The emergency he and lawmakers used to justify it: They didn't want to stick around Albany.
States Find Ways To Raise Taxes Without Really Doing So
In New York, Democratic Gov. Andrew Cuomo and Republicans who share control of the Senate boast that they have balanced the budget without raising taxes, even though a critical part of the balancing act involved extending an income tax on high earners that both sides had campaigned against in 2010.
As state government leaders struggle to reconcile public demand for services with still sluggish post-recession tax collections, they have turned to tax increases — but will call them anything but. Governors and lawmakers in several states have labeled their ideas extensions, surcharges or fees and used verbal gymnastics to explain why they aren’t tax increases.
Raising taxes this year also puts a little breathing room between the laws passed in state legislatures and lawmakers’ 2014 campaigns for office. Still, any opponent would likely seize on such a vote no matter when it was taken, so the labels become part of a delicate dance for politicians searching for both sources of revenue and votes for their re-election.
Strategies include taxing corporations or the wealthy more heavily while emphasizing resulting tax cuts for the middle class, or taxing businesses that will inevitably pass along the increases.
In Georgia, Republican Gov. Nathan Deal engineered an end-run of a politically sensitive vote on the renewal of a tax on hospitals that generated more than $230 million, which was used to secure about $450 million in additional federal Medicaid money this year.
Lawmakers were reluctant to jeopardize the federal funding, but many Republicans feared primary challenges next year if they voted to extend the tax, so Deal and his allies proposed replacing it with a “provider fee” designed to work the same way. Both chambers overwhelmingly approved it and the governor signed it in February.
In Connecticut, where the governor and his Democratic allies in the General Assembly touted a budget with no new taxes, this year’s adjustments included extending a 20 percent increase on the state corporation tax that had been set to expire June 30. House Speaker Brendan Sharkey said it’s debatable whether such actions are tax increases and sought to focus on residents rather than businesses.
“What most people care about is whether their income taxes are going up, whether their sales taxes are going up, not whether corporate taxes are going up. Those are not happening,” Sharkey said this month.
In Delaware, Gov. Jack Markell and fellow Democrats who control the Legislature suggested they were actually cutting taxes by making certain temporary tax increases permanent. In those cases, they argued, the permanent rates are slightly lower than the temporary rates were at their peak. But the permanent rates are higher than the rates in place before the temporary increases were approved in 2009.
In New York, the extension of the tax on millionaires and a $500 million tax on business that had been scheduled to expire next year were critical to this year’s state budget deal.
The millionaires’ tax was originally approved in 2009 at the height of the state’s fiscal crisis and was slated to expire in 2011. Cuomo and Senate Republicans both opposed it during their 2010 campaigns, calling it a “job killer,” but then approved two extensions. The second one kept the tax alive until 2016.
Politicians in both parties emphasize that the budget keeps spending in check and reduces taxes on the middle class. They also approved $350 rebate checks to be mailed out to most families with children next year, beginning weeks before Election Day.
“The public wants a free lunch” and that’s part of why elected officials eager to please constituents respond by devising creative ways to raise revenue or giving new names to tax increases, said Doug Muzzio, a political science professor at Baruch College in New York City.
“Raising taxes is verboten. You can’t do it, but you have to do it, it's ubiquitous," he said.
The orders state the changes "could not otherwise be addressed before the adjournment of the Legislature." The second message of necessity, for the casino bill, was a day after the scheduled end of the 2013 session.
"The two messages mock the constitution," said Robert Schulz, a resident who has sued governments more than 100 times to enforce what he considers violations of the state and U.S. constitutions. "Regardless of the level of significance of the individual changes, the bills as finally approved by the Legislature were not on their desks for three days prior to final approval and are therefore unconstitutional, null and void."
Schulz, who isn't suing this time, said he found many substantive policy changes in the amendments that changed percentages in funding formulas.
Earlier, leaders were being pressured by advocates and some lawmakers to extend the session on other major -- and politically thorny -- issues. Some advocates wanted the leaders to reconcile a last-minute block of nine major women's rights initiatives and a bill to create public financing of campaigns, which came up just one vote short.
Issuing the messages of necessity cut off that pressure.
"If you want to change the culture of Albany, you never do this unless it's an emergency," said Bill Samuels, founder of the New Roosevelts government reform group. "The minute you slip back into it, even for a minor reason, you signaled that it is still fine to pass legislation without any review by the public."
Cuomo used messages of necessity in his early budgets to legalize gay marriage and pass gun control laws that are still drawing opposition. But his office notes he uses messages of necessity far less than previous governors and ordered it just five times last year, compared to 29 his first year.
Cuomo spokesman Rich Azzopardi said Cuomo's record speaks for itself. He wouldn't comment on specific changes.
An extended session would have been disrupted. Cuomo barnstormed the state immediately after the session presenting his casino law, tax-free law and other accomplishments while legislators returned to their districts in preparation for the 2014 elections.
The changes in last week's amendments appear relatively minor but not insignificant.
In the casino bill, a late addition appears to ensure two Catskill casinos won't be located at the site of a storied old Catskills resort. The addition also appears to limit the former Concord resort in Sullivan County to one casino.
The change in the tax-free program sets a threshold for companies that fail to meet job promises. If a company fulfills 75 percent or more of its job promise, measured in annual reviews, it will get the same percentage of a tax break. But if a company makes less of its job promise, it will get no tax break.