The Associated Press
ALBANY -- Critics say a proposal in closed-door budget negotiations to extend a temporary income tax hike for the second time is bad for New York and a ploy by Albany politicians.
"None of this seemed to be in the cards when (Gov. Andrew) Cuomo unveiled his budget two months ago," said E.J. McMahon, of the fiscally conservative Manhattan Institute. "But it's not exactly a surprise, either, since it so neatly fits the political agendas of the Capitol's major players."
The $2 billion income tax increase isn't due to expire until 2014, but that's an election year. The proposal being considered in closed-door talks was first revealed last week by The Associated Press, citing officials close to the talks who spoke on the condition of anonymity because they weren't authorized to divulge the effort.
On Sunday night, Senate Republican leader Dean Skelos said extending the income tax on millionaires is Cuomo's idea.
"The governor brought it up," Skelos told reporters. "We're going to discuss it."
Skelos said Monday night that the tax is still being discussed for inclusion in a budget agreement that could come Tuesday.
On Jan. 22, Cuomo presented his budget, saying that because of the "difficult decisions over the past two years," New York finally had stable finances.
"For the third consecutive year," Cuomo said in his budget address, "We are closing the deficit with no new taxes or fees."
At the time, Cuomo budget Director Robert Megna also praised the proposal as being "as empty of one-shot actions as any that I can remember."
Cuomo, Skelos and Senate Republicans opposed the measure during the 2010 elections, calling it a job killer that would drive millionaires out of state while sending the wrong message to employers. Yet in a special session in December 2011, they approved it. They often refer to the tax increase as a tax cut, citing the tax break of $200 to $400 for middle class families the increase also pays for.
The Partnership for New York City calls told the New York Daily News that the extension "at this time is the worst possible message New York State could send to our most important job creators and revenue generators."
The temporary tax was first created in 2009 under the Paterson administration to deal with the emerging fiscal crisis that led to the Great Recession. New York is still slowly recovering.
"A pre-emptive extension of the tax will also give the Legislature more leeway to make promises now that will have bigger costs in three years," McMahon said.
Cuomo has refused to confirm the tax extension proposal.
"The only discussions we are having are about lowering taxes," said Cuomo spokesman Rich Azzopardi.
The administration doesn't consider an extension of a tax about to expire to be a tax increase or a new tax.
On Monday, Assembly Republican leader Brian Kolb tried to drum up legislative opposition to a tax extension that Cuomo did include in his January budget proposal. Kolb is trying to block the five-year extension of a business tax known as the 18-A Utility Assessment.
The proposal would extend the tax on the sale of gas, electric and steam energy at 2 percent, although it was scheduled to be cut in half this year. The state Business Council said extending the 2 percent assessment will cost businesses, residents, governments, schools and nonprofit agencies $2.8 billion over the next years.
"It's a broken promise by those who said this tax would be temporary," said Heather Bricecetti, CEO of the business group.
Closed-door negotiations continue Tuesday on the state budget, which could be adopted March 21. The budget isn't due until April 1.