NY Budget Restores Transit Funds, Eliminates Opportunity Zones, and Rejects New Budget Powers for Governor

Updated on 4/8/2021 with new information about statewide transit restorations.

Reinvent Albany is happy to see the state’s April 6th budget includes a number of our priorities including the elimination of the Opportunity Zones real estate subsidy and the restoration of $279M in dedicated statewide transit operating funding over two years ($236M for MTA). The budget also rejects the Governor’s proposal to give himself extraordinary new fiscal powers.

Unfortunately, much of the budget was passed at the last moment, negotiated out of public view and with little time for legislators to assess or even read. Instead of aging for at least three days, six of ten budget bills are likely to be passed within a day of introduction via the Governor issuing “messages of necessity.” Crucial parts of the budget, including the 1000+ page Capital Projects bill and 200+ page “big ugly” Revenue bill will have been voted on with little to no time for public review.

Details of the FY 21-22 budget will be revealed more fully in the coming days as advocates, journalists and legislators dig into the bills, but questions remain. Probably the biggest is that the public still does not have a complete accounting of the cuts or restorations made to the FY 20-21 “COVID budget.” For example, in FY20-21, the state Division of the Budget withheld $98M from the MTA ‒ effectively raiding its dedicated funds, which advocates successfully pressed the Legislature to restore as reappropriations in the FY 21-22 budget. Details are not known for other, less high-profile state programs, however.

New York State’s constitution gives the governor massive power over the budget process. During COVID, the Legislature granted the Governor even more discretion over state spending. However, in the April 6th budget, the Legislature rebuffed the Governor’s proposal to grant himself even more power ‒ which was opposed by an array of government watchdog groups.

Reinvent Albany Budget Highlights

1. State’s Opportunity Zone Real Estate Subsidy Eliminated. As part of the budget, the Legislature passed the Opportunity Zone Tax Break Elimination Act. The bill decouples New York State and City’s tax codes from the federal Opportunity Zones program, a Trump-era handout to extremely wealthy real estate investors. The elimination of the tax break could save New York billions over the next decade. The bill was championed by State Senator Mike Gianaris and Assemblymember Jeffrey Dinowitz and supported by Reinvent Albany, 19 other organizations and 6 unions.
2. $279M in Statewide Dedicated Transit Funds Restored Over Two-Year Period, Including Rejection of $236M in MTA Raids. Earlier this month, 30 organizations and unions asked state leaders not to raid more than $160M dedicated statewide transit funds which the Governor proposed steering to the state’s general fund in the FY 21-22 budget. Raids of dedicated transit funds are a backdoor tax on riders that breaks trust with the public, who pay these taxes with the understanding that they will fund transit, not other state priorities. The Assembly and Senate’s bills rejected the raids, and fully restored the funds in the final budget. Statewide, $163M is being restored through the rejection of raids for FY 21-22, and $116M that will be paid back to transit systems from 2020 withholdings, for a total of $279M in statewide dedicated funds restorations over two years. The MTA’s share of restorations is $138M for FY 21-22, and $98M for FY 20-21, for a total of $236M over two years. For more information see the Asssembly’s final budget book.
3. Extraordinary Budget Powers Sought by Governor Removed. The final budget removes the extraordinary budget powers proposed by the Governor in his Executive budget, including: (1) the continuation of the budget withholding process; (2) the ability to move state operating funds by “interchange,” and (3) the creation of a COVID-19 emergency relief slush fund composed of new revenue raisers. The Legislature’s successful action to reject these emergency budget powers is a welcome continuation of their rollback of the Governor’s emergency COVID-19 powers. We urge the Legislature to continue to address issues related to the balance of power in the coming weeks.
4. MTA Procurement Changes Removed. The Legislature rejected the Governor’s proposal to amend procurement laws related to sealed bidding on MTA contracts. The Senate one-house resolution called for hearings to be held instead so that all stakeholders can weigh in on how to improve MTA contracting as recommended by Reinvent Albany.
5. Democracy Programs Funded. The final Legislature and Judiciary Budget Bill included $4M for the state’s new redistricting commission, $27M for election funding, and $7.3M for the new public campaign finance board. Prior to this funding allocation, the Governor attempted to fund the redistricting commission through a SUNY Research Foundation grant, which was opposed by Reinvent Albany and the League of Women Voters of NYS, among other groups.

Reinvent Albany Budget Concerns and Questions

1. Empire Station Complex Funded. $1.3B for the Governor’s Penn Station project is provided in the final Capital Projects Budget bill. The language requires the state funding only be used for transportation improvements, not “above-ground development.” However, it is still possible that other sources of state-authorized funding will be made available for high-rise developers. For example, the Governor’s past announcements said that value capture with PILOTs could be used. Reinvent Albany opposes state actions that siphon away city taxpayer dollars for state projects without full consultation with the City Council and public. We are also concerned because this very complex megaproject is being handled by multiple government and private sector entities including Amtrak, as well as state authorities like ESD and the MTA whose funds do not all go through the state budget process. This makes it difficult for City government, state elected representatives and the public to follow the money and track the planning, overall costs and potential return on investment.
2. Comptroller Still Stripped of Oversight Over Certain SUNY/CUNY Contracts. Watchdog groups asked the Legislature to reject the Governor’s proposals to strip the Comptroller of oversight of important state contracts. Unfortunately, the final ELFA legislation retains the Governor’s language to strip the Comptroller’s pre-audit authority for certain SUNY and CUNY contracts. This partially undoes the 2019 MOU restoring the Comptroller’s ability to pre-audit SUNY and CUNY contracts following the upstate bid-rigging scandal, which was strongly supported by watchdogs. In total, only 3 of the Comptroller’s 12 requests were addressed.
3. NYC Central Business District and MTA Tolling Enforcement Proposal Removed. The Executive Budget proposed new enforcement mechanisms to discourage toll evasion. Reinvent Albany supported the measure as a means to more effectively implement congestion pricing. The Senate amended the proposal in their one-house bill, while the Assembly eliminated the provision from their one-house proposal. Ultimately, the language was removed altogether in the final budget.
4. Tiny, But Important, Authorities Budget Office Not Fully Funded. The ABO oversees hundreds of state and local economic development authorities, and Reinvent Albany has supported it receiving at least $3.1 million to be able to conduct more effective oversight. The final budget provided only $2.05 million.
5. Hundreds of Millions of NY State subsidies for Fossil Fuel Industry Remain. Neither house addressed a proposal by Senator Krueger to end tens of millions in state tax abatement subsidies to the fossil fuel industry — subsidies opposed by Reinvent Albany and environmental groups.
6. RGGI Fund Raids Continue. Reinvent Albany joined green groups urging the restoration of $23M in raided Regional Greenhouse Gas Initiative (RGGI) funds. While these were removed in the one-house bills, the final budget still includes the raids.

Reinvent Albany will provide additional commentary on the budget in the coming days.