De Blasio Hits Albany With Tax Plan as Cuomo Ignores It

New York Mayor Bill de Blasio cruised through the state capitol giving hugs, handshakes and pats on the back to lawmakers whose support he needs for a tax increase on wealthy residents for early-childhood education.

De Blasio was making his first official visit to Albany as mayor in a bid to drum up support for his signature pre-kindergarten program and to attend yesterday’s State of the State speech by his former boss, Governor Andrew Cuomo, who never mentioned his fellow Democrat by name.

Instead, the governor, who faces re-election this year along with the entire legislature, called for $2.2 billion in tax cuts. Cuomo did set statewide universal pre-kindergarten as a goal, though he didn’t say how he would fund it.

De Blasio has momentum on his side after winning by 49 percentage points, the biggest margin for a non-incumbent in city history, with a campaign that described a metropolis divided between rich and poor. He says taxing the wealthy to pay for early-childhood education would close the gap.

“The way we need to foster equality in our city, we have to have a feeling of urgency,” de Blasio, 52, said at a breakfast with a group of four breakaway Democrats who share power in the senate with Republicans.

“This is exactly the moment where we have to right the wrongs, having missed the opportunity for years to have provided our children the type of education that would equip them for the 21st century,” he said.

State Control

The legislature and the governor in New York control most local levies, including income taxes. That requirement is setting the stage for a possible duel between a governor considered a potential presidential candidate and a mayor who is the first Democrat to run the largest U.S. city in 20 years.

The tension may strain a friendship that goes back to 1992, when the two worked together in New York’s Democratic headquarters on Bill Clinton’spresidential campaign. Later, de Blasio was employed by the U.S. Housing and Urban Development Department when Cuomo ran it for Clinton.

De Blasio’s five-year plan would generate $530 million annually by raising taxes for city residents on income above $500,000 a year to 4.4 percent from almost 3.9 percent. For the 27,300 city taxpayers earning $500,000 to $1 million, the average increase would be $973 a year, according to the Independent Budget Office, a municipal agency.

Soy Latte

The mayor says that’s “less than three bucks a day -- about the cost of a small soy latte at your local Starbucks.” For those making $1 million to $5 million, the average extra bite would be $7,793, the budget office said. At incomes of $5 million to $10 million, the increase would be $33,518.

Cuomo and senate Republicans say they support statewide universal early-childhood education. They have indicated there might be funding in the state or city budget to provide the $340 million the tax would raise to fund full-time education to almost 50,000 4-year-olds who are either in part-time programs or none at all. De Blasio says the remaining $190 million raised in his plan would provide almost 120,000 middle-school students with after-school programs.

“We have to get it done with our own resources,” de Blasio said in a press briefing after Cuomo’s address. “We need support from Albany. We see Albany as our partners.”

Paying Enough

Publicly financed pre-school for those who can’t afford it would reduce to about 29 percent from almost 36 percent the segment of the population that in the long run will be poor, according to a National Bureau of Economic Research study released in May. It would also boost the college graduation rate for children whose parents didn’t attend a university to almost 14 percent from about 10 percent, the study said.

A married Manhattan couple with two children jointly filing with an income of $700,000 under standard deductions currently pays about $25,000 to the city.

“They are paying enough already,” said E.J. McMahon, a senior fellow on city and state fiscal policy for the Manhattan Institute, which advocates less taxation. “The highest-income earners are the most volatile and unpredictable element of the tax base, and both the city and the state have become increasingly dependent on those taxpayers.”

Steady Stream

After a meeting yesterday with Sheldon Silver, the Manhattan Democrat who leads the assembly, de Blasio said the tax is needed as a consistent funding source for the program.

“We need to know we’re going to have it; it has to be reliable,” de Blasio told reporters.

De Blasio, elected in 2009 to the watchdog post of public advocate before running for mayor last year, says he’s concerned that the number of middle-income city residents is shrinking. The city’s richest 1 percent took home almost 39 percent of all earnings in 2012, up from 12 percent in 1980, according to the Fiscal Policy Institute, a nonprofit research group in New York backed by organized labor.

Silver says he agrees that a steady funding source for the program is needed.

“A dedicated revenue stream is important, the way the mayor proposes it is important,” Silver told reporters in Albany on Jan. 7. “If he can’t achieve it, the second best is to find a way to pay for it anyway, but I’m not ready to say he can’t achieve it.”

Bond Issue

In the State of the State speech, Cuomo said he wants to put a $2 billion borrowing referendum on the ballot in November to update technology in schools. Silver said some of that money should be spent building facilities for pre-K across the state.

De Blasio also has the support of Jeff Klein, the Bronx Democrat who co-leads the senate. Klein, Silver and Dean Skelos, Klein’s Republican counterpart from Long Island, all say they want the pre-K funding to be part of the budget process rather than a separate measure. After hearing Cuomo call for statewide early-childhood education, Silver said he believes the governor will phase in the funding over years.

Using the budget process would put the onus on Cuomo to decide how to handle pre-K funding when he introduces his spending plan this month. The governor, 56, would have to balance the needs of the entire state against those of the city.

De Blasio, Silver and Klein say the city should be allowed to make its own decisions on taxation, noting that other mayors have been granted similar requests.

“We’re simply asking for the right to tax ourselves,” de Blasio said.

To contact the reporters on this story: Freeman Klopott in Albany at fklopott@bloomberg.net; Henry Goldman in New York at hgoldman@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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