At the end of his budget presentation, Gov. Andrew Cuomo launched his best impersonation of Obi-wan Kenobi attempting to trick some stormtroopers.
“Don’t lose the forest for the trees because the main issue in the budget is not the budget,” Cuomo told lawmakers on Tuesday. “The main issue in the budget is the SALT deductions.”
Cuomo outlined a $168 billion spending plan that will dominate the conversation in Albany in the coming weeks, closing a $4.4 billion shortfall with a 2 percent cap on spending from the current year and $1 billion in new taxes and fees that Republicans are already viewing with a wary eye.
As he has done for the last several months, Cuomo repeatedly blamed Washington, however, for the state’s challenges.
“Washington hit a button and launched an economic missile and it says New York on it and it’s headed our way,” he said. “You know what my recommendation is? Get out of the way before it lands.”
But at the same time, Cuomo is trying to use the federal government, controlled by Republicans, as a foil in the budget proposal. For instance, Cuomo wants to tax “windfall” profits for health insurance companies as a result of the federal tax overhaul. The money would “recapture” $140 million in tax savings and be used to bolster health care spending in New York.
Cuomo wants to create a statewide payroll tax that would eventually replace the personal income tax while also making changes to charitable deductions. Both are measures to work around a federal $10,000 cap on state and local tax deductions.
Cuomo acknowledged there are challenges, particularly with the adoption of the payroll tax, which would somehow have to sit alongside the existing personal income tax as the transition is underway.
“It is hard, it is complicated, but it is doable,” Cuomo said. “This is not a political issue.”
The payroll tax switch has some early support from Assembly Speaker Carl Heastie, a Democrat.
“To just do nothing and have the federal government continue to pick the pockets of New York state — I think it would be wrong on us not to do something,” he said.
But the fee and tax increases are, especially for Senate Republicans, who are unlikely to want to back a budget that includes a $1 billion tax increase, especially in an election year. The budget includes new fees placed on opioids and e-cigarettes.
Overall, Cuomo said the money would be used to help pay for education and health care, the two costliest items in the budget.
“The revenue stuff we have to take a hard look at,” said Senate Majority Leader John Flanagan.
Asked if his conference would support a $1 billion tax increase, Flanagan said, “no.”
Other Republicans, including potential gubernatorial candidate Sen. John DeFrancisco, were skeptical as well.
“A lot of diversion took place here and blaming someone other than those who put us in the problem we are in now,” he said.
There are more land mine up ahead as well, including a likely push from lawmakers in both parties to add more money to the proposed $338 million increase in foundation aid and, from Assembly Democrats, opposition to an increase in charter school tuition aid.
The budget proposal also includes more money to fund sexual harassment investigations in an oft-criticized state ethics oversight panel.
Cuomo has prided himself on budgets being passed by the final day of the state’s fiscal year, March 31. Last year, the budget was 10 days late.
This year, Passover begins Friday March 30, a day before the budget is due. The final scheduled session day is March 29 — setting up an early budget adoption, or a late one.