Governor Andrew Cuomo and New York legislative leaders may reach a deal as soon as today on a $136.5 billion budget that would extend a higher tax on top earners, raise the minimum wage and cut $700 million in taxes.
The agreement would close a $1.35 billion deficit without new taxes in fiscal 2014, which begins April 1. Approval by the legislature, which could happen as early as this weekend, would mean Wall Street’s home state would have its third consecutive on-time budget for the first time since 1984, when Cuomo’s father, Mario, was governor.
“It’s not as cloudy as it was yesterday,” Assembly Speaker Sheldon Silver, a Manhattan Democrat, said today after Cuomo met with him and other legislative leaders. “We are on target to close very soon.”
Negotiations over the budget slowed this week as Cuomo pushed to include policy measures such as allowing New York City to decriminalize as much as 15 grams of marijuana and changes to the toughest U.S. gun regulations. The law, which the 55-year-old Democrat pushed through in January, lowered the number of rounds allowed to be sold in a magazine to seven from 10. No manufacturer makes seven-round magazines. The changes would allow residents to carry 10-round holders, with only seven rounds loaded.
All sides, including Republican Senator Dean Skelos, who co-leads the senate, said they are ready to extend a higher tax on joint filers earning $2 million or more, which raises $1.9 billion annually. The tax, which Cuomo coupled with reductions for married couples earning less than $300,000 a year when he pushed it through in December 2011, expires in 2014. Extending it now would allow the governor and lawmakers to avoid the issue in an election year.
Business groups, including the Partnership for New York City, which supported the extra charge in 2011, are balking at the plan.
“Extension of the surcharge at this time is the worst possible message New York state could send to our most important job creators and revenue generators,” Kathryn Wylde, the partnership’s president, wrote last week in a public letter to Cuomo. She has previously backed Cuomo’s spending plans.
Over the past three years, he has closed more than $13 billion in deficits, in part by getting the state’s largest unions to agree to wage freezes. This year’s negotiations were complicated by a power-sharing agreement in the Senate, where a group of five Democrats shares leadership of the chamber with Republicans.
The structure endangered Cuomo’s push for a higher minimum wage. He called for raising it to $8.75 an hour in a January proposal. The Democratic-controlled Assembly approved a measure this month to raise it to $9 and tie future increases to inflation. The measure had stalled in the Senate as recently as last week.
Instead, a deal was cut to phase it in over three years, starting Jan. 1, when it will reach $8, then rise to $8.75 a year later before climbing to $9 by 2016. It won Republican support by packaging the rising wage with tax cuts for small businesses, including a $10,000 tax credit for each veteran they hire, and $15,000 for hiring disabled ex-service members.
Another measure creates a $350 tax credit for families with at least one child that earn from $40,000 to $300,000 per year. Those savings would be funded by the extension of the higher tax on top earners.
As New York lawmakers head toward budget passage, investors in the $3.7 trillion muni market were demanding the least extra yield from the state and its localities in four years. Standard & Poor’s is poised to upgrade the state to AA+, its highest grade since 1972.