New York's budget proposal 2020: What to watch for from Cuomo

ALBANY - Gov. Andrew Cuomo will present his budget proposal for the coming fiscal year on Tuesday with New York facing the worst financial condition since he took office in 2011.

The $6 billion deficit will loom large over the state Capitol for the next several months as Cuomo and lawmakers will need to close the gap in hopes of having an on-time budget for the fiscal year that starts April 1.

Cuomo has laid out dozens of agenda items for 2020, but he has stayed clear so far from offering any specific plans on how he will close the deficit.

That will change Tuesday at 1 p.m. when he will make his plans known before lawmakers and state leaders in a theater next to the state Capitol.

"As we begin our journey this year, there are challenges we must overcome and issues requiring immediate attention — a significant financial deficit, new public health emergencies, federal challenges, and a confidence crisis of a distrustful electorate wary of government and politics," Cuomo said Jan. 8 in his State of the State address.

Here's what to watch for:

How to close a $6 billion budget gap in New York? 

Cuomo last dealt with a deficit of this magnitude in 2011, when he entered office facing a $10 billion deficit.

It was a difficult task. Cuomo cut school aid, required unions to give concessions for new contracts and put a cap on both health-care spending and state spending.

Now the latest deficit will require tough choices:

Limit school aid (which is the largest part of the state budget)? Cut health-care spending? Tax the rich, as some Assembly Democrats want? Add new fees on all New Yorkers?

More:State of the State: 10 takeaways from Andrew Cuomo's 2020 address

Cuomo will offer his direction, then lawmakers will debate his plans.

The state's budget problems are expected to get worse before they get better: The deficit is estimated to grow to $8.5 billion by 2023.

"We know the destination for our ship of state. But it will not be clear sailing, there are obstacles in our way," the Democratic governor said in his State of the State speech.

More:New York faces its largest budget crisis in a decade. This is the reason why.

Funding Medicaid in New York

Between the state and federal governments, New York spends $70 billion a year on Medicaid, the health insurance program for the poor and disabled.

The program covers more than 6 million New Yorkers, aided by its New York State of Health exchange that was established under the federal Affordable Care Act, known as Obamacare.

The program, though, is bursting at the seams and covers more than one-third of the state's budget gap.

"This is different because it is a significant deficit not in the context of any kind of economic downturn," Bill Hammond, the Empire Center's director of health policy, said late last year.

"It’s a Medicaid problem."

The state's managed long-term care program has been a major culprit: It has grown 13% a year, up to a total of about $8 billion this year.

Another problem, state officials said, is limited federal funding — despite New York's uninsured rate dropping to record lows of about 4.7%, records show.

New York splits Medicaid costs with the federal government, and counties pay a capped portion.

More:NY State of Health enrollment is starting: What you need to know this year

Since 2015, the state agreed to not increase Medicaid costs on counties, but Cuomo hinted the additional state cost is adding up — fueling concerns from local officials that he may seek to change the formula.

"For six years, we have been paying all the increased costs in local Medicaid spending and holding local governments harmless," Cuomo said in his State of the State address, saying that equates to $4 billion a year.

"Also, the local governments still administer their local program, even though they no longer share the costs — and we have seen dramatically higher cost increases recently, why?"

So Cuomo suggested that counties may have to take on more responsibility for the program, whether that means additional costs or more administration.

More:Poof! How New York could eliminate 50% or more of your county tax bill

Will property tax rebates continue in New York?

Three years ago, Cuomo and lawmakers agreed to spend $1.2 billion to fund a property tax relief credit -- a check that income-eligible received each fall to offset the cost of school taxes.

But now the program is over. It will be up to Cuomo and the Legislature to decide whether to extend this year and into the future.

"It is something that is helpful to homeowners and so it’s something I’m interested in keeping," Senate Majority Leader Andrea Stewart-Cousins, D-Yonkers, said Tuesday when asked about the program.

More:Property taxes in NY: These communities pay the most compared to home values

But the budget gap will make it difficult to keep.

The program, though, is popular. and for good reason: The average check last year averaged $490.

Lawmakers would like to re-up it: They all face re-election in November.

More:New York’s rebate check program ends this year. Will it continue next year?

Marijuana and casinos and New York revenue

If Cuomo and lawmakers want to close the budget gap with limiting the fiscal pain, they could look to legalizing marijuana and expanding casinos as ways to raise new revenue.

Efforts to legalize marijuana faltered in 2019, but a new year and a new six-month legislative session in Albany has renewed hope a deal can get done in 2020.

There is a fiscal benefit, too: The state estimates a legalized marijuana program could ultimately bring in $300 million a year in new tax revenue.

Cuomo reiterated his support in his State of the State address.

"This year, let's work with our neighbors New Jersey, Connecticut and Pennsylvania to coordinate a safe and fair system, and let's legalize adult use of marijuana," he said.

More:Legalizing marijuana in New York won't happen in final days of legislative session

Meanwhile, if New York wants big bucks fast, it could turn to the deep-pocketed casino industry.

MGM, which owns Empire City Casino in Yonkers, and the Genting-owned Resorts World property in Queens are eager to land full-scale casino licenses.

They are each offering the state $500 million to get casino licenses to turn their facilities with video-lottery terminals into casinos with privately owned slot machines and live table games, as well as sports betting. 

That would be a $1 billion infusion, and the state could land a similar $500 million fee if it were to award the third and final casino license at its disposal for another New York City site.

But whether the state might move quickly on issuing the licenses — and offering mobile sports betting, which is now limited on-site at four upstate casinos — might not happen in time for the budget.

The state Gaming Commission is undergoing a study on the future of the gambling industry, and the first draft isn't due until April — after the budget is due.

More:New York’s casinos: Five new developments you should know abour

More:Why this quiet decision on the future of New York casinos may have a big impact

Joseph Spector is the New York state editor for the USA TODAY Network. He can be reached at JSPECTOR@Gannett.com or followed on Twitter: @GannettAlbany

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