 to $150,000, the rate would go from 6.85 to 6.45 and $150-300,000, 6.85 to 6.65. And these would be phased in and they would continue to drop as the years go on.
One third of the state budget is education. We would raise it by $1 billion. When you look at our spending over the past years, it has increased by 30 percent in just six years to the highest level in history. The people of this state believe that education is a priority. I agree with them, and we’ve put our proverbial money where our mouth is, the highest level of education spending in history. This gives you an idea of what past governors have proposed. My father, Mario Cuomo, over 12 years proposed on average a 1.8 percent increase. George Pataki, a 1.2 percent increase. Governor Spitzer and Governor Paterson, combined, a 1.5 percent increase. If you look at my six years, I’ve proposed a 2.4 percent increase in the initial budget. The first year we had a real deficit so we actually cut education spending the first year. If you take out the first year, our average has been a 4 percent increase. So you can see that my budgets have always been exceedingly generous with education spending. Within education spending you have $150 million for high need schools to make them community hubs. You have $800 million for Pre-K which is a program that we’re very excited about. $35 million for after-school slots in high poverty areas. You want a place for children to go, you want a safe place, you want them off the streets, and that’s what this program funds. $163 million for the free college, as we’ve mentioned for middle-class families. Part of this would provide funding for the DREAM Act, which we’ve proposed and talked about for many years but we still haven’t passed.
Reigning in the cost of prescription drugs is another first for the state of New York. This is a major problem for seniors, it’s a major problem for middle-class families, and it’s just an abuse of the consumer. Some of the increase in prescription drugs is just abusive. I mean there’s no other word to use for it. What this would do is set up a state review board, which would establish the cap price of a drug that is sold to Medicaid. And they would set a cap price that the state through the Medicaid program will pay for that drug. If the company sells that drug in the private market, the amount in excess of that cap will be assessed a surcharge of about 60 percent of that amount, and that 60 percent will go to the health insurance companies to write down that cost. No other state in the country has done it. It is creative, it is aggressive, we believe it’s legal, and we believe it will make a major difference in people’s lives.
The heroin/opioid epidemic is all across the state and is only getting worse. Literally it is from one end of the state to the other. We have a six point plan that is comprehensive, and combats it—from treatment to law-enforcement to high schools for recovery. And making fentanyl a controlled substance and analogs thereof.
Buy America Act. We would extend the Buy America provisions for all procurements over $100,000. It would be the strongest law in the country. Buy American, protect American jobs, create American jobs.
$2 billion for the Clean Water Infrastructure Act as we discussed. Local communities could fix existing infrastructure, they could put in filtration devices. Owasco Lake for example has had a problem for certain algae blooms in the lake. They also get their drinking water from the lake. They need an enhanced filtration system, that’s several million dollars. They would really have no way to fund this, frankly. Especially some of the smaller communities--what we went through in Hoosick Falls. So this would be a fund that would do just that.
We passed a program called Affordable New York, we sent the bill up, Affordable New York is the redesign of the 421a program. It will create 112,000 affordable units in New York City. The Senate was holding $2 billion in a memorandum of understanding until we passed the success of the 421a. We now have an agreement. The money was supposed to be released upon execution of the MOU by the two parties--REBNY and the organized labor representative. We’ve accomplished that, the Senate should now release the $2 billion.
$70 million for I Love New York, as I mentioned a $150 million investment. And we had a $9 billion increase in visitor spending. The more we can do to promote tourism the better. We also had a proposal that would allow alcohol and beer to be sold in movie theaters. And it would be joined with an incentive program, to incentivize the movie theaters to sell New York wine and beer. It is a very big industry for us, we have developed it. It’s going gangbusters, anything we can do to encourage it. It’s especially successful in Upstate New York. It would require a law change to allow alcohol and beer to be sold in a movie theater and to incentivize New York products to be sold in that venue.
We have an agreement with NYRA on a privatization bill that we will also be sending up that privatizes NYRA. We had taken it over, it is restructured essentially and sustainable. And this bill would continue the VOT support but turn it over to private control.
Empire State Trail—750 miles. It builds on existing trails that are there now. The Erie Canalway, the Hudson River Valley Greenway. This is the existing trail, so you can see a large part of it is already in place, maybe 60-70 percent is already in place. In three phases we would close the gaps. Phase 1 would be 70 miles, Phase 2 80 miles, Phase 3 is 196 because you have that long leg from Albany to Canada through the North Country—which is beautiful but long. That would take the third year in total 750 miles, it is a beautiful natural resource. I think it would be a phenomenal tourist attraction. And when you’re talking tourism, you’re talking jobs in Upstate New York and that is a major priority for my entire administration.
Ridesharing, Uber, Lyft, is allowed in New York City. It is not allowed in Upstate New York. The Downstate taxicab companies oppose Uber and Lyft, I understand that. But I also understand that upstate matters, and it’s unfair and unjust that you have ridesharing in New York City but you don’t pass it in Upstate New York. I’ve said many times that I believe Upstate New York has gotten short-shrift from the legislature. I think over the decades when their economy was stumbling Albany could have been more help and they weren’t. And this is another example where Upstate matters, they need help, they need this law passed, and the legislature should get it passed this year.
Local property tax is the number one tax in the state of New York. New York is a high tax state, people say. The average state income tax is $1,800. The average property tax is $4700. That my friends is the greatest obstacle that the state of New York has. Getting the property tax down. It’s not new. FDR complained about it often and bitterly. That quote could be a quote that came out of my mouth over the last five years. It is about the duplication, size and waste of local governments. You have over 10,000 local governments in the state of New York. And there is very little incentive or energy to find any sort of savings, any efficiencies, any anything. We’ve tried to do this a lot of different ways. We’ve incentivized them, we’ve provided rewards, but it remains a problem. It’s not just downstate New York. Upstate New York by a percentage of home value pays the highest property taxes in the United States. This is an idea of the cost – Westchester $11,000 average bill, Nassau 10, Suffolk, New York State 5, USA 3. This year we have a new plan that is simple and inarguable in my opinion.
We give the county executives the authority to convene the local governments. Which the county executive will not say they don’t have. For example, Mark Poloncarz is the County Executive of Erie. 900 local governments in Erie County. County executive calls together 900 local governments. And the 900 local governments deal with one question: how do we find efficiencies among the governments? What are we doing that we can find savings by cooperating or working together? For example, you have 900 communities. We all buy police cars. Why don’t we all bid out our police cars at the same time? We all buy health insurance. Why don’t we place our health insurance through one contract? We all have offices. 900 different offices. Why don’t we collocate offices to find savings? I’m not talking about consolidating governments. Just getting governments to work together to find savings. Not everybody needs a $300,000 dump truck. You can share equipment, you can share real estate, you can share a lot of back office functions and find savings. We have been going through this on the State side for five years. For state agencies, the funding has been flat. It has been zero. If you’re at zero increase, you’re really at a negative number, right? Because everything is going up. Lease payments going up, electricity’s going up. How have we made it work? The agencies had to get out of their comfort zone and had to work together and had to find savings. By the way, like every family in the state of New York has had to do. Why should government be exempt? Well, they want to have their own everything. I understand that. I want to have my own everything. We can’t afford it.
Let the County Executive convene the local governments, let them come up with a plan, let them put the plan on the ballot in November, and let the people in that county decide if they accept the plan or not. All you’re doing is asking the question of the local governments: see if you can find savings by cooperating. Frankly, it’s outrageous that that question hasn’t been asked, and hasn’t been asked in a way that the elected officials are held accountable. Raise the age. We’re one of only two states – this is for nonviolent felons. We’ve done everything that we can administratively, but we need the law changed and we would like to do it this year.
We have a 10-point ethics proposal. Constitutional amendment limiting outside income, constitutional amendment proposing term limits for elected officials, an independent advisory opinion before earning outside income to make sure there’s no conflict of interest. And I would do this for the legislature, and for the executive. Right now, the legislature goes to their legislative ethics committee. And their legislative ethics committee will tell them whether or not they think it’s a conflict. People don’t have confidence when a body is getting advice from its own body. I also have executive employees who get outside income. Let’s take an independent, outside legal expert and go to that body to get a ruling on conflict of interest. It protects the government; it also protects the person who’s actually earning the income.
Close the LLC loophole, which is just a pure loophole, proposed almost every year I’ve been governor. Subject local officials to the financial disclosure that we now do for state officials. Institute public financing and campaign finance reforms. Increase transparency through comprehensive reforms to FOIL for the legislature, the legislature still has not accepted the FOIL laws for the legislature. And I think the time has come and passed. Extend the authority of the state Inspector General, who does SUNY and CUNY, to the not-for-profits that are under SUNY and CUNY which is where we’ve had a lot of issues. And the IG does not now have authority to those not-for-profits. Procurement reforms; we call this a blockout period. Once an RFP goes out, a bidder to the RFP cannot make a political contribution, and the award winner cannot make a contribution for six months following. Create a new inspector general for the Port Authority of New York. The Port Authority went through a terrible scandal called Bridgegate. Since Bridgegate, we have adopted no ethics reform. Why? Because the state passed one bill, New Jersey passed another bill, the bills are different so no reforms have been done. And the Port Authority needs reforms desperately. And this is a minimum – make sure Port Authority is respecting the rights and the funds of New Yorkers. Create a new Inspector General for SED, which I believe should be picked by the legislature.
In any event, and taking a step back, I think this is going to be a remarkable year for progress for the state. On the legislative agenda side, we’ll reduce middle class taxes, we’ll have a historic high in education aid. We will have a national precedent in college affordability. We’ll create jobs. But also apart from all of this, apart from the legislative actions, we are in the midst of the most aggressive development program that this state has ever undertaken and these are real tangible accomplishments all across the state. You don’t see it if you sit in this town, but New Yorkers in communities all across the state are seeing it every day. And these are no ideas, or proposals, or blue prints, or hopes and dreams. We have the most comprehensive infrastructure development that this State has done and it’s all across the state. Again, it’s not about studying or preparing, it is about actually building. These things are happening. We’re building a new airport at LaGuardia that’s happening. We’re building a new JFK international airport finally. Two new major airports in downstate New York. We’re building a new airport in Syracuse. We’re building a new airport in MacArthur, which is on Long Island, which has great potential where we link it right to the Long Island railroad. And MacArthur can take a lot of traffic from JFJK and from LaGuardia. We’re building a new airport in Rochester because airports today are the new front door for commerce and business right. And if you want to be completive and you want to be successful you need to have the facilities to match it. Elmira-Corning new airport. Plattsburgh, not only a new airport, but we’re making it an economic development hub with a distribution center etc. New Schenectady rail station. Tappan Zee Bridge is going up on time, new Penn Station, new Long Island Rail Road concourse, Albany convention center.
We’re going to break ground in the next week on a million square foot addition to the Jacob Javits Center to make it one of the most competitive convention centers in the country. Four new MTA stations in the Bronx which will open up the Bronx to development in a way it’s never been before. Kingbridge Armory which can bring nine recreation ice-skating rinks to the middle of the Bronx which can give children an alternative to the streets. Orchard beach the same thing in the Bronx. Huntspoint, a new regional food market. Kosciuszko Bridge, we’re about to complete the first span which is very exciting, that goes between Brooklyn and Queens. We’re redoing the Queens Midtown Tunnel, we’re redoing the Brooklyn Battery Tunnel. We did the Second Avenue Subway which is done on time and is really a masterful edition for the city. MTA is redoing 33 stations, Eastside access. We’re buying 1,000 new subway cars, we’re buying 2,000 new buses.
We’re illuminating all the bridges in New York City with different colored lights and the bridges can then be coordinated and choreographed to music. So literally you’ll have bridges all across the New York City area that are choreographed nothing like this has been done on the planet. You have some cities that have done bridge lighting projects and the single bridge lighting project has turned out to be a great tourist attraction, and people come just to see one bridge lit. Imagine New York harbor with all those bridges and all of it choreographed. Open road, which we are doing downstate and we’re going to be doing on the Thruway upstate. New Gateway Tunnel, which connects New York and New Jersey. We’re improving the Long Island Railroad on Long Island by building two new tracks which is one of the reasons why the commute can be so difficult from Long Island. Modernizing 16 LIRR stations. We’re opening tourism centers. We did the first one on Long Island to spur the I Love New York experience. We’re redoing Jones Beach. Brookhaven laboratory which is a great economic engine for the island. It’s going to be connected to the Long Island railroad. Town of Woodbury 131, the Empire State Trail I hope to get. We’ve rehabbed the New York state fair. It broke all attendance records in history last year. Highest attendance in history and now we’re coming back with phase two. Saab just signed on to move to Syracuse, photonics is growing in Rochester, north titanium in the North Country, Clarkson-Trudeau joint enterprise. This budget funds the National Comedy Center in Jamestown. Lucille Ball, favorite of Casey Seiler’s, he’ll be there first. Solar City, we have Panasonic and Tesla moving into Buffalo. If you had told someone that five years ago, they would think you would need the state’s opioid program. It’s amazing the rebirth of Buffalo and we’re coming back with what we call Buffalo Billion Squared. An article from this past weekend talked about Millennials coming back to Buffalo. This is after decades of young people leaving. Now you have young people coming back to Buffalo, at the next 1400 jobs.
So the arrows are pointed in the right direction. I hope for a good legislative session. I think we can have national firsts. Prescription drugs, college affordability. I know you’re going to see a new New York just in terms of redevelopment, in terms of the transportation facilities, the infrastructure, et cetera. And again, you’ve never had as robust a development program as we have undertaken, and we will make a reality.