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NY Reaches $ 212 Billion Budget Deal to Boost Economic Recovery

New York state leaders announced on Tuesday they reached a deal on a $ 212 billion state budget that included tax hikes on the rich as well as substantial relief for the rich. tenants, undocumented immigrants and business owners hardest hit by the coronavirus.

Many of the budget’s major initiatives are aimed at reviving the recovery of a state that was once the epicenter of the pandemic.

It includes $ 2.3 billion in federal funds to help tenants behind on rent; $ 1 billion in grants and tax credits for small businesses that have suffered from the economic downturn; and a $ 2.1 billion fund to provide one-time payments to undocumented workers who were not eligible for federal stimulus checks or unemployment benefits, according to budget highlights released by the governor’s office.

All were proposals championed by Democratic leaders in the state Legislature, who took advantage of Governor Andrew M. Cuomo’s weakened political stance to forcefully lobby for their priorities, including an increase in government. Long sought after personal income tax rate for people earning over a million dollars – overcoming the governor’s government. long-standing aversion to raising taxes for the rich.

Two new tranches would also be introduced for revenues over $ 5 million and $ 25 million. The changes mean wealthy New York City residents would effectively be subject to the highest combined local and state personal income tax rates in the country, surpassing California.

The ramifications of the tax changes are sure to spark controversial debate in the months to come. Progressives see them as essential in helping pay for the new liberal priorities of vulnerable New Yorkers, especially after the pandemic has led to increased unemployment and the closure of businesses. But conservatives fear that higher taxes could lead wealthy New Yorkers, some already working remotely, to relocate permanently to low-tax states like Florida.

The spending plan – about 10% more than last year’s budget – falls far short of the doomsday scenario officials envisioned earlier this year as the state sought to fill a $ 15 billion budget hole over two years through sharp cuts and tax increases.

Since then, incomes have been better than initially expected, although they still lag behind pre-pandemic levels. The state also received a one-time injection of $ 12.6 billion in direct aid from Washington, as well as billions of dollars in education and transportation funds.

Even as the governor faces multiple allegations of sexual harassment and calls for his resignation, Mr Cuomo has been able to claim some of his own political victories in budget negotiations, where governors have traditionally wielded inordinate influence.

The budget deal will allow mobile sports betting, bringing a potential revenue stream of nearly $ 500 million per year to New York City, which has seen neighboring states like New Jersey and Pennsylvania take over that market. But proposals to speed up casino development in the New York City area were left out of the budget.

Mr Cuomo successfully fought for the $ 1.3 billion inclusion that will help fund a redevelopment plan for blocks near Penn Station in Manhattan, a controversial project that could include 10 new towers and has already sparked the reprimand of local community councils and elected officials. . State funding, however, would be limit transportation improvements, according to budget documents.

The governor also gained the state power to withhold 50% of state and federal funds from communities that fail to produce plans to reform their police services, which Cuomo commissioned. by executive order following the George Floyd protests last year. It also includes a program to make broadband internet more affordable and a package to improve patient services in nursing homes across the state.

The budget, yet to be passed by the legislature and approved by the governor, would dramatically increase spending in New York, already one of the top spending states, leading some budget analysts to warn of the dangers to maintain record spending levels once federal. the funds are drying up.

Further tax hikes on the rich and corporate tax increases are expected to generate more than $ 4 billion in additional revenue each year. The tax increases are expected to hit 50,000 taxpayers, said Liz Krueger, Democrat and chair of the state Senate finance committee.

“This is not a tax increase on the vast, vast majority of New Yorkers,” Krueger said on the upper house floor on Tuesday. Even so, the increases will be taken from an integral part of the state’s tax base: the richest 2% of top-earning New Yorkers pay about half of state income taxes.

Under the changes, the personal income tax rate would drop from 8.82% to 9.65% for individuals earning over $ 1 million and for co-applicants earning over $ 2 million.

Two new personal income tax brackets would also come into effect: 10.3% for income between $ 5 million and $ 25 million and 10.9% for income over $ 25 million. The new tariffs would expire by the end of 2027.

The late budget – it was due on April 1 – resulted in late payments for thousands of state employees, according to the state comptroller.

The so-called excluded workers’ fund was among the latest sticking points in budget negotiations, sparking infighting among Democrats, including some who fear it could be used as a political issue with moderate suburban voters. in 2022. The details were still becoming clear, but it would effectively offer unemployment benefits to undocumented workers who lost their income or were unemployed during the pandemic and who are not entitled to federal assistance. Applicants will need to provide certain documents to verify their identity, residence and work eligibility.

Conservatives have castigated the plan, with Republican Party chairman Nick Langworthy calling it “waking madness.”

“Democrats are set to pass a budget that raises taxes for New Yorkers and businesses by $ 4 billion while enacting a $ 2 billion fund that will provide $ 25,000 in payments to illegal immigrants,” Langworthy said Tuesday.

The rent relief program is expected to be an urgent lifeline for low-income tenants who owe rent or are at risk of eviction because they are experiencing financial hardship due to the pandemic. Eligible tenants would be allowed to cover up to 12 months of rent and utility costs, as well as three months of contingent rent, funded by federal funds.

The deal also includes $ 600 million in help for homeowners and property tax relief for New Yorkers earning less than $ 250,000. There is also $ 250 million for the struggling New York Public Housing Authority and $ 100 million to facilitate the conversion of hotels and vacant properties into affordable housing, an idea that has gained momentum at as most of Manhattan’s shopping districts emptied during the pandemic.

School districts across the state are also set to receive a large cash injection – about $ 4.2 billion – over the next three years. The money will provide additional support to districts with large numbers of high need students and struggling schools, including New York City. The state will distribute approximately $ 1.4 billion annually for the next three years, then providing approximately $ 4.2 billion annually to schools, a significant increase from current funding levels.

This provision is the result of a two-decade legal and advocacy battle known as the Campaign for Tax Fairness to force New York to increase funding for schools on a formula focused on high-need districts. In 2006, the state court of appeals ruled that New York denied children their right to a solid basic education guaranteed by the state’s constitution. The new funding outlined in this year’s budget fully settles the prosecution’s mandates.

This year marks the first time that the Legislature has committed to meeting the financial obligations set out in the lawsuit.

Eliza Shapiro contributed reporting.

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