December 21, 2007
$4.3 BILLION AND RISING?
threatened by revenue reversals
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Budget bigs Deutsch (left) and Francis (right) |
New York Governor Eliot Spitzer made a whole bunch of promises during his 2006 election campaign: to reform Albany, grow the upstate economy, improve education, make higher education more affordable, boost access to health care—and, he promised, "there's one thing we're not going to raise: your taxes. You can take that to the bank."
Just when he's attempting to make a political comeback after a disastrous summer and fall, Spitzer's "positive" agenda could be severely diminished by a drop in state tax revenues tied to bad times on Wall Street—and his unwillingness to consider "broad-based" revenue increases.
Spitzer's outgoing budget director Paul Francis says the 2008-09 budget gap is now at about $4.3 billion—and that it could be even higher when Spitzer unveils his executive budget proposal on January 22. "The wind has shifted on Wall Street," said Francis. "And 20 percent of state revenue comes directly from the financial services sector."
Francis spoke last week to a meeting of the Revenue Forum, an alliance of union, anti-poverty, health, human services, environmental and children's advocates who band together to push for progressive revenue initiatives to pay for pressing New York needs. He told the group Spitzer would not raise "broad-based" taxes like the state income tax, but would definitely be looking to close unfair tax loopholes, including many that benefit big international corporations to the detriment of New York taxpayers.
Some press reports have suggested Spitzer might be willing to consider tax increases on the very rich to help pay for property tax relief for middle-income families. But Francis told the Revenue Forum that it would be a "bad signal" to raise taxes even on highest-income taxpayers. "He's not willing to introduce an income tax increase, and the (Republican-controlled) State Senate isn't willing to pass one."
Ron Deutsch, executive director of New Yorkers for Fiscal Fairness and a leader of the Revenue Forum, says Spitzer needs to look at the entire tax system if he wants to make real progress for New York.
"If they're really looking at helping struggling New York families, they're going to have to look at the whole tax structure," Deutsch told the Update. "Our research and state data shows that lower and middle-class taxpayers are carrying the majority of the tax burden, and that's not right."
NYFF and the "Better Budget Campaign" (Housing Works is a member) have pushed for investments in human needs paid for with progressive taxation. Deutsch says the two go together.
"We need a strong economy, and that takes well-educated people with good access to health care and housing," Deutsch said. "The Governor has good and lofty goals in these areas that we fully support—the question is where he gets the revenue. We suggest it should come through a more progressive income tax, so that wealthy New Yorkers can share the burden with lower- and middle-income families to get us where we need to go."
Spitzer will deliver his second State of the State speech on January 9 at 1 p.m., which should provide a preview of his budget and revenue priorities for this year's legislative session—and for his potential political revival. More on these issues in the coming weeks.