Potential big-ticket budget items loom in NY

ALBANY, N.Y. (AP) - Even as Gov. Andrew Cuomo talks about multi-year tax cuts and surpluses, potential state budget challenges loom on the horizon.

Cuomo’s election-year budget plan claims the state can rack up a $2 billion surplus by 2017 as long as the governor and state lawmakers agree to keep spending growth under 2 percent over that time.

The governor has yet to specify how that out-year goal will be reached. But as the Citizens Budget Commission said in a recent post on its site: “hard choices lie ahead” for the surpluses to become a reality.

And those choices could come with big ticket items like universal prekindergarten and tax cuts in the mix.

The Cuomo administration said Wednesday their long-term plan is financially sound and all proposed spending is accounted for. Still, the billions in cuts and new spending would grow in coming years as the governor and the state Legislature make their budget choices.

Here’s a look at a few looming items:

-PRE-K: The fight over the expansion of universal prekindergarten is often portrayed as a clash of wills between Cuomo and New York City Mayor Bill de Blasio. The mayor wants to fund it with a citywide tax hike on the wealthy; Cuomo wants to fund it statewide through the existing budget.

Either way, statewide universal pre-K will be costly. State Education Commissioner John King Jr. gave a rough estimate last week that it would cost roughly $1.6 billion a year statewide. The state currently spends $410 million per year and Cuomo would phase in $500 million per year in additional funding.

E.J. McMahon of the fiscally conservative Empire Center said statewide universal pre-K as promoted by Cuomo this year could mushroom into a costly entitlement.

“He’s the one who introduced a whole new costly issue into the budget calculus and he’s the one who is going to have to control it,” McMahon said.

Cuomo budget spokesman Morris Peters said the costs of pre-K are included in the financial plan.

“As the Governor has repeatedly said, if we continue to hold spending growth to 2 percent and our very conservative revenue projections hold true, we will be able to comfortably meet all commitments in 2014-15 budget,” Peters said in a prepared statement.

-TAXES: Cuomo last month proposed property tax relief and corporate rate reductions as part of a broad range of tax cuts, freezes and repeals. The costs for the coming fiscal year would be $657 million, but they would more than triple the next year to $2.1 billion once more of the program is phased in, according to budget documents.

“A lot of these tax cuts are back-end loaded … They don’t cost a lot now, so you can balance the budget,” said Frederick Floss of the Fiscal Policy Institute. Floss gave the example of proposed changes in New York’s estate tax, which is projected to reduce revenues by $33 million in the first year and $612 million by 2018.

Another complication is a law already on the books until 2018 that enacted a temporary income tax surcharge on New York’s wealthiest residents that brings in roughly $2 billion in revenue a year. A decision by the governor and lawmakers to continue it could be politically difficult. A decision to let it expire would be costly financially.

Peters said the costs of the governor’s tax cuts are accounted for in the financial plan.

-TAPPAN ZEE: On the day last week Cuomo announced the arrival in port of a giant crane that will be used to build a replacement to the Tappan Zee Bridge, the head of the Thruway Authority, which operates the bridge, told lawmakers they have yet to complete a plan to pay for the $3.9 billion project.

The state has secured a low-interest $1.6 billion federal loan for part of the costs, and officials have mentioned the option of Thruway bonds backed by tolls.

The Thruway’s bridge costs are different from general state budget items like pre-K and tax cuts, and there is no indication in Cuomo’s budget proposal that general fund money would be used to pay for the rebuilding.

But there are concerns among commuters that bridge’s tolls would have to be raised well beyond $5 to pay for the rest of the project.

Thruway spokesman Dan Weiller said in a prepared statement they are assembling a Toll Financing Task Force that will include local people “along with financial experts and transportation officials who can understand the complex issues involved and help keep future tolls as low as possible for all drivers.”