New York would be forced into hiking its income tax on its wealthiest earners if a federal aid package fails to materialize in Congress, Gov. Andrew Cuomo on Monday warned.
"If we don't get funding from Washington, there will be an income-tax increase," Cuomo said in an interview with WAMC's Alan Chartock.
But even then the revenue gained from the tax increase is unlikely to cover the mutl-billion dollar budget gap created by the COVID-19 pandemic. Even if New York increased its taxes on its richest residents beyond the tax rate in California, the state would still need to find billions of dollars to make up the shortfall.
Cuomo has raised the possibility of a mix of tax increases, spending cuts and borrowing. On Monday, Cuomo also raised the possibility of layoffs of government workers.
New York next year faces one of its most difficult budget cycles since the recession of 2008-09.
President-elect Joe Biden has pledged support for cash-strapped states and local governments that have been affected by the pandemic. But Republicans in the U.S. Senate are seeking a smaller package that would aid those who are unemployed or small businesses, but not municipal governments.