Tough financial times ahead
By Dan Murphy
During one of his daily briefings on the Coronavirus, Governor Andrew Cuomo, when asked about how deep state budget cuts will be that affect State Education Aid to local school districts, he quipped “ask Mitch McConnell.” Cuomo was only half joking after last week, US Senate Majority Leader Mitch McConnell said, “I would certainly be in favor of allowing states to use the bankruptcy route. It saves some cities, and there’s no good reason for it not to be available.
Calling any bailout of New York and California a “Blue State Bailout,” McConnell said, “My guess is, their first choice would be for the federal government to borrow money from future generations to send it down to them now so they don’t have to do that. That’s not something I’m going to be in favor of.”
Gov. Cuomo responded, saying “You want to see that market fall through the cellar? Let New York declare bankruptcy. This is one of the really dumb ideas of all time, you will see a collapse of this national economy” if states such as New York and California declare bankruptcy, Cuomo said. “So just don’t.”
McConnell and Cuomo are arguing in public and through the media, after a Phase III package of Federal stimulus-bailout funds go out to small businesses and to the people, and discussions have begun on a State IV plan. Cuomo and democratic members of Congress want a phase 4 that includes a bailout of state governments hit hard by COVID-19, including New York. Republicans, led by McConnell don’t want a phase 4 and don’t want to bailout New York.
Some of the arguments heard about bailing out New York are some of the same arguments heard about changes made to the Federal Tax Code, which resulted in a $10,000 cap on State and Local tax deductions. Called the SALT tax deduction limit, it was vociferously opposed to by Westchester and New York Democrats, but in the end, SALT and the new federal tax code passed and is the law of the land today.
Republicans like former Speaker of the House Paul Ryan had argued that by limiting the amount of dollars New Yorkers could deduct from their federal taxes would result in State government controlling or reducing their spending. This did not happen. Now the same, “punish New York” argument, for spending too much, taxing their homeowners too much, and paying their union workers too much, is what you hear from Republicans in Washington.
Westchester’s Congressman Eliot Engel said, “Senator McConnell has made clear that when it comes to helping states like New York, which have been dramatically affected by this pandemic, he is not interested. Now, just three years after he and his GOP cronies blew a hole in the national deficit with their awful tax scam, Senator McConnell has decided, out of the blue, that the national debt is a problem and we need to hit the brakes on a phase 4 stimulus.”
“Time and again Senator McConnell and the GOP have sought to punish New York—just ask our 9/11 first-responders. Right now is no different. The irony of course is that New York keeps Senator McConnell’s home state of Kentucky afloat. As a donor state, we send far more to the federal government in taxes than we get back. Kentucky gets far more in federal support than they put in, meaning they are basically on the New York State welfare system and have been for years. So given the financial support we provide to the state of Kentucky, and given the unprecedented difficulty New York finds itself in, you would think the Senate Majority Leader would be able to suppress the petty partisanship for just a moment and give us the unequivocal support we need.
“We need a phase 4 stimulus package and we’re going to get it. We need money for state and local governments, and more money in the form of direct payments to Americans. We need funding to help our school systems, funding to keep the Post Office going, and funding for the MTA. This is how we get New York back up and running, and that is my priority,” said Engel.
The trickle down catastrophe for New York State, Westchester County, and local governments and school districts, if Speaker of the House Nancy Pelosi, U.S. Senate Minority Leader Charles Schumber (from NY) or someone else doesn’t stand up to McConnell is:
#1-New York State presents its final revenue numbers in early May that show a $10 Billion budget hole, due to the Coronavirus. With no direct revenue, or bailout coming from Washington, Cuomo makes cuts to local governments and school districts in comparison to prior year funding.
#2-Westchester County Government is facing a $85 Million budget shortfall as a result of the COVID-19 pandemic. That figure was shared with the public by County Executive George Latimer late last month.
Latimer wrote to Washington DC in the hopes of receiving a Federal government bailout. “The greatest priority of Westchester County Government is the care of the almost 1 million people who live here during this unprecedented pandemic. But that care comes with a massive price tag – one that has our finances in freefall.
“I fully support US Senator Chuck Schumer’s proposal to include loss revenues for counties in the next federal stimulus package. Our federal representative, who always fights for New York, is this time fighting to provide Westchester with $85,785,945.00 and millions for towns, cities and villages in the County. This funding would be used for lost revenue.
“Our traditional sources of revenue hang in a field of the unknowns, our residents are out of work and suffering financially. It is times like these – more than ever – that we need financial help from the federal government. Westchester County is on the front lines of providing care and combating this deadly contagion – and we have the bills to prove it. I want to thank Senator Schumer for fighting for us, and now we also need the support of the Senate and the President,” wrote Latimer.
Sales Tax Revenue, which the county is reliant on and which the county increased by 1 cent last year, has plummeted, because of reduced shopping by all of us and because of both declining gasoline prices and declining demand for gasoline because we are at staying at home.
Local school districts are waiting for State Education Aid numbers before coming out with their budgets for the 2020-2021 school year. Gov. Cuomo also provided school districts with extra time this year due to COVID-19, until May 15, to put their budgets together.
But without state education aid dollars coming down to Westchester school districts at the same levels as last year, and with local property tax collections up in the air based on Westchester residents, taxpayers and homeowners who have lost their jobs or small businesses, the future of how many teachers and staff can be afforded and paid for is very much up in the air.
The possibility of layoffs, which has almost never been mentioned in any school district or local government other than Yonkers in the last 20 years, is a possibility now in communities not used to it, including Westchester County government.
And layoffs are even more likely if US Senator Mitch McConnell gets his way.
