Federal bailout does not change that
New York State is set to receive $12.7 billion in federal funding as part of the recently approved American Rescue Plan. These funds are much needed as the state was facing a major budget gap created by prolonged lockdowns and disruptions to businesses because of the COVID-19 pandemic. The injection of federal funding represents a few things: first, it eliminates the need for drastic tax hikes like those being floated by Democrats, and second, it reminds us how fragile our economic climate is as we emerge from the damage caused by COVID-19.
New York liberals have always supported tax hikes, but the budget uncertainty has intensified their push for massive tax increases. New York state is already home to one of the highest tax rates in the nation. To add to that burden would be unconscionable. Residents of all income brackets have increasingly left for places like Florida where the state income tax is zero.
The good news is a few economic indicators show that our state’s financial condition may not be as negative as first thought. Based on the federal bailout and higher-than-projected state tax revenue, any talk of tax increases at this stage is unwarranted. Earlier this month, executive and legislative leadership reached consensus on two-year, state-tax revenue projections being up $5.7 billion from mid-January. Paired with the nearly $12.7 billion in federal aid, the state is no longer looking at any deficit in the upcoming fiscal year. The state’s immediate fiscal issues appear to be resolved.
What New York needs now is steady, predictable tax and regulatory policies that invite organic increases in tax receipts and help keep vital job-creating, income-earning New Yorkers in the state. While, for now, we may have averted a short-term budget crisis, the state still has a long-term affordability crisis that’s been driving residents out of New York state for years.
In the last decade, New York has experienced a dramatic population decline of nearly 1.4 million people as residents have left for states with more opportunity, and friendlier economies. Coupled with consistently being ranked one of the highest taxed states in the nation, as we craft the budget, we must look toward strengthening our economy from the bottom up and put in place policies that facilitate long-term growth. We have the luxury of federal aid this year, and that means there is no longer pressure to desperately plug holes with haphazard reactionary measures; however, we must not waste that luxury.
The Assembly Minority Conference is calling for level-headed, rational policy making that accounts for the entire state’s needs. We need robust, long-term policies that facilitate job growth and incentivize businesses and residents to stay put. We aren’t going to be getting massive federal injections every year. We shouldn’t have to if the state budget process is open and transparent and delivers a fiscally responsible spending plan. We can no longer afford to put New York at a competitive disadvantage.
William (Will) A. Barclay, Republican, is the New York Assembly Minority Leader and represents the 120th New York Assembly District, which encompasses most of Oswego County, including the cities of Oswego and Fulton, as well as the town of Lysander in Onondaga County and town of Ellisburg in Jefferson County. Contact Barclay at email@example.com.