Good afternoon — It’s Wednesday and Hot Dog Day.
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Hey, it’s Dan. We’ve made it through the first three days of the week. It’s Wednesday and we have a packed CapCon for you today.
First up, Ulster County could become the first county outside New York City to impose a local income tax on high-income earners. Here’s what’s happening there and what’s next.
State Comptroller Thomas P. DiNapoli is raising several red flags around this year’s enacted state budget. His office identified multiple risks to the state’s finances in a new report released Wednesday.
Later, we’ll get into politics. New York is set to elect the first nonbinary member of the state Legislature, campaign cash filings were due Wednesday and Republicans are launching a new campaign to court Jewish voters.
Plus: A lawsuit filed against the State University of New York over its selection process for community college leaders is kaput.
Names in today’s CapCon: Thomas P. DiNapoli, Jen Metzger, Sarahana Shrestha, Kathy Hochul, Deborah Glick, David Siffert, Jeannine Kiely, Ed Cox, Zohran Mamdani, Daniel Rosenthal, Bruce Blakeman, Patrick Martinez, Mike Lawler, Andra Ackerman
Ulster County Executive Jen Metzger (Tony Adamis/Special to the Times Union)
💵 Ulster County wants to set a local income tax on high-income earners. It needs Albany’s approval
Democrats in the Ulster County Legislature voted Tuesday night to ask the state Legislature for permission to enact a local income tax on the county’s highest earners.
If that happens, Ulster County would be the only county in New York to impose such a tax.
The only other two municipalities that levy a local income tax are New York City and the city of Yonkers in Westchester County. That’s on top of the state income tax.
The county Legislature approved a resolution Tuesday night in support of the Ulster County for Fair Taxes Act.
It would allow the county to impose a 18.75% local income tax on single filers earning more than $250,000 and joint filers earning more than $500,000.
It’s intended to drive new revenue to the county’s coffers to help pay for social services that could be impacted by cuts at the federal level, said Ulster County Executive Jen Metzger.
“Tonight’s vote is about balancing the scales,” Metzger said. “We’re asking the state for the authority to pursue an additional revenue option based on residents’ ability to pay, using the existing state income tax framework that will be easy to administer and fair to taxpayers.”
Assemblywoman Sarahana Shrestha (Will Waldron/Times Union)
Counties and localities can’t impose income taxes on residents without permission from the state.
The resolution approved by the Ulster County Legislature acts as what’s called a “home rule message” — when a local government formally asks the state Legislature to approve a change in state law that allows them to do something.
“This is the fairest solution because you get maximum benefits from minimal impact and we shouldn’t assume high earners oppose this proposal by default because our office has heard from several constituents who would be impacted, but are happy to do their part,” said Assemblywoman Sarahana Shrestha, who represents part of Ulster County.
The resolution was opposed by the Ulster County Chamber of Commerce. Scott Davis, chair-elect of its board of directors, argued during the comment period before its approval that it would hinder the county’s economic development.
“Why would any successful entrepreneur want to come and relocate to Ulster County and pay more taxes when they could easily go to any other upstate county where there’s no luxury tax?” Davis said.
Rather than enact a local tax, Davis argued that the county should place more pressure on the state to help support services at risk of losing funds.
(Will Waldron/Times Union)
💰 New York’s finances are ‘highly exposed’ and not structurally sound, DiNapoli says
The $277 billion state budget negotiated between Gov. Kathy Hochul and Democrats in the state Legislature is on shaky ground, state Comptroller Thomas P. DiNapoli said Wednesday.
DiNapoli released his office’s annual report on the enacted state budget, which was approved in late May by the state Legislature. It’s $18.1 billion larger than last year’s spending plan.
Decisions made as part of that spending plan could have ripple effects that impact large swaths of New York’s economy and, consequently, the state, DiNapoli’s office said in the report.
“The state’s finances remain highly exposed to federal actions and potential economic downturns,” DiNapoli said.
Part of his concern around the enacted budget centers around a decision by Hochul and lawmakers not to pad the state’s financial reserves. At the same time, total spending in the state budget increased by 7% this year.
“Major national and international developments risk affecting New York’s economy, with downstream impacts on tax revenues and fiscal stability,” DiNapoli said.
New York’s debt burden: One part of the report I found particularly interesting was the analysis of the state’s debt burden. New York, according to the report, has developed an “overreliance on debt financing,” particularly by allowing substantial “backdoor borrowing” by public authorities.
“The total state-supported debt outstanding is projected to grow from $60.3 to $98.8 billion during the next five years, an increase of about 64%,” the report said.
As a result, New York is projected to approach its debt limit, the report said. The room below that cap is projected to reach just $177 million by state fiscal year 2031, which begins in April 2030.
“Approaching the debt cap could make it more difficult to maintain existing infrastructure in a state of good repair or impede making new investments,” the report said.
A $1.2 billion SNAP surprise: The “One Big Beautiful Bill” passed last year by Congress included a penalty for states with high payment error rates for the federally funded Supplemental Nutrition Assistance Program.
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