New York woke Sunday to learn that state lawmakers had agreed to a budget that aims to spend a whopping $175 billion in the next fiscal year, while imposing a boatload of new taxes and fees in the name of funding the MTA.
More hits to your pocket, and more spending, are still to come: The budget also sets up “independent” commissions to settle the details of both public funding of state political campaigns and “congestion” tolls in Manhattan. Plus, lawmakers this year may yet legalize online sports betting and the sale of pot, each of which will come with a hefty cut of the profits for state government.
The only good news: Lawmakers agreed to make permanent the law capping property-tax hikes (which doesn’t apply in the city). It will no longer be linked to renewal of the rent-control laws.
But the rent laws are being tightened, and some city real-estate taxes are headed up: The budget adds new “mansion” taxes on the sale of multimillion-dollar homes — while reserving the revenue for state priorities, even though property taxes traditionally fund local government.
Mansion-tax supporters usually point to billionaire hedge-funder Ken Griffin’s $238 million January purchase of a penthouse off Central Park, the most expensive home in America, as evidence of excess that deserves special taxation — especially since Griffin’s Citadel fund is Chicago-based. What they don’t mention is that Citadel was expanding operations in the city, and even considering a move to the Big Apple — which would have added lots of high-paying (and so big-tax-generating) jobs to the local economy.
Except that Griffin publicly called off those plans more recently, citing New York politicians’ clear intent to “soak the rich” no matter how many jobs it destroys.
‘Congestion pricing” is another state grab of fees generated in New York City, from a city resource (its roads). Yes, the funds are supposed to go to the MTA, but suburban lawmakers have won guarantees that some of the windfall will go to the commuter railroads rather than the subways and buses. And, significantly, the money will count as part of the state’s share of MTA funding, with the city forced to cough up still more cash for its contribution. (Mayor de Blasio, his eyes on his future job prospects rather than the city’s interests, went along happily with this naked cash grab.)
The same gimmick applies to revenue raised from “improved” (that is, harder-hitting) taxes on Internet sales: Money raised from the city will go toward the state’s share of MTA funding. In the rest of the state, that cash goes to the local government — though the budget also cuts other state payments to local government on the grounds that Internet taxes will replace it.
Gov. Cuomo claims that the congestion, Internet and “mansion” revenue will fund up to $25 billion in MTA capital spending. But that means bonding out the income for 30 or 40 years — and leaves the MTA at risk of having to make bond payments if the revenue streams prove less lucrative than expected. So this gimmick adds new risks of even steeper fare hikes down the line, even as it means the state will have to look at yet new income sources (most likely, yet more tax hikes) to fund future five-year MTA capital plans.
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Meanwhile, the budget’s supposed MTA reforms are thin gruel (other than a sensible requirement for outside vetting of major-project proposals, which might prevent future white elephants like the East Side Access project). Nearly all the “reforms” are to start in future years, and are left to the MTA itself to accomplish.
Utterly absent is any effort to reform the agency’s labor relations, even though pay and benefits are by far the largest, and fastest-rising, part of the MTA budget.
Assembly Speaker Carl Heastie calls this “a budget where we were scrimping and saving, trying to find pennies in the couch.” In truth, all the ingenuity went into picking the pockets of the public, and of local governments, to spend nearly $9,000 for every man, woman and child in the state.
All this, without setting aside anything like a prudent amount of rainy-day funds. Which means Cuomo, Heastie and Senate Majority Leader Andrea Stewart-Cousins also just laid the groundwork for far broader tax hikes when a recession inevitably hits.
And possibly even without a recession: Ken Griffin’s decision not to bring his business here follows Amazon’s abandonment of its NYC expansion plan, which the company likewise blamed on New York politicians’ greed and hostility to business.
In the long run, bleeding the golden goose can only lead to doom.