As much as $8.2 billion would be cut from Aid to Localities
spending, while large reductions in funding for State Operations are also
planned. School children and college students, people living in poverty,
individuals with disabilities, and aging New Yorkers are among those who may
suffer the loss of services. Programs
that help fund front-line responders, safeguard health, protect the
environment, ease the burden on property taxpayers and maintain a sound
transportation system could also face significant cuts.
“The Financial Plan warns of deep cuts and very troubling
actions the state anticipates taking to address the revenue loss and growing
costs of fighting the coronavirus,” DiNapoli said. “New York is facing an
unprecedented public health and fiscal crisis that could dramatically change
our landscape for years to come. As reports by my office have repeatedly shown,
New York ranks first among the small group of states that send more dollars to
the federal government than they receive in return. Now we need help from
Washington that comes without strings to protect New Yorkers from seeing essential
services decimated.”
DiNapoli’s report finds:
-The economic projections of the state Division of the
Budget (DOB) that underlie the Financial Plan are in keeping with those of the
Congressional Budget Office and other forecasters, and the revenue projections
appear reasonable. Given the potential for major cuts in funding for essential
services, DOB should make detailed data underlying its economic and revenue
forecasts publicly available, and update such information throughout the year
along with more detailed information on spending, cash flow, out-year gaps, and
borrowing. Cuts to key services should be minimized by reevaluating less
essential spending where possible.
-DOB does not anticipate the use of deficit financing this
state fiscal year, nor the use of rainy day reserves to avoid a deficit. These
are positive factors in addressing the reality of what is expected to be a
multi-year fiscal challenge. The state’s plans to delay paying $667 million in
Social Security taxes and to defer an additional $700 million of the
state-share Medicaid payments, among other steps, will push certain costs to
future years.
-Medicaid and other health care costs represent a
significant budgetary risk this fiscal year and onward. State costs will rise
by levels not yet identifiable due to the direct and indirect impacts of the
COVID-19 pandemic. While increased federal aid will pay for some of these new
costs, the net impact to the state remains unclear.
-The state may be able to use substantially more of its $5.1
billion allotment from the federal Coronavirus Relief Fund than is reflected in
the Financial Plan. The U.S. Treasury should explicitly make these resources
flexibly available for use as needed, while more direct federal aid is needed
to help both the state and local governments fill gaps from new lost revenues and
new costs.
-Projected out-year budget gaps, after delaying payments and
other actions, have tripled compared to those in the Executive Budget proposed
in January, now totaling $25.6 billion over the out-years of the Plan. Without
additional, urgently needed federal aid, the state has limited flexibility to
avoid undesirable actions including spending cuts, revenue increases or deficit
financing.