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Old 01-17-2018, 07:56 PM
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Mary Pat Campbell
Join Date: Nov 2003
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Cuomo proposes plugging budget gap with more than $1 billion in taxes and fees
Governor pitches excises on health insurance, painkillers and online shopping

Gov. Andrew Cuomo called for an array of new revenues to close the state’s $4 billion budget hole on Tuesday while sketching his spending plan for the coming fiscal year.

The governor asserted that Albany could reap $750 million from sales of health care nonprofits to private entities, $140 million from a new tax on health insurers, $170 million from an opioid surcharge, $300 million through a one-year suspension of certain corporate tax credits and $318 million through an internet sales tax.

The state would allocate the proceeds to a “health care shortfall fund”—which Cuomo said would “make up for these federal cuts that are coming down the pike”—and education spending.

Cuomo's total budget would be $168.2 billion, up 2.3% from last year. Expenditures of state funds would rise by 1.9%.

In keeping with all of his recent speeches, the Democrat deflected attention from the state’s longstanding fiscal issues by railing against the tax law Congress passed and President Donald Trump signed in December. He pointed to the massive federal corporate tax cut to defend the proposed levy on health care providers, and the one-year deferment of credits for companies holding more than $200 million in such incentives.

“They weren’t expecting the tax cut, they got the tax cut," he said. “I think it’s totally justifiable to have a tax to recoup part of their windfall benefit.”

Cuomo plans to impose a 14% tax on health insurers’ underwriting profits, raising an estimated $140 million, following a 40% cut they received in the federal tax overhaul. He also proposed that manufacturers pay 2 cents per milligram of active opioid ingredients, generating $170 million, “to offset the costs that we’re spending to fight opioid abuse.” The governor’s chief of staff insisted on Twitter that the state’s Medicaid program—which will grow by $593 million, or 3.2%, this year—will not pay the surcharge.

The governor vowed to dedicate the funds from the painkiller impost to anti-addiction programs, which will hit $226 million under the plan he announced Tuesday.

Several major federal health care programs have yet to be funded by Congress. Support for the Children’s Health Insurance Program, which covers about 350,000 Empire State children, expired on Sept. 30, with Congress providing temporary funding to states in December. Cuomo’s budget assumes Congress will reauthorize funding for the program, but if not, the state would need to contribute an additional $1 billion.

Another $1 billion is at risk if the federal government doesn’t approve cost-sharing reduction payments, which fund New York’s Essential Plan for low-income consumers.

The health care shortfall fund would offset that risk.

The reserve fund would be supported, in part, through funds paid to the state when health care nonprofits sell or merge with for-profit companies. One such deal that is pending is Queens-based nonprofit health plan Fidelis Care’s $3.75 billion sale to Centene. Cuomo didn’t mention the deal by name, but few such transactions are large enough to generate the $750 million the state anticipates.

“This is about not-for-profit health care companies that we financed through Medicaid primarily,” he said.

Cuomo also promised to rationalize what he described as a “hodgepodge” of sales taxes on online retailers like Amazon by imposing a single rate on the entire industry.

The new imposts face opposition from private-sector interest groups and their allies in the dominant state Senate GOP conference. State Senate Majority Leader John Flanagan, a Long Island Republican, appeared to outright reject them after the address in remarks reported on social media.

The governor will have to negotiate a final financial plan with the Senate and the Democrat-controlled Assembly by the start of the new fiscal year, April 1.

The 2017 federal tax legislation eliminated the state and local tax deductions, which let New Yorkers report less on their returns to the Internal Revenue Service. Cuomo reiterated his earlier calls to restructure New York’s tax system by replacing the income tax with a payroll tax—eliminating the excise on employees for money earned, and putting the burden instead on employers for wages paid.

This idea won a swift and bitter rebuke from a top small-business trade group.

“The executive budget proposed today by Gov. Cuomo offers little to help New York’s struggling small businesses and looks to impose a complicated and potentially unworkable new payroll tax,” complained Mike Durant, state director of the National Federation of Independent Business. “New York’s lack of economic competitiveness and high tax status is solely the result of Albany’s tax-and-spend culture, not the recently enacted federal tax reform.”

The governor also floated the notion of legalizing recreational marijuana, saying his office would study the matter and watch the actions of neighboring states and the federal government.

One of his Republican challengers, former Erie County Executive Joel Giambra, proposed decriminalizing cannabis as a new state revenue source over the weekend.

The governor again teased a congestion pricing plan that would fund the moribund subway system through a new charge on cars entering the Manhattan business district. He offered few new details other than insisting that he would not impose tolls on the four city-owned East River bridges, but promised a full proposal later in the week.

He did, however, call for providing the Metropolitan Transportation Authority with a permanent revenue stream by having the agency directly collect the payroll mobility tax on employers in the greater New York area. The tax was enacted after the Great Recession and later pared back because of opposition from suburban Republicans.


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Last edited by campbell; 01-17-2018 at 08:01 PM..
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