On the road with governor’s 2019 budget

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Gov. Andrew Cuomo brought his 2019 budget road show to Woodbury last week with a rousing address to the Long Island Association. But while he gave significant nods to transportation, education, health care and the environment, he clearly had taxes on his mind.

At the same time, his sometimes fraught relationship with Albany Democrats was on display as he lambasted state senators, charging them with what he termed “governmental malpractice” for proposals that he claimed would unfairly target New York’s wealthiest, while undermining a deal to build Amazon’s second corporate headquarters in Long Island City.

Reaction to the speech was positive, if somewhat muted. “He said a lot of good things, especially about investment in Long Island,” said State Sen. Kevin Thomas, a Democrat who represents part of Wantagh, adding that he was pleased that the governor had committed to upgrading Long Island’s aging infrastructure and supporting the schools. And Thomas agreed with Cuomo about the crippling effect of losing the federal deduction for state and local taxes for Long Island taxpayers.

At the same time, Thomas reserved judgment on the issue of the so-called “millionaire’s tax,” which Cuomo spoke at length about. “I need to look into it more,” Thomas said. “The governor is trying to attract more high-wealth individuals to the state, and we need to keep our economy robust.”

But the senator was less sure that wealthy taxpayers were likely to move out of the state if they did not receive additional tax breaks, as Cuomo contended. “New York is a financial capital,” he said. “Where are you going to go? There’s no place like New York. So I think we need a balance.”

“The next few weeks are going to be key” as the Legislature gears up for budget negotiations, Cuomo told the audience at Crest Hollow Country Club, which included Long Island Democratic Senators John Brooks, of Seaford; Todd Kaminsky, of Long Beach, and Thomas. “This year, it’s not about plans. It’s not about vision,” he said. “We know what needs to be done. We just have to get it done.”

Reinstating the state-and-local-taxes deduction topped the governor’s to-do list. The 2017 change in the federal tax code has added 30 percent to New Yorkers’ tax bills, Cuomo said. “It changes the economic competitiveness of the state of New York. . . . We just saw a $2.3 billion shortfall in our revenue, and this is how fragile our economic situation is.”

“We have a very progressive tax code; we believe the rich should pay more,” Cuomo said. But “1 percent of New Yorkers pay 50 percent of taxes. . . . Our entire economy rests on those people.” The top 1 percent are “the most mobile people in the country, and they’re the most financially astute people in the country,” he said. “I believe that the $2.3 billion shortfall is because rich people are starting to leave.”

Making the tax cap permanent

To help offset the loss of the SALT deduction, “we have to make the 2 percent property tax cap permanent for all,” Cuomo said. “No exceptions, no tweaks, no backdoor increases, no Albany games.”

According to Cuomo, a typical homeowner pays roughly $1,900 in state income tax and $5,000 in property taxes. An estimated $7.1 billion in taxes were collected from businesses, while $23 billion were collected in property taxes, the governor said. “Property taxes have to get under control. Our 2 percent cap has saved Long Islanders $8.7 billion already,” he said.

“We want a tax cut for the middle class, because they’re the ones who are struggling,” Cuomo said.

The governor said he would like to reduce the top rate for families with household incomes of between $40,000 and $300,000, from 6.85 percent to between 5.5 and 6 percent. “We want to bring the rates down . . . so the middle class knows that we are on their side,” he said.

Cuomo also said he wants to eliminate the internet tax advantage. While online retailers are supposed to charge a sales tax for online purchases, many do not. Last year’s U.S. Supreme Court decision, South Dakota v. Wayfair, gave states the right to charge online retailers the same sales tax rate as that collected by brick-and-mortar businesses.

“Main Street is struggling,” Cuomo said. He estimated that tax from this source could bring Long Island communities as much as $30 million in additional sales tax revenue. Measures to empower state and local governments to collect these revenues are now making their way through the Legislature.

Millionaires and Amazon

But it was the so-called millionaire’s tax and the proposed building of Amazon’s second corporate headquarters that sparked Cuomo’s most heated words, revealing tensions in Albany just six weeks into the new legislative session, in which Democrats control both the Legislature and the governor’s mansion.

New York has the second-highest millionaire’s tax in the nation, Cuomo said, with top rates in excess of 8 percent. “On what possible logic would you now think now is the time to increase the millionaire’s tax? . . . If that happens, we’ll be able to count on one hand the number of millionaires who are left in New York.”

Cuomo also accused Senate Democrats of attempting to undermine the deal negotiated late last year to bring Amazon’s second headquarters to Queens. The deal, which is to bring an estimated 25,000 jobs to the area, has drawn fire from some local residents who are concerned about the impact of such a large-scale project on the quality of their lives.

Calling it the “largest economic development project in the history of the State of New York,” Cuomo said the average Amazon salary would be at least $150,000 per year. “It brings us into the tech economy in a big step forward,” he said. “It synergizes Long Island and the [research and development] that we’re doing on Long Island. We have to make Amazon a reality.”

Cuomo cited a Feb. 8 Washington Post article reporting that Amazon executives are reconsidering their decision to come to Queens because of community opposition. “There’s no business that brings 25,000 jobs,” Cuomo said. “I spend days to bring a business that has 100 jobs.”

Cuomo estimated the state stands to gain roughly $27 billion in revenue in exchange for incentives worth $3 billion. Opponents of the development call the incentives corporate welfare.

“They’re afraid it might have a disruptive impact on the neighborhood,” Cuomo said. “I’ve never done a major project where there’s not local opposition.”

The Senate is not currently considering legislation pertaining to Amazon or the millionaire’s tax, but a millionaire’s surcharge is set to expire next year.