Kremer’s Corner: For now happy days are here again

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Kremer’s Corner: For now happy days are here again

For the past 40-plus years, there has been an ongoing debate about how much money New York State gets from the federal government compared to what we send to Washington. Thanks to two major initiatives of President Biden, that argument will have to be put on hold.

As of this week is it estimated that the state will have gotten over $150 billion in various types of federal aid that is guaranteed to set off a major feeding frenzy. The battle over federal money will intensify now that Gov. Kathy Hochul has released her first state budget. Her tentative fiscal plan calls for a record-setting $216.3 billion budget, no doubt the largest in New York State history.

I use the word “tentative” because she must now deal with a state Legislature that will have dozens and dozens of ideas on how the money can be spent. During the past two years, progressive members of the Assembly and Senate have asked for billions for their pet programs, some of which were approved. That group, which is gaining more influence each day, will be pushing hard for tenant assistance and funding for workers affected by the COVID pandemic.

The moderate Democratic caucus has its own priorities mostly geared towards aid to education and funding for mass transit. That clash will escalate because Gov. Hochul has proposed $2.2 billion in property tax relief.

It is too early to determine what types of property tax relief the governor has in mind, but it is likely that there will be two programs on the table. One will involve giving the suburbs a healthy dose of school aid and the possibility of rebate checks for middle-class homeowners. City legislators who are constantly battling with suburban representatives will probably push for many of their priorities and, in some cases, will oppose the funds for out-of-city members. This promises to be a bruising battle.

To add to the likely conflict, Hochul has her own plans, which include $1.4 billion to subsidize childcare for about 400,000 families, $150 million to expand tuition assistance programs and $1.2 billion in bonuses for the state’s exhausted health care force. And much to the relief of many local governments, she is proposing $32.8 billion for infrastructure programs.

These numbers are overwhelming but the amount of money that New York State has collected over the past year is equally staggering. On top of the influx of federal dollars, the legislature last year imposed a new income tax on high earners. That tax has produced a windfall and the state’s rising recovery has brought in more revenues than anticipated. With all these dollars, flying in the air it is fair to ask what steps is the state taking to shield itself from any future calamity?

The governor has proposed that the state set up a new reserve of 15 percent of all revenues just in case a new crisis hits us. Over the years, the state has not done a very good job of putting away rainy day funds. Maybe it will happen this time.

It is hard for me personally to imagine New York State being so flush with cash. When I served as chair of the Ways and Means Committee, the legislators would argue bitterly over any little pot of money they could find and most of the time we were faced with massive deficits. To have a healthy surplus is a dream come true, but there is a warning sign attached to those dollars.

If you spend like a drunken sailor, the state’s taxpayers will wind up with the worst possible hangover. So at least for the next 11 months, happy days are here again. How happy and how long the happiness will linger will be up to the governor and state Comptroller Tom Di Napoli, whose job is to make sure that the fiscal bonanza is not squandered.

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