Cuomo Budget Sets Up Showdown Over De Blasio’s Pre-K Tax

New York Governor Andrew Cuomo says he can finance universal early-childhood education statewide while cutting $2.2 billion in taxes. Mayor Bill de Blasio says New York City still needs to tax the wealthy to create a pre-kindergarten program.

Cuomo said his $137 billion election-year spending plan, unveiled in Albany yesterday, will deliver on a promise to make New York the fourth U.S. state to provide universal pre-K. The move may also outmaneuver de Blasio on his signature campaign issue, though not end their feud over taxes.

The state’s two most visible leaders face a showdown in a divided legislature, where New York City Democrats are seeking to tap into an election-year wave that carried de Blasio to the biggest victory margin for a non-incumbent in city history. The dueling Democrats, who have been friends for 20 years, are at opposite ends of a split within their party, said Dean Skelos, the Long Island Republican who co-leads the Senate.

“The governor has pointed out very clearly that there is a path to have universal pre-K and I have said all along you don’t raise taxes just to raise them,” Skelos told reporters after Cuomo presented his budget. “It also shows that there is a schism within the Democratic Party, between the Democratic progressive left and the Democratic progressive right, de Blasio and Cuomo.”

Each has a five-year plan to bring pre-K and after-school programs to their constituents. Cuomo’s would spend more than $2.2 billion to reach every school district in the state; de Blasio’s earmarks $2.5 billion just for New York City.

Local Control

De Blasio won office with a campaign that described a metropolis divided between rich and poor and made taxing the wealthy to close that gap and provide universal pre-K its centerpiece.

New York’s legislature and governor control most local levies, including income taxes. Sheldon Silver, the Manhattan Democrat who leads the Assembly and has been supportive of the mayor, said yesterday there may be room for both plans.

The 65 New York City Democrats, who make up almost half the chamber, “have been briefed by the mayor and they’ll have to make a determination,” Silver said. “As long as it’s sustainable, as long as it’s guaranteed going forward, then I think very clearly, maybe a tax would only be needed for part of what’s overall needed.”

Robert Megna, Cuomo’s budget director, said each district will have to come forward with a proposal, and each will be handled separately.

‘Viable Plan’

“If the city has a viable plan that spends more than that, we’ll figure out a way to accommodate that,” Megna said at an Albany press briefing yesterday.

Even so, de Blasio and Jeff Klein, the Bronx Democrat who co-leads the Senate, weren’t backing down on what they said was the need for a consistent funding source.

“I have a mandate from the people to pursue this plan,” de Blasio said at a press briefing in Manhattan yesterday. “What we need is a plan that locks in the resources for five years and is not dependent upon the vagaries of each year’s budget process.”

The legislature and the governor have consistently let local governments raise levies. From 2011 to 2013, the senate approved at least 35 measures that allowed localities to increase taxes or extend levies already in place. Three proposals died in the Assembly. The other 32 were signed by Cuomo.

Five Years

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 the current level of almost 3.9 percent. It would spend about $340 million to fund full-time education for almost 50,000 4-year-olds who are either in part-time programs or none at all. The other $190 million would provide after-school programs for almost 120,000 middle-school students.

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.

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 a year, the average extra tax would be $7,793, the budget office said. At incomes of $5 million to $10 million, the increase would be $33,518.

Cuomo’s plan was “commendable,” de Blasio said yesterday, though the funding could be used for other educational programs.

‘Inside Baseball’

“I don’t worry about inside baseball, I don’t worry about political prognostication,” de Blasio said. “Of course we’ll be respectful and communicative, but this is the plan that will work for the people of this city.”

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,” E.J. McMahon, a senior fellow on city and state fiscal policy for the Manhattan Institute, which advocates less taxation, said this month. “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.”

The budget Cuomo outlined yesterday would provide $100 million in funds statewide starting next school year. It would climb to about $500 million by the fifth year. Funds generated by revenue from casinos that won’t open for another year would provide $160 million for after-class programs in the school year that begins in 2015. That would climb to $200 million by the year beginning in 2017. He also wants to use a portion of a $2 billion bond referendum that would be on the November ballot to build pre-K classrooms.

“The state will pay and the state will be proud to pay” for pre-kindergarten, Cuomo said while detailing his budget.

To contact the reporter on this story: Freeman Klopott in Albany at fklopott@bloomberg.net

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

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