Hoping for a President Biden
By Dan Murphy
Governor Andrew Cuomo and State Comptroller Tom DiNapoli have been sounding the alarm about the State’s finances, budget holes, and the lack of assistance coming from Washington DC. That warning has now turned into a temporary cut in State Aid to the City of Yonkers.
A planned summer payment of $97 Million to the City of Yonkers in AIM funding (Aid to Municipal Governments) has been cut by 20% to $77 Million. According to the State Budget Division, the reduction, or temporary cut, is just that for the time being.
“We are not reducing support for AIM at this time and instead are holding back 20% of the funding as the State contends with a cash crunch caused by a 14% drop in revenue due entirely to the pandemic, the federal decision to delay income tax filings to July, and awaits clarity on federal assistance to offset this revenue loss,” said Freeman Klopott, spokesman, NY State Budget Division.
NY Comptroller Tom DiNapoli reported that state revenues for the month of May were down by $767 Million, or 19.7% from the previous year. “With an economy still suffocated by a global pandemic, the state’s finances took another serious hit in the month of May,” DiNapoli said.
“We are now clearly seeing the recession’s impact on tax receipts. As we continue to slowly re-open the economy, it’s critical that Washington act on our call for more federal aid.”
Other items of note in the report: Personal income tax withholding revenues were $291.8 million below May 2019, a decline of more than 9 percent reflecting both depressed economic activity and timing factors. The Department of Education made $4 billion in general aid payments to school districts.
“New York is facing an unprecedented public health and fiscal crisis that could dramatically change our landscape for years to come. Now we need help from Washington that comes without strings to protect New Yorkers from seeing essential services decimated,” said DiNapoli.
Westchester County government has also seen a large revenue hole blown in their budget from COVID-19. County Executive George Latimer has estimated a deficit in the current budget of more than $100 Million. Latimer offered an early retirement incentive to county employees to help close the expected budget gaps for 2021.
In Yonkers, Mayor Mike Spano proposed a budget, which was approved by the City Council with minor modifications, for the fiscal 2021 year which began July 1. The adopted budget did not include the $20 Million cut in State Aid.
In order to close the $20 hole in the City of Yonkers budget, Spano will have to make cuts. Those cuts will have to include lay offs of City personnel. Spano cannot raise taxes any higher that the budget that was passed with the Council, which was 2%.
Spano must also decide whether to spread the layoffs to the Yonkers Public Schools. In the current City budget, the YPS was forced to layoff xxx staff to balance a $22 Million hole. The question now becomes if the YPS will be asked to cut more positions.
The other, short term option will be for Mayor Spano to wait, and see if the $20 Million cut from Albany is ineed, short term.
What Governor Cuomo, County Executive Latimer, and Yonkers Mayor Mike Spano, are waiting and hoping for is a 4th stimulus- bailout from Washington DC, which includes a bailout of State governments and most important to our readers, a bailout of New York State government. What that requires is the approval of US Senate Majority Leader Mitch McConnell, who has previously said NO to any Blue Bailouts. President Donald Trump could also intervene and agree to a bailout package for NY, which is also unlikely.
If neither McConnell or Trump agree to help the Empire State, a final alternative to avoid serious cuts would be to wait until the November elections to see if Joe Biden is elected President. A Biden presidency would be more agreeable to helping states like New York through their financial troubles for a year or more.
That is why the Governor is slow to move on any significant cuts, calling them for now a temporary cut, or holding back of revenues the state usually provides Yonkers and White Plains. With short term borrowing, New York State and Yonkers, could delay their doomsday cuts until after November and possibly into 2021.
But even with a President Biden in the oval office, Democrats would also have to take control of the US Senate, so that Senator Charles Schumer from NY becomes Senate Majority Leader Schumer. If McConnell retains his post, and republicans still hold onto the senate, don’t look for any NY bailouts coming from DC.
Democrats will have to pick up four seats in November, in Arizona, Colorado, North Carolina and Maine. If Democrats have control over both houses of Congress and the Presidency, then not only will bailout funds become available for New York, but the federal cap of State and Local deduction, (SALT), could also be repealed. This would give Westchester residents the ability to deduct all of their property taxes instead of just the first $10,000.
The City of Yonkers could continue to issue short term bonds to help cover the cost of expenses through the summer. But if that practice continues into the fall, the danger is that it is possible that a 4th bailout will never come, or that it will come without funding to help state governments hardest hit by the Coronavirus, like New York, and Yonkers.
