Cuomo officials say without federal help, deep state budget cuts coming
New York’s finances will suffer for some years to come, and there are likely to be big cuts to schools and local governments because of the coronavirus pandemic, according to a report released over the weekend by Gov. Andrew Cuomo’s budget office.
The report finds a $13.3 billion shortfall in this year’s budget, with a $61 billion structural deficit over the next four years. An assessment done by the Boston Consulting Group predicts that the state’s economy will lose a staggering $243 billion, or 14% of the state’s gross domestic product, over the course of the pandemic and the economic recovery.
The recovery is expected to be longer than the Great Recession of over a decade ago.
Cuomo commented briefly on Friday.
“What you are going to see is what we expected,” Cuomo said.
The financial report also predicts that the state will have to slash $10.1 billion from the current budget, leading to over $8 billion in cuts to schools, health care providers, and local governments. The governor’s budget director, Robert Mujica, said the decisions on specific cuts will be made in the next couple of weeks, in time for schools to make hard decisions before their budgets are due.
“Between now and May 15, we’ll have more clarity,” Mujica said. “By the time they put their school budget votes together, they will have those numbers.”
School budget votes, originally scheduled for May 19, have been postponed. A new date has not yet been set.
Some Democrats in the State Legislature have proposed raising taxes on the wealthy to avoid deep cuts.
David Friedfel, with the watchdog group Citizens Budget Commission, said with the massive shortfall, it’s sensible to first “curtail spending.” He said it’s also difficult to raise revenues four months into the fiscal year, when there is almost no money coming in to the economy.
“It’s a delicate balance,” Friedfel said. “The state already is a high-tax state; we do need to worry about our long-term competiveness.”
But he said the cuts would be severe and could have harmful effects.
“We want to make sure we preserve the public health system, obviously, during a global pandemic,” he said.
Friedfel credited Cuomo’s budget office for holding on to New York’s relatively small rainy day fund for now. He said it will be needed next year, when the financial picture is expected to be even worse.
He said much will depend on whether there is a fourth federal bailout package that addresses state and local governments’ budget shortfalls.
Recently, U.S. Senate Leader Mitch McConnell suggested that states should instead consider declaring bankruptcy, comments that enraged Cuomo.
Cuomo, speaking Monday, continued to press for the money, saying the funds represent the jobs of essential workers.
“Police, fire(fighters), schoolteachers and hospital workers,” Cuomo said. "How can you exclude them when you are talking about priorities?”
The state's counties agree with the governor. In a statement, the New York Association of Counties said they also urge Congress to pass another stimulus package. They say “local taxpayers are in no position to backfill state funding cuts,” and raising local taxes to make up the difference will not be an option.