New York weighs impact of virus outbreak on state budget
ALBANY, N.Y. (AP) —Gov. Andrew Cuomo says the state will try to pass a budget ahead of an April 1 deadline despite questions about how the coronavirus pandemic — which has closed the New York Capitol to visitors — will affect the state economy and how Congress could dole out federal aid.
The state comptroller will release a report about the outbreak’s potential impact on New York’s revenues by midweek, and the state Assembly and Senate are readying their own spending proposals.
But Cuomo said Saturday that a pending federal aid package promising $35 million to New York could throw a wrench in the state’s budget process by giving too little to New York, given its large share of disease cases, and blocking his push to have New York City and counties once again take on more Medicaid costs.
“This federal bill, if they pass it the way it is, forget the acceleration,” Cuomo said. “You will never get the numbers to balance.”
Cuomo’s push to swiftly pass a budget comes after at least two state lawmakers fell ill and New York confirmed over 600 cases of COVID-19. Assembly members Helene Weinstein, 67, and Charles Barron, 69, both Brooklyn Democrats, have been absent from Albany since the beginning of the month, and all legislators and staff who came into contact with them will be tested.
Cuomo scoffed Sunday when questioned whether lawmakers should return to Albany this week over concerns about the virus spreading.
“I need them to authorize the laws and the measures that we may need to do this,” Cuomo told reporters. “You need soldiers to fight the war.”
For most people, the virus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia, or death. The vast majority of people recover, but the outbreak has caused more than 5,000 deaths worldwide.
Cuomo says the state is spending $30 million a week to fight the virus.
The state is preparing for dips in personal income, sales and capital gains tax revenues as the virus hits the financial, hospitality, tourism and insurance industries.
"This is an extraordinary unknown,” state budget director Robert Mujica said Friday. “We have to figure out with the Legislature and comptroller how we manage and prepare for that risk.”
Some experts warn it will take time for New York’s economy to bounce back and say the state should avoid drastic spending cuts that could worsen a slowdown or recession.
“Not to the point of being irresponsible, but to the point of providing some stimulus for an economy that is quite weak,” investment advisor Hugh Johnson said.
Mujica said a potential federal aid package will be “critical” as New York steadies its budget in coming days. “We don’t want to do anything dramatic,” he said. “We don’t want to do anything that makes it worse.”
New York entered 2020 with worries over a hefty budget deficit that Cuomo hoped to plug by trimming $2.5 billion from Medicaid and shifting more costs onto New York City and counties. Still, the state expected its tax revenues would keep rising this year and in 2021.
In late February, lawmakers agreed Wall Street bonuses would help fuel an extra $700 million in tax revenue over the next year. Economic forecasters expected Asia and Europe would weather most economic pain from the virus. Now, officials are scrapping those optimistic estimates.
Consumer spending, wage growth and employment are expected to take a hit as New York and other states move to address the virus by restricting big gatherings — from Broadway shows to major sports events — and encourage people to stay at home and away from others.
“It’s very clear the economy is going to be stalled,” University of Albany economics professor Kajal Lahiri said.
Mujica said the state could struggle to ensure it has enough cash coming in this spring if the federal government extends its tax-filing deadline.
Lahiri said New York should tweak the governor’s proposed $178 billion budget based on how much money the state lost in past recessions. Lawmakers expected New York’s tax revenues to grow 6.7% next year — but New York’s revenue dropped between 4% up to nearly 9% in the first year after previous recessions, according to Lahiri.
Lawmakers facing calls to fund virus response could also dip into the state’s rainy day fund.
The public fight over using the state budget to legalize pot sales and tweak a new law eliminating cash bail in most cases has all but quieted in Albany as rallies are canceled and crowded meetings are avoided.
But Cuomo, who often uses the budget to push sweeping policies, said this weekend that he thinks the budget can still include new laws like those on legalized paid surrogacy or bail. He’s also urging lawmakers to at least approve paid sick leave for quarantined New Yorkers.
“I would not rush an issue that we’re not ready to do,” Cuomo said.
Criminal justice reform groups warned a rollback to the new bail law could land more New Yorkers in jails and prisons amid a public health crisis.
Assemblyman Ed Ra, a minority Republican, said lawmakers disagree which policies belong in a fast-tracked budget.
“The responsible thing to do is to remove those conversations from the budget so they’re not holding up passing a budget,” he said.