Reflections on this year’s state budget

God, grant me the serenity to accept the things I cannot change, courage to change the things I can, and the wisdom to know the difference.

Late in the day on April 2 — and two days past due — the State Senate finalized the passage of the 2020 state budget.

We already knew that this would be a painful budget given the Governor’s projection of a $6.5 billion deficit. Then pandemic struck and everyone’s expectations — in nearly every aspect of life — were upended. The State budget was no exception. With the devastation of a new virus that we have little immunity towards tearing through our Country, our economy has ground to a halt.

This is not a time for celebration, and as such, this is not a budget to celebrate.

But first, a note on process — this is important

After last year’s budget — my first as a legislator — I alluded to the fact that the legislature is not a co-equal partner in budget negotiations. That was an eye-opening experience for me and many of my colleagues.

To understand how and why we ended up with a budget that leaves many of us deeply unsatisfied, we cannot ignore the fact that the state constitution explicitly places control of the budget process firmly in the hands of the Governor.

Article VII of the New York State Constitution states (emphasis added):

§2. Annually, on or before the first day of February in each year following the year fixed by the constitution for the election of governor and lieutenant governor, and on or before the second Tuesday following the first day of the annual meeting of the legislature, in all other years, the governor shall submit to the legislature a budget containing a complete plan of expenditures proposed to be made before the close of the ensuing fiscal year and all moneys and revenues estimated to be available therefor, together with an explanation of the basis of such estimates and recommendations as to proposed legislation, if any, which the governor may deem necessary to provide moneys and revenues sufficient to meet such proposed expenditures.

§3. At the time of submitting the budget to the legislature the governor shall submit a bill or bills containing all the proposed appropriations and reappropriations included in the budget and the proposed legislation, if any, recommended therein.

§4. The legislature may not alter an appropriation bill submitted by the governor except to strike out or reduce items therein, but it may add thereto items of appropriation provided that such additions are stated separately and distinctly from the original items of the bill and refer each to a single object or purpose. None of the restrictions of this section, however, shall apply to appropriations for the legislature or judiciary.

In short, the state constitution states that: (1) the governor must submit a budget to the legislature and can include policy proposals related to budget revenues and expenditures; (2) the text of the actual budget bills are submitted by the governor to legislature; and (3) the legislature cannot amend the budget bills submitted by the governor, except to eliminate or reduce a proposed spending item.

And thanks to a pair of Court of Appeals decisions known collectively as ‘Silver v. Pataki’,since 2004 the governor has increased authority to line-item veto any changes that the legislature makes to the budget that exceed the parameters of Article VII, Section 4.

Despite these constitutional restraints, the actual practice of finalizing the budget involves the legislature to a large degree. There are two and a half weeks of joint legislative budget hearings. Each chamber of the legislature passes a budget resolution that reflects the budget priorities of that chamber — a budgetary wish-list if you will for both the senate and assembly. And the final budget product that is voted on is a reflection of negotiations between the governor and the legislature.

But just like the state constitution requires, the final budget product is still a bill submitted by the governor to the legislature to be voted on. And so, at the end of the day, if the legislature really wants something included in the budget, the governor must agree to include it in the final budget bill to the legislature. Likewise, if the governor really wants to include something in the final budget bill, the legislature is constitutionally powerless to prevent him or her from doing so.

This is how you end up with a final budget that legalizes paid gestational surrogacy and e-bikes but includes cuts to healthcare spending and no new sources of revenue.

The strategic logic of supporting a budget compromise

You might be reading all of this — or reading news coverage about the recently adopted budget — and wondering why the legislature can’t just walk away from a deal it doesn’t like. After all, the budget can’t be adopted without consent of the legislature, so if we don’t like the final deal that is reflected in the budget bill submitted by the governor, we can reject it and start anew, right?

Wrong.

The state budget needs to pass by March 31st to keep the lights of state government on. Or, to put it in a more timely perspective, to keep the state health department and office of emergency management operational in the midst of a ravaging pandemic.

Nobody wants a government shutdown, least of all the New Yorkers who just lost their jobs depending on being able to file for unemployment. As it was, because this year we were two days late in passing the budget, hundreds of thousands of state employees were not paid on time. And while the state’s Covid-19 response did not stop at midnight on April 1st because the budget wasn’t done, we were close enough to finishing that we did not see a full government shutdown. But the prospect was not far from anyone’s mind as we raced to finish the budget over the last few days.

If the state shuts down, the only way to reopen it is by passing a new budget that — you guessed it — needs to be sent by the governor to the legislature as per Article VII of the constitution. Which gets us right back to where we started from. Except this time, a strong-willed and impervious governor might insist on adhering to his or her original budget proposal and force the legislature to either accept it or keep the government shut down. We don’t have to engage in hypotheticals — this happened under Governor Paterson in 2010.

In other words: the system is designed to come to a compromise by March 31st, and the best budget that can be negotiated by the deadline is in all likelihood the best outcome compared to the alternative of a shutdown or accepting the governor’s original proposal — or worse.

As a member of the legislature confronting this dilemma, there are two choices: vote no as a matter of principle, even though the alternative can be so much worse, or work in good faith to shape the final budget as best possible, and pray for the serenity to accept the things you cannot change unless you can successfully amend the state constitution.

Count me among the people who absolutely, unequivocally thinks we must amend the constitution to make the legislature an equal branch of government when it comes to writing and passing the state budget.

The ugly realities of this year’s budget

This all leads us back to this year’s budget.

Before the realities of a global pandemic hit our state, this year’s budget was already shaping up to be a big fight.

With the introduction of his constitutionally-required executive budget proposal, Governor Cuomo projected the state faced a $6.5 billion deficit — with approximately $2.5 billion attributed to the state’s Medicaid spending and $4 billion attributed to other spending. Except when you peeled back the layers of the budget onion, there wasn’t really an actual deficit. Rather, what the Governor was projecting was a deficit of projected spending that exceeded his arbitrary imposed 2% growth spending cap.

In other words, we didn’t face an actual deficit of having less revenue to pay our expenses. We faced a projected increase in expenses that exceeded how much the governor wanted to spend. Big difference.

The 2% growth spending cap has been in place for nearly 10 years, and it is not without controversy. Many sectors of public investment face expenditure growth of more than 2% each year, yet under the Governor’s formula, the state budget won’t rise to meet that demand. The 2% cap is also not required by law or the constitution. And yet the governor can insist on adhering to it because…see above, under Article VII of the constitution he can.

I’ll concede that there will always be ways to curb excess government spending on programs that run over budget, or that don’t produce the results you might hope for. But for every example of “government waste,” there’s an equal or greater example of programs and agencies that are underfunded and that need more financial investment, not less. Fully funding our public schools to comply with the Campaign for Fiscal Equity court order is a perfect example.

Six weeks ago, we faced the prospects of passing a state budget that would close the “projected” $6.5 billion deficit by cutting healthcare spending by nearly $3 billion, marginally increase public school funding, not investing in critical CUNY needs, and rejecting commonsense revenue raisers such as taxes on ultra millionaires and billionaires and luxury goods.

There was significant opposition to that approach in the form of a coalition of progressive legislators, labor unions, advocacy groups, and grassroots organizations that fundamentally believed that an austerity budget was not the solution to close a manufactured budget deficit. As the budget process continued, opposition continued to grow and the coalition increased the pressure it was placing on the governor to change his approach.

I supported taxing the ultrawealthy. I fought to increase funding for CUNY and SUNY students, especially those with disabilities. I organized my local public schools and PTAs to help call attention to the need for a fully-funded education budget.

And then the pandemic hit and the world as we knew it stopped. The economy shut down overnight. And the “projected” deficit turned into a real shortfall of expected state revenue, with projections of anywhere from $6-$15 billion in lost revenue. Now the talk of raising taxes on the ultrawealthy wasn’t just a rhetorical exercise to fully-fund our wish list of progressive goals — it was (and remains) a morally imperative choice that should have been used to staunch the economic bleeding we are in the midst of and to prevent deep cuts to critical programs and service areas. We raised taxes on the wealthy in the midst of the Great Depression to help stabilize the country. We raised taxes on New Yorkers after 9/11 to help the city rebuild. There was no good reason why we couldn’t do it again now.

But the governor was opposed to raising taxes and the governor controls the budget process. At a time when the voices of the anti-austerity coalition could have reached a crescendo in calling for increased revenue to stem the worst of the cuts, the momentum of the movement was blunted as the state capitol was literally (but rightfully) closed to the public in the face of a global public health crisis, and the public’s attention turned to growing hospitalization rates and rising body counts from covid-19.

In the end, we passed a state budget that closed a $10 billion deficit with $4 billion in federal stimulus aid from the C.A.R.E.S. Act, and saw a reduction of $5.7 billion in spending across the board in every area of the budget except public education, which stayed flat from last year’s spending levels.

We fought tooth and nail against cuts to services and for increased revenue. Should we have shut down the government, on the off-chance we could have improved the outcome? That would not have been a responsible decision.

But I do know that the gravity of the health crisis and a last minute push to publicize the details of projected cuts to the Medicaid budget — information which was not even made available to the legislature until days before the budget was due, by the way — helped the legislature convince the governor to blunt the worst of his proposed health care cuts. Rather than accept a $3 billion reduction in health spending, we fought back and ended up restoring $2 billion in cuts, resulting in a net cut of a $1 billion while also delaying any cuts until after the public health emergency ends and creating a stabilization fund to help financially distressed and safety net hospitals.

Cutting $1 billion in healthcare spending at a time like this is absurd. The covid-19 outbreak has shown quite dramatically how structurally precarious our health delivery system is. We will need that $1 billion — and more! — to rebuild our health system and make sure we are never again in a position where we need to ration out ventilators, undersupply critical needs of PPE, or turn away people who can’t afford to pay for their care. But given the circumstances we faced, I don’t know if we could have gotten any better outcome right now.

Why I voted yes on the budget

So, while I wasn’t happy with many aspects of the budget, in the end, I cast my vote in favor.

Despite the fact that this crisis budget wasn’t all we hoped for, there were glimmers of light that will make a deeply positive impact on New Yorkers’ lives.

Highlights include an increase in benefits for police and fire widows to adjust for cost of living that I passed as legislation last year and proposed again this year. This issue is incredibly near and dear to me as Chair of the Civil Service and Pensions Committee — we have to care for those left behind by our heroic first responders.

The budget also capped out-of-pocket expenses for life-saving insulin at $100, legislation that I have previously sponsored.

We banned pricing products differently based on the gender they’re marketed towards, a practice that typically unfairly targets women; and took actions to combat vaping, including banning the flavors that target kids.

The Domestic Terrorism Hate Crimes Act creates a new category of crime for those who target group of people because of their race, religion or for being part of a protected class with the intent to injure or kill. This law stems from a devastating spate of anti-Semitic attacks, including a cold-blooded Hannukah night attack at a gathering of celebrants in Monsey.

The budget banned styrofoam — enormously destructive for the environment — and extended the ban on fracking. Furthermore, the budget expanded prevailing wage for construction workers to private projects, ensuring that these workers are paid a fair wage that they can support themselves with.

This was also a budget that responded to the very real crisis unfolding all around us. We added $9.8 million to the Workers’ Compensation Board in anticipation of an influx of claims related to the Covid-19 crisis, and increased funding for the Unemployment Administration by $1.05 billion. The budget also provided $200 million in additional support through the Child Care Development Block Grant to assist families affected by the public health emergency.

We funded the Liberty Defense Project so that immigrant New Yorkers, many of whom are serving on the front lines of the pandemic, receive the legal help they need and families can remain together.

The budget also establishes a $3 billion dollar environmental bond act that will help communities protect against flooding, rising sea levels, and dangerous heat waves.

It demonstrates the State Legislature’s commitment to public education that, under these extremely difficult circumstances, we were able to hold Foundation Aid for schools flat, and even increase expense-based aid by $96 million. Our public institutions are the basis of a good and just society, and even when we have nothing to spare, we need to invest in them.

We also successfully blocked the Executive branch from forcing public retirees to pay more for their health insurance.

Yet the blows were deeply dispiriting.

I fought for an increased investment of our chronically underfunded CUNY & SUNY schools — including $15 million in new funds for our higher education students with disabilities. We didn’t get it.

I fought for toll relief for Brooklyn residents crossing the Verrazzano-Narrows Bridge — the highest toll in the country and a regressive tax that unfairly punishes Brooklyn residents. With the MTA’s finances in a freefall right now, we couldn’t get this done.

We fought to provide an increased annual investment of 3% for the next 5 years for service providers for communities with disabilities, a program called 3 for 5. Again, we did not get it.

We fought for $5 million in funding for crucial programs for refugees across New York State, but ended up with just $1 million — which means services will have to be cut.

Where do we go from here?

After we get through the health emergency we find ourselves in, we need to have a full reckoning of what we just went through and what we must do to never put ourselves in this position again.

We need to enact the political and structural change that will allow the legislature to be treated as a co-equal branch of state government so we no longer have to face such draconian Hobson’s Choices.

We need to continue to fight for a city and state that’s not just for the well-to-do who can escape to their country house in the Hamptons at the first sign of crisis, but a City and State for all of us to live and thrive in.

We’re not there yet. But what pulls us through even the darkest times is the hope that we can build a City and a State with opportunity for all — the New York we all want to live in.

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NYS Senator, District 22.

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Senator Andrew Gounardes

Senator Andrew Gounardes

NYS Senator, District 22.

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