Coronavirus hampers New York State budget process
The New York State Legislature missed a March 31 deadline to pass an on-time fiscal 2021 budget while grappling with the financial toll of the ongoing COVID-19 health crisis. Budget officials said that the finalized budget might have $10 billion less in state funding to account for expected losses in tax revenues.
Gov. Andrew Cuomo said during the end of a press briefing early Wednesday afternoon that lawmakers have a conceptual agreement in place without giving specifics. Cuomo initially proposed a $178 billion spending plan in January ofaround $105 billion for state operations prior to the COVID-19 pandemic forced an emergency state shutdown in mid-March.
“This is particularly difficult budget because there is no money and there is much fear and there is much stress,” Cuomo said. “We had to do the budget while dealing with this coronavirus situation.”
New York State Budget Director Robert Mujica said at the press briefing that the finalized budget might have $10 billion less in state funding to account for expected losses in tax revenues. Mujica said short-term borrowing and reserves would help bridge the gap from lost revenues the state is anticipating from the tax filing deadline being moved by the federal government from April 15 to July 15.
The New York State Division of Budgets is projecting a $15 billion deficit resulting from revenue losses caused by the virus forcing many businesses to shut operations. A previous report released by State Comptroller Thomas DiNapoli stated that a possible “severe” recession would result in a potential $7 billion revenue hit for 2021. State lawmakers have discussed allococating less funding for public schools to combat the revenue losses.
“We can’t spend what we don’t have,” Cuomo said. “If money comes in during the course of the year, we’ll spend it. If we lose money we have to adjust it.”
Prior to the COVID-19 hampering state revenues, New York was already facing a $6.1 billion budget shortfall driven largely by a $4 billion rise in Medicaid costs. A Cuomo-appointed panel recommended a plan on March 20 that would save about $1.6 billion through a series of measures that included cutting Medicaid spending on state hospitals by nearly $400 million.
Cuomo’s original budget plan included no broad-based tax increases, but he urged lawmakers to approve other revenue-raisers like legalizing recreational marijuana. The Democratic governor said Tuesday that marijuana legalization was unlikely to be included as part of the budget process.
New York’s general obligation bonds are rated Aa1 by Moody’s and AA-plus by S&P Global Ratings, Fitch Ratings and Kroll Bond Rating Agency.