An ambitious Cuomo budget, with optimistic assumptions

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Andrew Cuomo. (Governor's office)
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ALBANY—Gov. Andrew Cuomo outlined a $137.2 billion state budget and multi-year spending plan on Tuesday afternoon that relies on a pair of key assumptions to pay for a freeze on local property taxes and a statewide expansion of pre-kindergarten programs.

Cuomo's budget assumes the federal government will approve a $10 billion Medicaid waiver, and that state operating spending will hold to less than two percent a year, which helps balance his plans for a local property tax freeze and for $100 million in funding during this coming year, to begin expanding pre-K programs statewide.

Fiscal experts have said these federal funds are critical to Cuomo's goal of a two-percent growth cap, and one of the only ways to balance the budget while keeping political promises to steadily increase spending for education and health spending.

In 2012, New York asked the federal government for permission to reinvest $10 billion of a projected $17 billion in savings it squeezed from growth projections by following recommendations of the Medicaid Redesign Team. New York updated its request in December of last year; its federal status is not clear. In a briefing book, the Cuomo administration called the waiver approval “essential” to its health spending plan.

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During his remarks, Cuomo referenced a “serious situation” in Brooklyn, saying hospitals could close without the waiver.

“We need H.H.S. to act on the waiver now," Cuomo said. "It is a critical situation. We have no alternative. The numbers are beyond the scope of the state government.”

The most recent state financial plan assumed state operating funds would grow by roughly 4 percent for the next several years, Cuomo's latest budget assumes only half that growth, allowing the administration to project a $2.2 billion surplus by the 2016-17 fiscal year, according to the briefing book. The administration also assumes $310 million in surplus funds will carry over from this fiscal year into 2014-15.

Cuomo is projecting a 3.8 percent increase for school aid, which amounts to about $807 million, including formula-based aid to districts and targeted funding streams for pre-kindergarten, after-school programs and merit incentives for teachers.

The total school aid proposal is nearly $21.9 billion, including $100 million for pre-K. The budget book commits $1.5 billion to pre-kindergarten over the next five years, and says facilities required to implement a statewide system will be partially funded by a $2 billion education facilities bond.

The proposed increase is slightly smaller than what Cuomo presented last year: in 2013, he offered an $889 million boost, including funding for competitive grants. The actual increase, after lawmakers adding more money to school pots, was about $1 billion.

Capital reported earlier this month that the governor planned to fund pre-K through the state budget in order to avoid raising taxes. New York City mayor Bill de Blasio campaigned on the promise of raising taxes on the city's wealthiest residents to fund universal pre-K and after-school programs for middle schoolers, and de Blasio said earlier Tuesday that he intends to continue pushing for that tax, calling it a "mission" from voters.

Cuomo's budget would also fund a public financing system to match small contributions, up to $175, at a rate of six to one, with “strict limits in place to protect taxpayers,” according to the briefing book. That program would initially be available to Assembly and Senate candidates in 2016, then all candidates for state office in 2018.

The budget would also restrict contributions to legislative soft money “housekeeping accounts” to $25,000. Currently, donors can direct unlimited amounts of money for purposes such as utility bills and party staff salaries, though those accounts are often used to transfer money to other committees. Party-committee transfers to candidates would also be limited, as would corporate contributions.

Cuomo's budget aims to close the so-called LLC loophole by treating LLCs as corporations subject to a strict $5,000-a-year donation limit, instead of individuals who face less restrictions.

Cuomo has also introduced an enforcement mechanism for campaign finance. The budget includes funding for a Independent Division of Election Law Enforcement within the State Board of Elections. Cuomo is providing $5.3 million for it, adding 11 staff who would report to the Chief Enforcement Officer.