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Report Details NY Budget Deficit Amid Pandemic

NY Gov. Andrew Cuomo
NY Gov. Andrew Cuomo

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 Governor Andrew Cuomo’s budget office. Meanwhile, a new poll finds record approval ratings for the Democratic governor, but most New Yorkers don’t expect life to return to normal anytime soon.

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 the state’s economy will lose a staggering $243 billion over the course of the pandemic and the economic recovery, or 14% of the state’s gross domestic product.  And the recovery will 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 says 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,” said Mujica. “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, says with the massive shortfall it’s sensible to first “curtail spending.” Friedfel, speaking via Skype, says 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 says 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 credits Cuomo’s budget office for holding on to New York’s relatively small “rainy-day fund” for now. He says it will be needed next year when the financial picture is expected to be even worse.

He says much will depend on whether there is a fourth federal bail-out package that addresses state and local governments’ budget shortfalls. 

Recently, Republican U.S. Senate Leader Mitch McConnell suggested that states should instead consider declaring bankruptcy - comments that enraged Governor Cuomo.

Cuomo, speaking Monday, continued to press for the money, saying the funds represent the jobs of essential workers.    

“Police, fire, teachers, hospital workers,” Cuomo said. “How can you exclude them when you are talking about priorities?”

Counties in New York state 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.

Karen DeWitt is Capitol Bureau chief for New York State Public Radio, a network of public radio stations in New York state. She has covered state government and politics for the network since 1990.
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