‘We Can’t Spend What We Don’t Have’: Virus Strikes N.Y. Budget

ALBANY, N.Y. — With the coronavirus outbreak racing through the state, sickening thousands of New Yorkers each day and draining the state economy, the Legislature on Friday was forced to pass a $177 billion budget that was laden with uncertainties.

The state is expecting at least $10 billion less in tax revenue, a steep gap that officials are already hoping to bridge with federal aid, short-term loans and cuts. Reserves may also be tapped.

The budget agreement, as it often does in New York, included an array of nonfiscal measures. They included modifications to last year’s bail reform law, which had eliminated bail for most misdemeanors and nonviolent felonies, and an end to a ban on gestational surrogacy.

But little about the budget — from the raw numbers to the negotiations leading to the agreement — was typical.

The virus has infected five lawmakers and has reordered legislative priorities and the power dynamics in the Capitol. This year, deals were discussed via phone or video conference, with lawmakers only returning to the ornate chambers of the Senate and the Assembly to vote.

Some did not even do that, as rules were changed to allow them to vote from their offices. The Senate passed the budget on Thursday; the Assembly followed suit on Friday following hours of debate that dragged on until 3:38 a.m.

But the biggest difference was dealing with the expected loss of tax revenues, estimated at somewhere between $10 billion and $15 billion.

With many businesses shut down and the state bracing for a cash flow crunch, lawmakers agreed to approve billions of dollars in borrowing to pay off future expenses, necessitating a temporary waiver to a legal debt cap meant to control levels of borrowing.

“We can’t spend what we don’t have,” said Mr. Cuomo, who called the spending plan “a tough, tough budget” for everyone involved.

In recognition that the state’s financial outlook may worsen, lawmakers gave the governor a one-year window to unilaterally cut spending if warranted.

Many of Mr. Cuomo’s and the Legislature’s pre-coronavirus priorities were left out of the budget for the coming fiscal year, which began on Wednesday.

Efforts to expand protections for workers in the gig economy did not materialize. Measures to allow the sale of alcohol in movie theaters unraveled. And marijuana legalization, which failed to pass last year, also fell by the wayside.

“Too much, too little time,” Mr. Cuomo said on Tuesday when asked about the possibility of reaching a deal to legalize recreational marijuana, which the governor has said could bring in about $300 million in annual tax revenue.

But lawmakers did strike a deal with the governor to alter last year’s landmark bail reform, which had come under fire from law enforcement officials and Republicans. They argued that the law — which eliminated bail for defendants charged with most nonviolent offenses and misdemeanors — was overly permissive and was already threatening public safety.

The new modifications will keep cash bail but also expand the roster of serious crimes under which judges could still set bail for defendants to include offenses like sex trafficking and grand larceny, as well for certain persistent offenders.

Lawmakers also passed one of Mr. Cuomo’s top priorities: structural changes to reduce billions in spending on the state’s growing Medicaid program, which the governor blamed for helping to create a projected $6 billion budget gap before the coronavirus outbreak hit New York.

The budget lifted a ban on paid gestational surrogacy, which failed to gain support in 2019 following opposition from some feminist and religious groups who argued that it commodified a woman’s body and would lead to the exploitation of poor women.

The legislation includes language requiring that surrogates have access to health care and legal counsel paid by the parents, as well as the right to decide whether to continue or terminate a pregnancy.

The environment was once again a hallmark of the budget: An act to leverage $3 billion in bonds to address environmental issues around the state was approved, as was a ban on single-use foam food containers, which are not biodegradable and difficult to recycle.

That provision was attacked as a job-killer by the American Chemistry Council, a major trade group for chemical companies, which noted that restaurants are now limited to takeout and delivery services. (The ban does not take effect until 2022.)

The measure followed a ban on single-use plastic bags passed last year that was supposed to go into effect March 1, but won’t be enforced until at least May 15 because of the outbreak.

Legislators also legalized electric scooters and bicycles, a reversal of Mr. Cuomo’s veto of similar legislation late last year because he had safety and implementation concerns.

There were no new taxes on the ultrarich, a measure many liberals had clamored for, but lawmakers approved an expansion of sick leave and a ban on flavored vaping products.

Mr. Cuomo, enjoying a surge of popularity as a result of his handling of the coronavirus, also managed to include a measure to increase ballot requirements for third parties, after the state’s highest court struck down the commission that established such rules.

The move was decried by a number of third parties, including the Working Families Party, which accused the governor of “using the pandemic to silence his opponents, expand his executive power and pursue an austerity agenda.”

The budget’s financial concerns and modest social policies stood in stark contrast to last year’s budget, which Democrats packed with a slew of progressive priorities after regaining control of the Legislature for the first time in a decade.

Mr. Cuomo, a third-term Democrat, had prided himself on on-time budgets — 2017 was a notable exception — but as midnight drew near on Tuesday night, it became clear lawmakers would not reach an agreement by April 1, the beginning of the new fiscal year. They extended the marathon negotiating sessions and debates through Wednesday and into early Friday.

All throughout, the coronavirus cast a poignant shadow over the negotiations, even if the political jockeying into the early morning hours provided a sense of normalcy.

The typically bustling State Capitol was closed to the public, including lobbyists who normally stalk the hallways as critical issues are being decided in back rooms. Missing were the chants from activists and the last-minute raucous protests.

In their place, however, was raw emotion: In a closing speech in the Senate, the minority leader, John J. Flanagan, wept as he spoke about his Republican colleague, James Seward, a central New York state senator, who has been hospitalized with the infection.

“My heart breaks as I speak about him, because there’s tens of thousands of Jim Sewards in New York at this very moment,” said Mr. Flanagan, a Republican from Long Island.

Despite the cuts in spending, Mr. Cuomo lavished praise on the Legislature for agreeing on a budget in trying times, insisting that 2020 will be considered “as a productive legislative session as we’ve had.”

“It would have been very easy to say, ‘This is an extraordinary year. Let’s just do the bare minimum and go home,’” the governor said on Thursday. “You can put this budget against any budget that I have done in any normal year and it would be a great budget. That it was done this year is really extraordinary.”