HOCHUL’S TAX CUTS NOT SO SEXY AFTER ALL?: Albany’s Queen of affordability could see her sweet tax cuts and refund checks come back to bite her. The governor’s Tuesday State of the State — which centered around affordability and public safety — came with the dramatic unveiling of a hefty tax cut for the vast majority of New Yorkers. It has earned more scorn and scrutiny than praise from Albany budget wonks. And her novel idea for “inflation refund checks” is even less popular with fiscal-heads. “We generally don't think that these kinds of cash transfers are the best solution to general affordability challenges,” Nathan Gusdorf, executive director of the state's Fiscal Policy Institute, said of the refund checks. The governor proposed them as a bonus to New Yorkers who paid higher sales taxes due to rising inflation. Hochul said she made the decision after state sales taxes outperformed initial projections in prior years. “What they actually do is they undermine the state's ability to deploy its resources in a more productive way,” Gusdorf added. Two years out from reelection, the governor's slate of politically popular cuts and credits that aim to “put money back in your pockets” are sure to appeal to voters increasingly concerned with the high cost of living in a state hemorrhaging population. But the budget wonks — who made a point to shower the governor with praise for building up the state reserves to record levels — say the cuts mean the governor will have to significantly rein in spending elsewhere. Gusdorf’s group says the inflation refund checks and middle class tax cut will amount to a $4 billion cost for the state, which is expected to grow over time. “Even though middle class tax cuts sound like a good policy for the middle class, in reality it deprives the state of its ability to continue investing in public services which middle class and working class New Yorkers benefit from the most,” he said. Others worry an economic downturn would pressure Hochul to dip into the state’s reserves. “You'd be making the state more reliant on volatile income that can dry up pretty quickly,” Ken Girardin, director of research at Empire Center for Public Policy, the fiscally-conservative budget think tank, said of the cut. Hochul’s tax cut will affect 8.3 million joint-filing taxpayers who earn up to $323,200 and stretch across five of the state’s nine tax brackets. The slash amounts to a $1 billion income tax cut over two years — a move her administration says will bring “the lowest tax rates in seven decades” to New Yorkers. The announcement of the tax cut comes two months after working-class voters moved toward President-elect Donald Trump. Mayor Eric Adams, contending with a difficult reelection this year, has also aimed to axe income taxes on the city’s lowest earners. Assembly Speaker Carl Heastie also continues to float a complete elimination of the state income tax on those earning wages around the poverty line. “The key is whether the state is willing to restrain spending growth elsewhere,” Andrew Rein, president of the Citizens Budget Commission said of the tax cut. “That's what's needed to make sure that they're actually affordable in the budget, rather than budget busters.” Hochul shot down the idea of dipping into reserves to pay for any of her affordability measures during a press conference near Albany touting her child tax credits, which Gusdorf and other experts support. She also touted state revenue from the “robust profits” flowing from Wall Street which have boosted the state coffers. “Everything we're doing we're able to afford to do because we have no option in my mind, we have a responsibility to help these families who live in our state, who’ve made this their home, who want to stay here, but there's just so many barriers to them,” Hochul said. “We are doing well,” she added. “We've managed our finances. Our bond ratings are high, and you couldn't always say that in past years when it came to the state of New York's government. I'm very fiscally responsible.” — Jason Beeferman
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