ALBANY — Wrapping up a long week of late nights, state legislators passed the final bills approving the 2016-17 state fiscal budget on Friday, April 1, just hours past the March 31 deadline. A product of negotiations between both houses of the state legislature and the administration of Gov. Andrew Cuomo, the $147 billion approved budget includes a progressive minimum wage raise, paid family leave, significant tax cuts for the middle class, infrastructure investments and the restoration of millions in education funding—while keeping spending growth under two percent for the sixth consecutive year.
In a press conference the night of Thursday, March 31 — the first Cuomo has held in Albany since last summer — the governor and key budget officials outlined the agreements that have been reached since the governor proposed his executive budget three months ago and highlighted significant changes from last year’s spending plan.
The largest budgetary increase, said Budget Director Robert Mujica, is to education funding, which, with an additional $1.5 billion, represents 6.5 percent growth to $24.8 billion. Medicaid is growing 3.4 percent to about $18.5 billion. And higher education will receive $7.2 billion, about a 2 percent increase. “The rest of the budget is relatively flat,” said Mujica. “From the governor’s budget, we added about $1.4 billion dollars in legislative adds, which includes the largest school aid number in history.”
The increase in education aid is something that leaders of both houses identified as a priority following the release of the governor’s proposed budget in January, a budget which critics claimed dramatically underfunded public schools. In particular, the governor’s budget failed to fully restore funding known as the Gap Elimination Adjustment (GEA) that has been withheld from school districts since the 2009-10 fiscal year to address budget deficits created by a faltering economy. Some of that funding has been returned, incrementally, over the last several years, but local school districts have been calling for full restoration since 2012. South Colonie, whose district estimates that it has lost almost $18 million in GEA funding over the last seven years, has hosted multiple public advocacy events and actively lobbied legislators to restore funding.
“We thank the state legislature for its efforts in restoring the GEA now, instead of over a two-year period as proposed by the governor,” said South Colonie Superintendent Jonathan Buhner in a statement. “And I want to especially thank the people of our district who continued to push year after year for an end to the GEA, while the district worked to strategically maintain specific academic needs and priorities for our students.”
“The New York State Constitution provides each student in our state with the right to a free public education,” said Assemblyman Phil Steck. “The courts have ruled that our state lags behind in providing the state aid necessary to fulfill that promise. The communities in my Assembly district cannot afford to fund education solely through the local property tax. Therefore, it is incumbent on the state to make up the difference in state aid. We are clearly doing that in the 2016 budget.”
According to Steck, the funding increases will provide North Colonie with $1.8 million and South Colonie with $1.7 million. Schenectady will receive a full $12.4 million. In addition to restoring GEA funding, the approved budget also increases Foundation Aid—funding that districts use for operational expenses—by more than $600 million. While that will still not bring education funding up to levels considered “adequate” by the State Supreme Court in 2007, educators working to put together district budgets see the increases as a significant step toward bridging that gap.
“The 2016-17 State Budget represents a victory for all New Yorkers,” said Town of Colonie Supervisor Paula Mahan. “It will help continue New York’s economic resurgence, building on the successes of the past five years. As a municipal leader, I was very gratified to see $27 billion targeted for much-needed infrastructure projects.”
The 2016-17 budget contains the largest state transportation plan ever approved, with over $55 billion of transportation investments statewide, including $27 billion for State Department of Transportation (DOT) and Thruway programs. Approximately $21 billion will be spent to improve highways, bridges, rail, aviation infrastructure, non-MTA transit and DOT facilities throughout the state. It also includes $2 billion in “Thruway Stabilization” funding that will allow the Authority to freeze tolls on the system until at least 2020.
$350 million in grant funding has also been made available, over the next two years, for municipalities to upgrade and maintain failing drinking and wastewater infrastructure. The 2015 Water Infrastructure Improvement Act is a three-year grant program started with an original investment of $200 million. The additional investment represents an increase of $100 million per year over previously budgeted totals.
Middle class tax cuts
Under the approved budget, the middle class personal income tax rate will remain unchanged (6.45 percent for taxpayers in the $40,000-$150,000 income bracket; 6.65 percent in the $150,000-$300,000 income bracket) until the year 2018, when rates will begin to drop. When tax cuts are fully phased in by 2025, lawmakers claim it will provide an average savings of $700 per taxpayer per year, for an expected annual savings of $4.2 billion.
Individuals and businesses eligible for tax rate reductions to 5.5 percent from include:
• Single filers with taxable income between $20,000 and $75,000;
• Heads of households with taxable income between $30,000 and $100,000; and
• Married joint filers with taxable income between $40,000 and $150,000.
Individuals and businesses eligible for tax rate reductions to 6 percent include:
• Single filers with taxable income between $75,000 and $200,000;
• Heads of households with taxable income between $100,000 and $250,000; and
• Married joint filers with taxable income between $150,000 and $300,000.
Paid family leave
“You shouldn’t have to be in a position where you have to choose between a paycheck and being there for your family,” said Cuomo on March 31. “And paid family leave does just that.” Paid for by modest employee payroll deductions, the program will be the longest in the nation at 12 weeks. Benefits will be phased-in beginning in 2018 and will initially be equal to 50 percent of an employee’s average weekly wage, capped at 50 percent of the statewide average weekly wage. When fully implemented by 2021, employees will be eligible to receive 67 percent of their average weekly wage, capped at 67 percent of the statewide average. Employees will be eligible to participate after having worked for their employer for six months.
Minimum wage raise
Possibly the most controversial aspect of the 2016-17 budget is the inclusion of a statewide minimum wage hike, and Cuomo spent a good portion of the press conference on Thursday talking about how the state intends to “calibrate” the introduction of a $15 minimum wage.
“This budget is designed to stimulate the economy and raise the minimum wage,” said the governor. Calling it “progressive,” “fair” and “appropriate,” Cuomo maintained that raising the minimum wage could help to stimulate the economy and pointed out that six of the eight times New York has raised the minimum wage since 1991, employment actually increased. “The key is calibration,” he said. “If you increase it at the right rate, all experts will agree that it can be a positive for the economy overall.”
Because it is impossible to know what the economy will look like in five years, Cuomo said, “What we’ve designed is a calibration mechanism that can be adjusted in the future when you know what the economy is doing.” Also, he added, it accounts for the differing regional economies around the state.
Under the currently calibrated rate, workers in New York City employed by businesses with more than 10 employees would see minimum wage rise to $11 at the end of 2016, then another $2 each year after, reaching $15 by 2019. In the rest of the state, the minimum wage would increase to $9.70 at the end of 2016, then another .70 each year after until reaching $12.50 by 2021. After that, it will continue to increase to $15 on an indexed schedule.