HOT OFF THE WIRE

Cuomo Considers Changing Tax Code as Economy Struggles

(Corrects Siena pollster’s name in fifth paragraph.)

Governor Andrew Cuomo is considering restructuring New York’s tax code as he prepares a budget that must close a deficit as large as $3.5 billion after a temporary surcharge on those earning at least $200,000 expires Dec. 31.

Cuomo has made clear he opposes the state’s so-called millionaire’s tax, an extra surcharge on those who earn $200,000 or more. With the levy set to expire at year’s end, he’s now discussing a broader rethinking.

“What I’m looking at is what do you do with the tax code and how you use the tax code to stimulate jobs,” the 53-year- old first-term Democrat said on WGDJ in Albany today.

In the past few months, the state has received a stream of bad news. The midyear update to the financial plan revealed a budget deficit that’s expected to grow as revenue from Wall Street slump amid fears of another global economic meltdown. Comptroller Thomas DiNapoli issued a report in October that said that finance, which accounted for 23.5 percent of wages paid by businesses in New York, is likely to shed 10,000 jobs by the end of 2012.

“Since April, when the budget was passed, he hasn’t had to change what he’s been saying,” said Steven Greenberg, a pollster for Siena College in Loudonville. “As he’s getting closer to having to present a balanced budget, it’s not surprising that his words are changing.”

Josh Vlasto, Cuomo’s spokesman, declined to comment.

Cuomo closed a $10 billion budget gap this year in part by using the threat of layoffs to get the state’s two biggest unions to agree to furloughs and wage freezes meant to save $450 million.

Changing the Conversation

When asked previously about raising taxes on the wealthy, Cuomo has said doing so would put the state at a competitive disadvantage for attracting new businesses. Rather than reiterating that position, as he has done before, Cuomo said today “all the focus on the millionaire’s tax is in some ways misplaced. I’m focusing on how do you turn the state’s economy around? How do you balance the budget in that context?”

Cuomo is taking a wider view that will help him push his agenda when the Legislature reconvenes in January, said Gerald Benjamin, a political-science professor at the State University of New York, New Paltz.

“He’s changing the conversation so he credibly keeps his promise that he would let what they call the millionaire’s tax expire, while at the same time not losing his capacity to drive the system,” Benjamin said in a telephone interview.

To contact the reporter responsible for this story: Freeman Klopott in Albany, New York at fklopott@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

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