News
New York finances stabilized since pandemic
New York State Comptroller Tim DiNapoli says the state’s finances have stabilized after the years-long disruption of the COVID-19 pandemic and, along with the state Division of the Budget, is anticipating reduced budget gaps at the same time in which he points out that fiscal risks and challenges remain. according to a budget report his office released Thursday.
“New York State has taken positive steps to stabilize its finances with higher reserves and lower anticipated budget deficits,” DiNapoli said in a statement. “Yet the executive and legislative branches face the difficult challenge of ensuring adequate funding for our schools, health programs and other critical needs while improving the state’s affordability.”
The Division of the Budget (DOB) forecasts that New York’s economy will slow considerably in the first half of 2024, growing at less than 1%, while stronger growth is forecast for the second half of the year, but at rates below 2023 levels. .
DiNapoli’s report states that the state’s structural budget deficit is expected to worsen in the coming years as the DOB forecasts growth in disbursements to outpace revenues by four times over the five-year financial plan period.
The DOB projects a balanced budget for 2024-25, but a cumulative deficit totaling $20.1 billion is forecast by 2027-28. School aid and Medicaid are the two largest categories of general fund expenditures, and their combined cost is expected to grow 4.7% through the 2027-28 budget.
Despite the gradual recovery since the start of the COVID-19 pandemic, DiNapoli’s report says New York has not yet achieved full recovery in the number of jobs and workers and the DOB expects the state will not return to pre-pandemic employment until to the second half of 2026.
Additionally, DiNapoli says the state’s years-long personal income tax filer outmigration problem poses a risk to New York’s economy and revenue. The latest US Census estimates show that New York’s population declined by nearly 102,000 between 2022 and 2023.
The state has increased reserve funds in recent years, including statutory reserves that now total $6.3 billion and $13.2 billion set aside in an informal reserve for “economic uncertainties,” for a total of $19.5 billion. dollars, but DiNapoli said greater priority should be given to construction. legal reserves for rainy days.
“The State must also continue to improve its preparation for future economic crises. As COVID has demonstrated, the unexpected can happen at any time and we must ensure our finances are strong enough to weather the next storm,” reads DiNapoli’s report.
DiNapoli said he is concerned that Gov. Kathy Hochul’s proposed executive budget would exempt at least $160 million from the state comptroller’s contract oversight and competitive procurement process. DiNapoli’s analysis identified an additional $1.4 billion in expenses that will be distributed without a competitive procurement process.
The State Budget expires on April 1st.