NY’s budget gaps expected to balloon to $36B by 2027: comptroller
The state’s top money manager painted a bleak fiscal future for New York in a sobering report released Tuesday, estimating a jaw-dropping budget gap of $36.4 billion by 2027.
State Comptroller Thomas DiNapoli pointed to several factors leading to the decline: higher state spending, lower tax collections, increased Medicaid enrollment, and the end of federal, pandemic-era funding.
The cumulative $36 billion price tag surpasses the roughly $20 billion estimate through 2027 previously provided by Gov. Kathy Hochul’s state Division of Budget.
Previous estimates from the state projected spending to increase by $4 billion in fiscal year 2024-2025, but DiNapoli’s report shows that number grows to $9.1 billion over the same time period.
Between 2025-2026, the number jumps from $5.3 billion to $13.9 billion and then to $13.4 billion from $6.3 billion by April 2027.
“The estimated gaps are well above typical forecasted levels over the previous 15 years,” wrote DiNapoli in the 28-page report.
The comptroller listed the elements contributing to New York’s financial hardships:
- Healthcare spending growing by $16 billion between now and April 2027, the main chunk of that includes an increase of $10 billion in Medicaid costs over that same time period
- State education aid increased by 24% over a three-year period as the state addressed the Campaign for Fiscal Equity Lawsuit, a controversial 2006 Court of Appeals ruling that found that Albany had underfunded New York City public schools.
- Higher-than projected minimum wage will drive up the costs of operating the SUNY system by $330 million by 2027
Although Hochul and the legislature grew the Empire State’s reserve fund to $19.5 billion in the recently passed $229 billion state budget, the Comptroller warned the move might not be enough to close the future gaps.
“These resources are an important budget management tool, but are insufficient to close budget gaps in their entirety and are not a substitute for prudent fiscal discipline,” he wrote in the 28-page document.
“State leaders must take action to align recurring revenues with recurring spending, with an eye toward preserving the economic competitiveness of our State and equality of opportunity for all New Yorkers.”
Along with the healthcare cost increases, New York is also likely getting stuck with a $1.3 billion bill in bonus payments for healthcare workers — a post-pandemic promise made by Gov. Hochul — as the feds rejected the state’s idea to fund the increases with Medicaid money.
DiNapoli pointed to yet another concerning trend: taxpayers exiting the state. The Post has reported much of those leaving have sights set on tax friendly environments in the south, such as Florida.
A net average of 28,700 personal income taxpayers moved out of New York between 2015 and 2019 and four times the amount followed in 2020 – 112,400 individuals.
The fiscally conservative Citizens Budget Commission argued Hochul should fend off pressures from the spend-thirsty legislature in the next budget cycle starting in January.
“If you end up spending those savings you have, the next time you have that true emergency, you’re going to be still unprepared to cope with the consequences,” cautioned the CBC’s Director of State Studies Patrick Orecki.
“It means under the current landscape, this year’s budget process is going to be very different than others.”
