January 27, 2013 at 05:59 AM EST
The governor has the answers
Because I needed the money." The one-liner was Gov. Andrew Cuomo 's response to a question from the Crain's editorial board about a minimum-wage hike and two other budget proposals that squeeze businesses to close a $1.3 billion deficit. Yes, he did elaborate. With his budget director, Robert Megna , on hand to back up his points with technical details, Mr. Cuomo said the measures that businesses perceive as a burden—a 20% increase in the minimum wage, an extension of utility taxes and what's arguably a raid on the workers' comp fund to pay for other projects—should be seen in the larger context of his efforts to reduce the state's high cost of doing business. "Look, I said if New York is the tax capital of the nation, you will see businesses continue to leave," the governor said. "We've worked very hard over the last few years to reduce [taxes]. We have a property-tax cap, we have the lowest middle-class tax rate in 50 years ... but we've had a terrible national economy. On the rebound, but not at the rate that anyone would want it. We had a $10 billion deficit, now $1.3 [billion]. I have to fill that hole every year." Mr. Cuomo said he "agreed with the concept and the premise" of the question—that businesses are often on the hook when the state has bills to pay—but said that was the "economic reality" in New York. The governor signaled a willingness to compromise on his call for increasing the minimum wage July 1 to $8.75 an hour from $7.25. "There's a difference between what you propose and what you wind up with," Mr. Cuomo said during the hourlong interview. "My guess is the ultimate result is going to be different from what you see here." Business groups have balked at the higher rate, saying it would force fast-food and other establishments to lay off workers. Republicans in the Legislature have been noncommittal, but Mr. Cuomo's renewed push and strong public support for an increase bode well for a deal. He improved his leverage by placing the measure in his budget rather than trying to pass it as separate legislation, an approach that failed in 2012. Nonetheless, the governor said his proposal was not set in stone. "We put out a set of proposals, and they become starting points. And then we have discussions," he said. "You have to start somewhere, right?" A compromise with Senate Republicans could reduce or phase in the wage increase. Assembly Democrats are asking for the minimum wage to rise automatically with inflation. The governor took issue with the term "raid" being used to describe his workers' compensation reform. "That's a ba-a-a-ad word," Mr. Cuomo said, laughing. "Them's fighting words in the Division of the Budget." According to Mr. Megna, the money to be taken from the New York State Insurance Fund, or SIF, which is funded by businesses, can be stretched out for four years or longer. It won't be used for operating expenses but to pay down debt and fund "pay as you go" capital projects. "This isn't a raid on the fund, in the sense of back in the late '90s, when people were taking money out of SIF and writing the state an IOU," Mr. Megna said. Mr. Cuomo said much of his third year in office will focus on recovery work after Superstorm Sandy. But his offer to buy out homeowners in flood-prone areas is complicated by delays in securing the federal aid to do it. "It would have been nice to offer buyouts right up front, before people started to rebuild," he said. "But we are where we are."
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