Last week, state Comptroller DiNapoli released his office’s analysis of New York’s finances. His observations were sobering: State government faces a three-year aggregate budget deficit of $34.3 billion. The Comptroller specifically pointed to Washington’s federal budget cuts and a weakening economic outlook as the bases for his assessment.
His findings tracked those issued late last month by the Hochul Administration, which also predicted growing state budget deficits over the next few years.
According to both, the federal cuts that impact the current year’s state finances are manageable, no more than $1 billion out of an overall budget of nearly $255 billion. The current state fiscal year runs through the end of next March, seven months away.
The Comptroller’s report also predicted that the state’s financial picture will get more “problematic” as the phase in of the federal cuts hit, as well as expected future actions that could further deepen those cuts.
One program that was targeted is the Supplemental Nutrition Assistance Program (SNAP), which used to be called food stamps, which is the federal program that helps low-income families with their grocery bills. The federal changes to that program will hurt right away. The federal government has always funded 100 percent of SNAP benefits. Yet the federal actions will shift some of those costs to the state, resulting in as much as $1.9 billion annually in additional costs for the state and local governments.
The impacts to New York don’t stop there. According to estimates, as many as 1.5 million New Yorkers will lose their health coverage. In particular, the cuts to Medicaid and other health insurance programs are deep and there is every reason to believe that state lawmakers will attempt to minimize the number of New Yorkers who lose their government coverage. But in order to do so, they may have to reduce spending on other areas.
This robbing “Peter to pay Paul” approach could impact programs in areas that were untouched by the federal cuts.
One option would be for the state to raise taxes on wealthy New Yorkers to help cover at least some of the upcoming shortfalls. After all, the federal budget plan advanced by President Trump and approved by the Congress enacts massive tax cuts with the benefits flowing overwhelmingly to the wealthiest Americans—thereby increasing the tax burden for the poorest while enhancing the incomes of the richest.
The thinking goes “why not claw back some of those benefits to offset the impact of the cuts to services?”
Governor Hochul has thrown cold water on that idea.
Whether the Legislature ultimately agrees with her, or she changes her mind, only time will tell. There are other options that the state should consider as lawmakers grapple with reducing expenses and generating revenue.
One area to examine is the state’s economic subsidies. A recent report found that New York spends billions of dollars on tax incentives and gets too little in return. In some cases, the subsidies run counter to the state’s established public priorities. For example, through tax expenditures and other economic benefits, the state provides annual subsidies to the climate crisis contributors—the fossil fuel industry. Should the state be providing tax benefits to the enormously profitable oil and gas industry? And aren’t benefits to the industry that causes the world’s climate catastrophe at odds with New York’s Climate Law, which promises to end reliance on that power source?
The clear answer is a resounding “yes.”
Governor Hochul is beginning to develop her plans for next year’s budget. As her plans come together, one important measure should be whether she has thoroughly vetted the state subsidies to the oil and gas industry, as well as the billions more spent on controversial tax and economic development benefits.
Thanks to the President and his Congressional allies, millions of New Yorkers—and tens of millions of Americans—will be poorer, unhealthier, and more at risk.
New York should take steps to do all it can to reduce that unnecessary suffering and to do so by eliminating questionable—or ineffective—tax programs, as well as steps to offset some of the federal benefits going to the well to do in order to reduce some New Yorkers’ misery.
Blair Horner is senior policy advisor with the New York Public Interest Research Group.
The views expressed by commentators are solely those of the authors. They do not necessarily reflect the views of this station or its management.
