New York Gov. Andrew Cuomo delivered his eighth State of the State address Wednesday amid an expanding budget deficit and facing $2 billion in federal cuts.
Cuomo stressed during the nearly two-hour speech in Albany that challenging fiscal times lie ahead for the 2019 fiscal year that begins April 1, with an estimated $4 billion budget gap. The Citizen Budget Commission estimates New York's shortfall will number between $4.4 billion to $6.3 billion before accounting for recent tax overhaul changes in Washington.
“These are challenging times and we have to rise to the challenges,” said Cuomo. “Washington released an economic arrow aimed at the heart of New York.”
Cuomo didn’t give specifics for attacking New York’s budget challenges, but revealed that he soon would announce “a major shift” in the state tax code aimed at restructuring the current income and payroll tax system.
The Democratic governor also said he would work with local governments statewide to try and lower property taxes in an effort to minimize the effects of new tax legislation signed by President Trump that restricts homeowners from deducting state and local property taxes. He said New York would sue the federal government over the tax plan, saying it amounts to “double taxation.”
David Friedfel, the CBC’s director of state studies, wrote in a Dec. 18 report that Cuomo in recent years has addressed budget gaps by shifting costs from state operating funds or across fiscal years along with utilizing one-time revenues.
He said the current budget challenge is due partly to $1.2 billion in property tax relief rebates owed in the 2019 fiscal year that may need to be re-examined. The state also adopted income tax cuts in 2017 that are projected to reduce state revenues by $236 million by the close of the 2018 fiscal year calendar and $1.1 billion for 2019, according to Friedfel.
In addition to budget obstacles, New York also faces rising debt levels projected to grow from $63.7 billion at the end of the 2018 fiscal year to $71.8 billion by 2022, according to a Dec. 14 report released by State Comptroller Thomas DiNapoli. Cuomo is slated to announce his 2019 executive budget proposal in mid-January.
New York State has general obligation bond ratings of Aa1 by Moody’s Investors Service and AA-plus by S&P Global Ratings, Fitch Ratings and Kroll Bond Rating Agency.