By JOSEPH SPECTOR
Gannett Albany Bureau
ALBANY -- Gov. Andrew Cuomo continues to reject attempts by education groups and unions to shift the state's tax burden to the rich, saying that doing so would further hurt the state's business competitiveness.
The issue is creating a growing divide between the Democratic governor and the more fiscally liberal members of the state Legislature, who on Tuesday called on Cuomo to maintain higher income-tax rates for people making more than $200,000 a year. They also want him to move to a more progressive property-tax system based on household income not home value.
On Tuesday, Cuomo will unveil his 2011-12 state budget proposal that will call for deep cuts in health care and education spending and perhaps as many as 15,000 layoffs in the state workforce.
Some Democratic lawmakers on Tuesday warned of the impact the cuts would have on services and schools as they unveiled a report with the group Alliance for Quality Education that showed a disparity between wealthy and poor school districts.
"When government resists deep cuts, when we appropriately tax the wealthiest New Yorkers and keep on public employees and keep on supporting the private sector by keeping government intact, we actually see a better and stronger recovery," urged Assemblywoman Barbara Lifton, D-Ithaca.
Cuomo is vowing not to turn to higher taxes - including on the wealthy - to offset a $10 billion budget gap for the fiscal year that starts April 1. In fact, Cuomo plans to let expire at year's end a higher income-tax bracket for people making more than $200,000 a year - which was enacted in 2009 amid an $18 billion budget gap.
The higher income-tax bracket, which was a three-year program, brings in about $5 billion a year in revenue to the state.
This week Cuomo also dismissed a proposal to tie property taxes to household income, called a circuit breaker, that advocates say would lower taxes for the middle class and raise them for the rich. The measure would cost at least $1 billion a year in state subsidies.
Cuomo told reporters that the state needs to lower taxes, or at least immediately rein them in, for everyone in the state. That's the way to grow the state's economy, he said.
New York has been ranked as the tax capital of the nation, Cuomo said, and a national study from the Tax Foundation last year ranked New York has having the worst business climate in the country.
Cuomo wants to cap the growth of property taxes to 2 percent a year.
"I believe the rate of spending is out of control, not just in the state government in Albany but also locally," he said. "And I believe that applies to all taxpayers regardless of income. I believe the taxes are too high in New York. I believe we're chasing people from their homes, all across the board."
Cuomo has received the backing of business groups for his fiscally conservative agenda.
"The growth and the size and scope of government in New York is obviously not sustainable," said Andrew Rudnick, president of the Buffalo Niagara Partnership, a business group, "and you are going to have to cut in order to structurally balance the budget and to return New York to any semblance of economic competitiveness -- and that's going to cause pain."
The Alliance for Quality Education's report warned that deep cuts to schools would particularly hurt poorer districts. The report found that wealthy districts spend $1,712 more per pupil than the neediest schools. Also, roughly 57 percent of students who graduated in 2009 in the 532 schools that have been deemed by the state as in need of improvement, compared to 92 percent in the "low need" districts.
Billy Easton, the group's executive director, said ending the higher income-tax bracket for the wealthy - currently 8.97 percent of income - would mean a couple that makes $40,000 a year would be essentially taxed at the same rate as a couple making $1 million a year.
"This is not a soak-the-rich tax, OK," Easton said. "This is simply saying that it does not make sense for a police officer to be in the same tax bracket as Donald Trump."
A report last month from the Fiscal Policy Institute, a union-backed group, found that the richest 1 percent of households increased their share of income in New York from 10 percent in 1980 to 35 percent in 2007.
Cuomo has argued that wealthy New Yorkers are fleeing the state because of its high taxes. Also, he said, New York spends the most in the nation for its schools, but isn't getting the best results. New York spent $17,173 per student for public education in the 2007-08 year, more than any other state and 67 percent more than the U.S. average, according to U.S. Census data released last year.
But education advocates said recent studies have shown that New York has among the highest performing schools in the nation and cuts would disrupt that.
"This is a difficult time. There is no question about it," said Assemblywoman Ellen Jaffee, D-Suffern, Rockland County. "But we cannot ignore our youth. We cannot ignore the children of the greatest needs in our communities."
Gannett ContentOne - Albany, NY