Unchecked spending for Gov. Kathy Hochul and the state Democrats’ record, election-year $220 billion has left New York with deficits for the next five years, watchdogs warned Tuesday, saying continued loose spending by Albany’s leaders is exacerbating the situation for could worsen a generation.
“It seems at least clear that the governor and legislature should have shown more fiscal restraint,” says an analysis by Peter Warren, research director at the Empire Center for Public Policy.
Falling tax revenues mean a federal budget deficit of $310 million next year, which would grow to about $3.5 billion over the following two years before peaking in the fiscal year beginning Jan.
The state budget grew by $47 billion between 2020 and 2022, with expensive items including record-high funding for public schools, a controversial film and television production tax credit, pension increases for state employees, and an expansion of health care for some undocumented people.
Budget watchdogs say state policymakers should hold back spending while they reconsider funding commitments made amid previously heightened fiscal projections that have been running budget surpluses for years, thanks in part to federal COVID-19 funding.
“This significant shift – from five years of balanced budgets to increasingly large and ultimately multi-billion dollar budget shortfalls – reinforces the need to build reserves, vigilantly contain spending growth, and identify and implement long-term cost savings,” said Andrew Rein, President of Citizens Budget Commission said in a statement.
Further fiscal restraint would help the state overcome an expected $1.9 billion drop in tax revenue for the fiscal year beginning April 1, 2023, compared to previous estimates.
Job growth in the Empire State is now expected to increase by 4.3% in 2022, compared to the 4.9% estimated in the state budget passed last April.
But then it’s expected to drop to just 0.8% next year according to the new budget update.
The state has so far recovered just 80.1% of the jobs lost at the start of the pandemic, with a full recovery looking increasingly unlikely before 2026.
Fiscal conditions in New York could worsen if Hochul signs pending legislation that could cost the state billions more in the years to come – including a tax subsidy for “green chip” makers that Hochul supported weeks ago when the state appeared still to be had cash on hand.
“It authorizes half a billion in tax credits for semiconductor manufacturers annually, up to $10 billion over twenty years. Hochul is expected to sign the law. If it does so, it will, with full knowledge, deepen the deficits that DOB is now forecasting,” Warren said.
https://nypost.com/2022/08/02/hochul-democrats-spending-has-ny-facing-fiscal-cliff-watchdogs/ Hochul, Democrat spending has put NY on a fiscal cliff: watchdogs