Even with $12.5 billion in federal aid, New York should consider taxes on wealthy, Cuomo says

(The Center Square) – The state of New York is set to receive more than $12.5 billion in aid as a result of the American Rescue Plan, which the U.S. Senate narrowly passed Saturday. However, Gov. Andrew Cuomo said that amount still will not cover the deficit the state faces.

When asked during a Sunday news conference with reporters if tax hikes on wealthy New Yorkers were still being considered, Cuomo said yes. But he said he’d let state lawmakers, who must pass the budget, speak for themselves.

“Don’t get me wrong, the $12.5 billion is very, very helpful,” Cuomo said. “But as you know, because I said it 150 times, we needed $15 billion in my opinion. So, we do have a gap there.”

New York state’s budget year starts April 1, and a budget must be approved by then.

The COVID-19 pandemic ravaged the state’s economy in the past year, thanks to businesses and major attractions being shut down, which led to the loss. The state lost 1 million jobs in 2020.

Cuomo kept calling for $15 billion in aid because, he argued, New York was the first COVID-19 hot spot and suffered the greatest damage as the result of federal mismanagement. He often cited that federal authorities last year claimed the virus would enter the U.S. through China. Instead, it came from European travelers entering New York.

Even amid calls for his resignation due to ongoing scandals, Cuomo has called for the 2022 budget to be transformational and lead the state into a recovery phase. Full federal funding would allow for that, but anything less would force the state to look at making program cuts and raise taxes.

Tax increases, though he said, come with a risk. In the past, Cuomo has been hesitant to raise taxes out of fear it may drive high-income earners out of New York City and the state.

“You can raise revenue in ways that actually costs the state revenue, right?” he said. “So there’s going to be discussion about taxes. There’s also going to be a discussion about a cliff.”

Besides tax increases, the governor’s budget has also proposed new funding streams for the state, namely the introduction of mobile sports betting and the legalization of recreational marijuana.

According to the $1.9 trillion stimulus plan, $350 billion was set aside for state and local governments across the U.S. The money can be used to help governments cover the cost of the pandemic or the negative economic impact from it.

Cuomo called the federal funding the “ultimate one-shot” source, so the state has to be smart in how to allocate it.

Besides the money for the state, cities, towns and counties will also receive about $10.8 billion in funding as well. New York City is set to receive about $6 billion of that.

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