Bloomberg News

Cuomo Strikes $300 Million Pre-K Deal Without Tax Increase (2)

March 29, 2014

NY Governor Andrew Cuomo

New York Governor Andrew Cuomo gives his fourth State of the State address in Albany, New York, on January 8, 2014. Photographer: Spencer Platt/Getty Images

Governor Andrew Cuomo and legislative leaders struck a deal to allocate $300 million for universal pre-kindergarten in New York City, giving Mayor Bill de Blasio funds for his signature program without the tax increase on the rich he sought.

The agreement is part of a wider accord on the state’s $137.9 billion budget and sets up the fourth consecutive on-time spending plan ahead of the fiscal year that starts April 1. The deal also puts on the November ballot a $2 billion borrowing referendum to fund school technology and pre-K classrooms, a measure to give property owners rebates on their taxes if their local governments control spending, and another that drives the corporate tax rate to its lowest since 1968.

The pre-K funds, which include an additional $40 million for schools elsewhere in the state, will be available as soon as localities can make classes available, Cuomo said. The plan also includes new training requirements for early childhood education teachers.

“It’s not just an aggressive undertaking for statewide pre-K, it’s also about a quality pre-K program,” Cuomo said today on conference call with reporters. “We’re excited about that.”

Sticking Point

De Blasio, in a statement, said the agreement was a “powerful and historic decision that will change the lives of tens of thousands of children.”

The accord puts a formal end to a battle over taxes between Cuomo and de Blasio, fellow Democrats and friends for 20 years. The mayor took office in January after winning election by the widest margin in history for a nonincumbent with a campaign that described a metropolis divided between rich and poor. He said a tax increase on those earning more than $500,000 to fund pre-K and after-hours programs for middle-schoolers would help shrink the divide.

The sticking point was that de Blasio needed approval from state lawmakers and the governor to raise taxes. He visited the capital four times, pressing for a levy increase. Cuomo and Republicans who control the Senate were focused on cutting taxes in an election year, and de Blasio’s initiative hit a wall.

Casino Money

About 20,000 of New York’s 68,000 4-year-olds get city-funded full-day pre-kindergarten classes, with 38,000 enrolled in three-hour programs and 10,000 in none. De Blasio, who plans to start the program in September with 53,000 children, has estimated it would cost about $342 million a year to serve about 73,000 children in 2015.

About 25 percent of middle-schoolers participate in after-hours extracurricular programs, and to double that enrollment would cost about $190 million, according to de Blasio’s plan. The budget directs as much as $750 million expected from new casinos in the state to pay for after-school programs, Bob Megna, Cuomo’s budget director, said on the call with reporters today.

In the last month, negotiations among Cuomo and lawmakers zeroed in on a dollar figure for pre-K in the city and statewide, with little talk of the tax.

On-Time Budget

Though de Blasio didn’t get the levy, the $300 million just for New York City is triple the amount Cuomo included in his January budget proposal for the entire state, while also committing to provide $1.5 billion statewide program over the next five years. The overall funding amount is the same that Cuomo proposed in January, although it speeds up the delivery. The cash will be doled out as a reimbursement for work already done by approved programs, Cuomo said.

It’ll help set up the largest pre-K program in the U.S. in New York City. De Blasio sees the tripling of state support in the first year of the five-year plan as a positive, said Wiley Norvell, a mayoral spokesman.

“We see this as a very significant win for us in implementing our program,” said Norvell.

The spending deal puts the state in position for its fourth consecutive on-time budget, the first time that’s happened since 1977. The timely budget has the state poised for its highest credit rating from Standard & Poor’s since 1972.

Property Taxes

The accord includes a plan to give property owners a rebate equal to the increase in their property tax bill if their local governments agree to keep spending growth below the state’s 2 percent property tax cap, the legislation says.

In the second year, they’d get a rebate if the jurisdictions they live in present a three-year plan to share services and lower spending by 1 percent annually while remaining under the cap. During the course of three years the plan, which also includes a rebate for New York City renters who meet income requirements, will provide $1.5 billion to 2.8 million taxpayers, Cuomo said.

“The tax freeze is an election year ploy that ignores the relationship of unfunded state mandated spending on local governments,” said Michael Conners, the Albany County comptroller, in an e-mailed statement. The budget also includes an additional $1.1 billion in education spending, a 5.3 percent increase over the current fiscal year.

Cuomo said it’s needed to lower New York’s property taxes, which are among the highest in the nation.

The income-tax rate for corporations would drop to 6.5 percent from 7.1 percent and to zero from 5.9 percent for manufacturers, said Rich Azzopardi, a Cuomo spokesman.

“We are thrilled to see serious corporate tax reform that will encourage job creation and business investment,” Kathryn Wylde, who heads the Partnership for New York City, a business-backed group, said in an e-mailed statement.

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

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Sylvia Wier, Joe Sabo


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