“The ultimate price of the coronavirus remains undetermined.
What is clear is that Washington must do more to help stabilize state and local
government finances to avoid drastic cuts that would hurt hospitals, schools
and vital services,” DiNapoli said. “The Executive and Legislature passed a
budget under very difficult circumstances to address our immediate needs, but
we must be mindful of the bigger picture. Tax revenues will be substantially
lower in the near term because of the pandemic, and likely well beyond. The
state should minimize long-term costs from any new debt and commit to building
up our rainy day reserves. The road ahead is a challenging one and will require
a long-term strategy.”
DiNapoli’s report notes the state has delayed the filing deadline
for 2019 tax returns for individuals and corporations from April 15 to July 15.
The Comptroller’s office estimates the amount of overall tax receipts delayed
from April to July could be as much as $9 billion to $10 billion, depending
largely on how many taxpayers choose to delay their filings. While the state
received almost $3.8 billion in Coronavirus Relief Fund resources earlier this
month, the total amount of federal assistance available to help address
cash-flow and budget-balancing needs remains to be determined. The ability of
the state to fully achieve its Medicaid savings target also remains unclear.
In response to these fiscal challenges, the Enacted Budget
provides the Executive with extraordinary flexibility to manage spending,
including authority to make broad reductions in most local assistance spending
as needed to maintain budget balance. Separate provisions authorize the
Executive to reduce Medicaid spending, in particular, if disbursements are
expected to exceed projections or other developments occur.
Some of these spending provisions provide a role for the
Legislature, while others do not. Given the extraordinary flexibility for
spending reductions, the state Division of the Budget should go beyond
statutory reporting requirements to provide more frequent and more detailed
public updates on fiscal developments, including monthly updates on the
economic and revenue outlook. DiNapoli said given the range of challenges
facing entities that depend on state funding, stakeholder input on any budget
actions should occur.
The final budget also included an additional $21.4 billion
in total new and increased state-supported debt authorizations, including $11
billion for cash flow or deficit financing purposes. While short-term borrowing
to offset delayed revenues may be appropriate, DiNapoli urges caution in any
longer-term borrowing for operating costs.
Report
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