One of the biggest challenges that Governor Andrew Cuomo and New York state lawmakers will face in 2018 is balancing the state’s budget, which already has structural deficit of more than $4 billion. On top of that, federal changes to taxes and health care could cost the state billions more in lost funding.
State tax revenues are down, contributing to the largest structural budget gap in seven years. State Comptroller Tom DiNapoli estimates the deficit to be around $4.4 billion dollars.
The ranking Democrat on the Senate Finance Committee, Liz Krueger, says that news alone would be bad enough.
“That disturbs me, but that’s not what keeps me up at night,” Kruger said. “What Washington might do to us is what keeps up at night.”
Krueger says the tax overhaul plan now being negotiated by the Republican-led House and Senate is an “endless list” of policy changes that will cost New York, including the ripple effect of ending deductions for state and local taxes.
“The loss of money to taxpayers in New York state through federal actions, will absolutely have enormous ramifications," said Kruger, who predicts it will result in a loss of “billions and billions” of revenue for the state to fund key programs.
Governor Cuomo, who calls the federal tax proposal “devastating” for New York, says some tough decisions will need to be made.
“The budget is not going to be an easy budget,” Cuomo said. “We’re going to have to find additional savings in the budget. That’s clear.”
Senator Krueger says Democrats in the state Senate are considering pushing once again for starting a new “Trump emergency fund” to handle major policy shifts in Washington that could derail the state budget. She says the existing rainy day fund of around $2 billion is not enough. She says some of the money could come from cutting the estimated $8 billion spent each year on economic development programs.
Despite the looming fiscal crisis, sectors that depend on the state for money are already making the case for why they need more aid in 2018.
The Educational Conference Board, a coalition of school boards, teachers unions, and school administrators, say the state’s schools need an additional $1.5 billion next year just to keep up with rising costs like health insurance premiums and pensions.
Brian Fessler, with the New York State School Boards, says with the state property tax cap set at 2 percent or lower, depending on the rate of inflation, schools don’t have many ways of raising extra funds.
“We certainly recognize the situation that we’re in,” Fessler said. “But our students are still in school now. They'll be here throughout this year in good times and in bad.”
The groups are also asking for an additional $500 million, for some targeted needs, including more resources to help the growing number of children who need to learn English at school.
Cuomo, speaking to reporters in Syracuse a few days before the school districts asked for the money, says it’s going to be difficult next year to fulfill all the requests for more funds.
“Every school will say we need more money,” said Cuomo, who joked that his kids also say they need more funds.
“And by the way, I need more money,” the Democrat said with a laugh. “The problem is, there is no more money."
Cuomo says the state during his tenure has already spent a record amount on schools, with more than $25 billion in state funds going to schools in the current fiscal year. He says New York is the top spender per pupil of any state in the nation.
The governor has just over a month before he presents his budget proposal.
