Coronavirus Increases New York State Budget Deficit
The New York State Comptroller says the state’s revenues are plunging, along with the stock market, and that spells a difficult time ahead for the New York budget.
State Comptroller Tom DiNapoli was asked by Governor Andrew Cuomo to recalculate the state’s finances, and he says the picture does not look good. He says the current $6 billion deficit will grow to $10 or $13 billion.
“This is an extraordinary time that we are going through, and it makes estimating the revenue impact of the pandemic very, very difficult,” DiNapoli said.
DiNapoli says the impacts of the virus on the economy and state revenues is currently unknowable.
“Most available economic forecasts have not yet caught up with recent events,” DiNapoli said.
Among the many uncertainties, will the April 15 tax collections be down, as people and businesses find they are unable to file their taxes on time?
DiNapoli says if that occurs, the state could experience a cash flow problem in the billions of dollars.
The mandatory casino closures enacted March 16 will also reduce revenues. Sales tax collections are also likely to be reduced, with bars and restaurants shut down and few customers at most retail centers.
The Comptroller says New York’s financial picture could improve, though, if the federal government comes up with a substantial bailout package for the states.
“Perhaps beyond the relief that’s currently being debated there will be stimulus money that will be additional money that’s not quantified at this point,” said DiNapoli, who said Cuomo and lawmakers may have to do a “baseline budget” and consider revisions later.
For that reason, Governor Cuomo’s budget director Robert Mujica says the administration might ask the legislature for greater flexibility, so the governor could, on his own, make more fiscal decisions later in the year.
“You’ll have to do a budget that has flexibility,” Mujica said, “To be able to make changes as you go. We don’t know how long this is going to last.”
Mujica says the budget office might need to hold payments back at times, or change or increase health care payments as the year goes on.
Cuomo says he and lawmakers will have to make the tough decision to “pick a point in time” and decide on a spending plan.
“If the revenues continue to slow, which I believe they will, you have a self-adjustment mechanism in the budget,” Cuomo said, “So you don’t have to come back every 24 hours to readjust the budget when the revenues shift.”
The Republican Minority leader in the Senate, John Flanagan, in a statement, is calling on the legislature to enact a bare bones state budget. He says lawmakers should leave out, for now, many proposed additional items, like legalizing adult use of recreational marijuana.
Flanagan is against the idea of granting Cuomo new budget making powers. He says the Legislature should “not simply hand over all oversight of potential decisions to the Executive” in the budget, and instead periodically revisit the budget to potentially make changes in the coming months.
A spokesman for Assembly Speaker Carl Heastie, Mike Whyland, says the Assembly wants to see the specific bill language that the governor is proposing before making any comment.