Cuomo's NY Budget Said to Sidestep De Blasio's Pre-K Tax

Image: Cuomo's NY Budget Said to Sidestep De Blasio's Pre-K Tax

Tuesday, 21 Jan 2014 12:11 PM

 

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Gov. Andrew Cuomo will unveil a budget that would phase in universal early childhood education over five years, sidestepping a proposal by Mayor Bill de Blasio to raise taxes on New York City’s wealthy for a program there, a person familiar with the details said.

Cuomo’s election-year spending plan, which he will outline Tuesday in Albany, would provide $1.5 billion over five years for schools to provide pre-kindergarten classes, said the person, who spoke on the condition of anonymity because the budget isn’t yet public. Cuomo has said he wants to cut taxes by $2.2 billion over three years.

The governor’s move may be an attempt to outmaneuver de Blasio on his signature campaign issue, though it may not end the feud over taxes that’s taken shape between the two Democrats and friends for 20 years. While he hasn’t commented on Cuomo’s latest proposal, de Blasio has previously said he’ll stick to his plan for an increased levy on those earning more than $500,000 a year.

The mayor won election by the biggest margin for a non- incumbent in city history with a campaign that described a metropolis divided between rich and poor. He has said taxing the wealthy would help close that gap.

“This is exactly the moment where we have to right the wrongs, having missed the opportunity for years to have provided our children with the type of education that would equip them for the 21st century,” de Blasio said during his first visit to Albany as mayor for Cuomo’s Jan. 8 State of the State address.

A group of business leaders, including real estate developer Leonard Litwin, Cuomo’s biggest campaign contributor, and Don Peebles, chief executive officer of Peebles Corp., endorsed de Blasio’s tax plan today.

New York’s legislature and governor control most local levies, including income taxes. Sheldon Silver, the Manhattan Democrat who leads the Assembly, and Jeff Klein, the Bronx Democrat who co-leads the Senate, are supporting de Blasio’s tax increase, saying it should be treated like any other such request from a municipality.

From 2011 to 2013, the Senate approved at least 35 measures that allowed localities to increase taxes or extend tax increases already in place. Three proposals died in the Assembly. The other 32 were signed by Cuomo.

“In the legislature, we give localities taxing authority all the time,” Klein said in an interview before Cuomo’s budget plans were known. “I don’t see why we shouldn’t give our new mayor this tax to use in a very important way, to provide crucial education for our kids.”

De Blasio’s five-year plan would generate $530 million annually by raising taxes for city residents on income above $500,000 a year to 4.4 percent from the current level of almost 3.9 percent. It would cover pre-K costs and extended after-school programs for middle schoolers. For the 27,300 city taxpayers earning $500,000 to $1 million, the average increase would be $973 a year, according to the Independent Budget Office, a municipal agency.

The mayor says that’s “less than three bucks a day -- about the cost of a small soy latte at your local Starbucks.” For those making $1 million to $5 million a year, the average extra tax would be $7,793, the budget office said. At incomes of $5 million to $10 million, the increase would be $33,518.

 “We have to get it done with our own resources,” de Blasio said in a press briefing after Cuomo’s address. “We need support from Albany. We see Albany as our partners.”

A married Manhattan couple with two children jointly filing with an income of $700,000 under standard deductions currently pays about $25,000 to the city.

“They are paying enough already,” E.J. McMahon, a senior fellow on city and state fiscal policy for the Manhattan Institute, which advocates less taxation, said this month. “The highest-income earners are the most volatile and unpredictable element of the tax base, and both the city and the state have become increasingly dependent on those taxpayers.”

Cuomo’s budget proposal helps shape debate in the legislature until its passage. The new fiscal year starts April 1. By proposing a five-year plan for pre-K and another $720 million over the same period from funds generated by casinos for extended after-school programs, Cuomo is making it difficult for de Blasio’s tax plan to gain traction.

He’ll also use a share of a $2 billion bond referendum on the November ballot to pay for building new classrooms, the person said.

Dean Skelos, the Long Island Republican who co-leads the Senate, has said he supports universal pre-K. He has questioned how to pay for it, though, and has generally opposed raising taxes.

The governor’s funding of pre-K was first reported by the New York Daily News.

© Copyright 2014 Bloomberg News. All rights reserved.

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