NYS Budget Gap to Significantly Widen after Federal Cuts
The recently released report by the New York State Comptroller’s Office (OSC) takes a close look at the state’s budget as imminent federal cuts loom over New York State. The projected gap between the “state’s projected spending and revenues will reach a combined total of $34.3 billion between fiscal years 2027 and 2029, a figure that grows to $46.7 billion when accounting for cuts to the state’s healthcare and food-assistance budgets that were imposed by the July federal reconciliation bill.” The budget gap of 12.1% of expected spending through Fiscal 2029 is the “biggest gap as a share of overall spending since the 12.4% the state faced in April 2009 as the national economy was tanking” according to the press release by Crain’s New York. Instead of being proactive, state leaders have “ruled out calling a special Albany session to address the cuts this year;” and instead plan to wait until January when they prepare a new budget. Suggestions offered by State Comptroller DiNapoli include the consideration of “cutting spending without harming essential services;” as well as studying “the money spent through programs like tax credits to see whether any are inefficient or duplicative.” DiNapoli has also expressed caution when considering increases to taxes, noting that “the state should keep tax rates ‘competitive’ to avoid worsening New York’s cost-of-living crisis.” Headwinds the state was already facing prior to the passage of the so-called One Big, Beautiful Bill passed by the White House last month, prompted decisions by state leaders to lower expected revenue projections by about $4 billion in each of the next three years. However, DiNapoli anticipates that the federal reconciliation bill is “likely just the beginning of what is intended to be a fundamental restructuring of the relationship between the federal government and the states, with cancelations “of grants made under the Biden-era Inflation Reduction Act” to further intensify the financial strain on New York.
Source: https://www.osc.ny.gov/files/reports/pdf/enacted-2026-financial-plan-report.pdf