Cuomo Includes Tax Overhaul Ideas, Congestion Pricing In State Budget Proposal

ALBANY, N.Y. (CBSNewYork) -- New York state Gov. Andrew Cuomo on Tuesday offered an election-year budget that seeks to soften the blow of federal tax laws that could stick New Yorkers with billions in additional taxes.

The proposal also lays out spending on schools and mass transit while also confronting greater uncertainty in federal funding. Further, as CBS2's Jessica Layton reported, the proposal includes congestion pricing.

Cuomo unveiled his $168 billion spending proposal on Tuesday. Lawmakers hope to approve a final budget by the April 1 deadline.

As CBS2 Political Reporter Marcia Kramer reported, it is clear that the last thing Cuomo wanted to do was run for reelection at a time when his constituents are being asked to pay higher taxes – even if the federal government is the culprit.

"Washington hit a button and launched an economic missile, and it said, 'New York,' on it," Cuomo said.

Thus, as part of the budget proposal, the governor called for restructuring the state's tax code to find was to work around the federal law – which limits the deductibility of state, local and property taxes.

"It is hard. It is complicated. But it is doable," Cuomo said.

The governor offered up several possibilities – among them changing the income tax to a payroll tax, and allowing taxpayers to make charitable contributions to the state instead of paying taxes. Charitable contributions are deductible.

Senate Majority Leader John Flanagan (R-Smithtown) is not wild about the payroll option – which would shift income taxes from an employee-paid system to an employer-paid system.

"Just the concept of the payroll tax is very challenging," Flanagan said.

The governor's 2019 budget proposal holds most spending flat in order to eliminate a $4.4 billion deficit. It increases education spending by $769 million and sets aside $254 million for emergency work on New York City's transit system.

The governor's budget address started with a focus on the possible tax code changes, and it was going smoothly until Cuomo proposed a 3 percent increase in school funding, 1010 WINS' Al Jones reported.

"It's not enough," Assemblyman Charles Barron (D- Brooklyn) protested. The assemblyman repeatedly interrupted the governor, wanting more for education, until he was asked to leave, Jones reported.

"How about that as a suggestion, assemblyman?" Cuomo said to Barron. "How about you listen to it first and then you say it's not worth it?"

The proposal also includes congestion pricing. For over a decade, the four bridges over the East River connecting Manhattan to Brooklyn and Queens have been the target of mass transit advocates who have yearned to put tolls on them.

But Cuomo told CBS2's Kramer that the "Fix NYC" panel is "going to be talking about a zone rather than bridges."

Hanging his hat on his panel of experts, Cuomo's congestion pricing plan will raise money for mass transit by charging drivers to enter Manhattan's central business district. Boundaries, fees and exact hours the fees will be charged would be worked out later.

"The bridges were a crude instrument," Cuomo said. "Really what you want to do is keep people out of the highly congested areas at the time of the highest congestion and we now have the capacity to put up tolling machines on any corner, any block."

Kramer asked the governor if the hours could be adjusted so, for example, shift workers or hospital workers could get to work with out paying a fee.

"That's just what this commission has worked on because the variables are infinite," he said. "You can pick times, you can do discounts, you can do whatever you want with the technology that we now have."

Sources say the plan is also expected to add a hefty surcharge for app-based car services like Uber and Lyft.

Mayor Bill de Blasio prefers to tax millionaires to fix the subways.

As WCBS 880's Rich Lamb reported, de Blasio cautioned that he wanted to see the whole plan – but he raised questions about Cuomo's congestion pricing proposal.

"How do you make sure it's not a regressive tax where folks who have lots of resources are all too happy to pay to come into Manhattan and other people who don't have so many resources can't?" the mayor said.

De Blasio also asked how the state would make sure the plan was fair to Brooklyn and Queens.

"What do they get back?" he asked.

The mayor emphasized that he thinks his millionaires' tax proposal is still the best solution for the MTA's money woes.

Reaction from New Yorkers was mixed.

"That's horrible because, you know, we're not making money to begin with and now it's going to cost more money to come into the city," said driver Fahim Hannan.

"I think it's a really good idea," said Upper West Side resident Lesley Weinsberg. "Traffic's gotten worse and worse and it's difficult to get around."

More congestion pricing details are expected later this week from the "Fix NYC" panel.

Cuomo says he's also hoping to restructure the state's tax code to soften the blow of the new federal tax overhaul enacted by Washington Republicans. The overhaul will sharply increase taxes for many New Yorkers.

Cuomo also called for a study on the effects in New York if New Jersey legalizes marijuana.

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• Andrew Cuomo
• Rich Lamb