N.Y. has lost $2.3 billion so far to federal tax law, Cuomo says
New York state's income tax receipts are down more than $2 billion so far, creating a significant and serious state budget deficit that is mainly caused by last year's Republican-led federal tax cuts, Democratic Gov. Andrew Cuomo said Monday.
Cuomo said during a news conference in Albany, N.Y., that the year-old federal law capping a deduction for state and local taxes — known as SALT — at $10,000 is the culprit for a projected $2.3 billion deficit.
"We've set up reserves, but this is worse than we had anticipated," Cuomo said after referring to the fiscal situation as being "as serious as a heart attack."
Cuomo, joined by Democratic Comptroller Thomas DiNapoli and Robert Mujica, the governor's budget director, said he'll be making adjustments in the $175 billion state budget proposal he unveiled last week. The governor didn't provide specifics, although he mentioned the state's top funding priorities — education, health care, infrastructure and a middle class tax reduction — as areas that could be impacted by budget cuts.
The governor has until mid-February to make budget amendments.
Democrats in Albany and other states with higher income and property taxes, such as California, Connecticut, Illinois and New Jersey, had warned that the GOP federal tax law reforms signed into law in late 2017 by Republican President Donald Trump would hurt predominantly Democratic states. In New York, the average SALT deduction tops $22,000, and the situation encourages high-income New Yorkers to move out of the state.
Republicans, now in the minority in the New York state Senate as well as the Assembly, said New York's high taxes were already prompting people to move to other states before the federal tax reforms kicked in.
"My fear is that the governor and the New York City Democrats who control the Senate and Assembly are going to use this as an excuse to increase taxes on hardworking, middle-class New Yorkers," Senate GOP leader John Flanagan, of Long Island, said in a statement. "We cannot allow this to happen."
DiNapoli said other factors have a role in creating the budget deficit, including stock market volatility in December that will affect Wall Street end-of-year bonuses and thus state tax revenues this year.
"We know that fourth quarter of calendar year 2018, we took a significant hit after three quarters of very positive returns," the comptroller said.