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NY reaches $ 212 billion bid to start economic recovery

New York State leaders said Tuesday they had agreed on a $ 212 billion state budget that includes tax increases on the wealthy as well as significant relief for tenants, undocumented immigrants and business owners hardest hit by coronavirus.

Many of the budget’s key initiatives aim to set in motion the restoration of a state that was the one-time epicenter of the pandemic.

It includes $ 2.3 billion in federal funds to help tenants late in rent; 1 billion $ In subsidies and tax deductions for small businesses that suffered from the economic downturn and a fund of 2.1 billion. dollars for one-time payments to undocumented workers who did not qualify for federal stimulus checks or unemployment benefits, according to budget highlights released by the governor̵

7;s office.

All were proposals advocated by Democratic leaders for state legislators who exploited the government of Andrew M. Cuomo’s weakened political position to vigorously lobby for their priorities, including a coveted increase in personal income tax on individuals earning more than $ 1 million – long-standing reluctance to raise taxes on the rich.

Two new parentheses would also be introduced for incomes over $ 5 million and $ 25 million. The changes mean that wealthy New York City residents would be effectively subject to the highest combined local and state personal income tax rates in the nation surpassing California.

The ramifications of the tax changes will certainly spur a controversial debate in the coming months. Progressives see them as essential to help pay for new liberal priorities for vulnerable New Yorkers, especially after the pandemic led to unemployment and closed businesses. But there is concern among conservatives that higher taxes could lead to wealthy New Yorkers, some of whom may already be working remotely, moving permanently to lower-tax states, such as Florida.

The spending plan – about 10 percent higher than last year’s budget – is far from the doomsday scenario that officials envisioned earlier this year as the state looked to tackle a daunting $ 15 billion budget gap over two years through steep cuts and tax increases.

Since then, revenues have been better than originally expected, although they are still behind pre-pandemic levels. The state also received a one-time infusion of $ 12.6 billion in direct assistance from Washington as well as billions of dollars in education and transportation funds.

Even as the governor confronts several allegations of sexual harassment and calls for his resignation, Mr Cuomo was able to claim some of his own political victories in the budget negotiations, where governors traditionally have great influence.

The budget agreement allows for mobile sports betting and brings a potential revenue stream of nearly $ 500 million a year to New York, which has seen neighboring states like New Jersey and Pennsylvania seize this market. But proposals for rapid casino development in the New York City region were thrown out of the budget.

Mr. Cuomo successfully fought for the $ 1.3 billion withdrawal. Dollars that will help pay for a plan to rebuild blocks near Penn Station in Manhattan, a controversial project that could include 10 new towers and has already drawn the reprimand of local community agencies and elected officials. However, public funding would be limited to transport-related improvements according to budget documents.

The governor also secured the state’s authority to withhold 50 percent of state and federal funds from localities that do not produce plans to reform their police departments, which Cuomo mandated through a decree in the wake of the George Floyd protests last year. It also includes a program to make broadband Internet more affordable and a package to improve patient services at state nursing homes.

The budget, which still has to pass the legislature and is approved by the governor, will significantly increase spending in New York, which is already one of the most expensive states, prompting some financial analysts to warn of the dangers of maintaining record spending levels when federal funds dries up.

The new tax increases on the rich and increases in corporation tax are expected to generate more than $ 4 billion in additional revenue each year. The tax increases are expected to affect 50,000 taxpayers, said Liz Krueger, a Democrat and chairman of the state Senate Finance Committee.

“This is not a tax increase for the vast, vast majority of New Yorkers,” Ms Krueger said in the upper floor on Tuesday. Still, the increases are levied on an integral part of the state’s tax base: The top 2 percent of the highest-income New Yorkers pay approx. half of the state income tax.

Under the changes, the personal income tax rate would rise to 9.65 percent from 8.82 percent for individuals earning more than $ 1 million and for shared archives earning more than $ 2 million.

Two new personal income tax classes would also come into force: 10.3 percent for income between $ 5 million and $ 25 million and 10.9 percent for income over $ 25 million. The new rates expire before the end of 2027.

The late budget – it was due on April 1 – resulted in thousands of government employees’ payslips being delayed, according to the state inspector.

The so-called Excluded Workers’ Fund was among the last items in the budget negotiations, leading to some sort of controversy among Democrats, including some who fear it could be used as a political wedge problem with moderate suburban voters in 2022. The details were still becoming clear, but it would effectively provide unemployment benefits to undocumented workers who lost income or were unemployed during the pandemic and were not eligible for federal support. Applicants must provide certain documents to verify their identity, residence permit and work-related eligibility.

Conservatives blew up the plan with Nick Langworthy, the Republican Party chairman, calling it “insane.”

“Democrats are passing a budget that raises taxes on New Yorkers and businesses by $ 4 billion, while enacting a $ 2 billion fund that will provide $ 25,000 in payments to illegal immigrants,” Langworthy said Tuesday. .

The rental assistance program is expected to be an urgent lifeline for low-income tenants who owe rent or are at risk of eviction because they are struggling financially as a result of the pandemic. Eligible tenants are allowed to cover up to 12 months rent and costs to utilities as well as three months potential rent, financed by federally allocated funds.

The deal also includes $ 600 million in assistance to homeowners and property tax breaks for New Yorkers earning less than $ 250,000. There is also $ 250 million for New York City’s struggling public housing authority and $ 100 million to facilitate the conversion of hotels and vacant properties into affordable housing, an idea that took off when much of Manhattan’s commercial districts were emptied during the pandemic.

School districts across the state are also poised to get a major infusion of cash – about $ 4.2 billion – over the next three years. The money will provide additional support to districts with a large number of high-need students and struggling schools, including New York City. The state distributes approx. $ 1.4 billion a year for the next three years, Then give about 4.2 billion. $ to schools annually, a significant increase from the current level of funding.

The provision is the result of a two-decade legal and legal battle known as the fiscal equity campaign to force New York to increase school funding under a formula concentrated on high-need districts. In 2006, the Court of Appeals ruled that New York denied children the right to healthy basic education, which is guaranteed under the state constitution. The new funding outlined in this year’s budget completely completes the trial’s mandates.

This year is the first time the legislature has committed to the financial obligations described in the lawsuit.

Eliza Shapiro contributed reporting.

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