New York State facing long-term fiscal pressures from coronavirus
The COVID-19 pandemic will cause a multi-year hit to New York State's finances with more federal aid needed to fill in the gaps, according to the state’s chief fiscal watchdog.
New York State Comptroller Thomas DiNapoli released a report Wednesday noting “significant” tax revenue losses are likely to extend into the 2022 fiscal year, with possible further negative effects in years beyond that. He said uncertainty regarding the public health crisis and when stay-at-home orders that began March 16 will be lifted creates challenges in determining the full scope oft the shockwaves to New York’s economy.
“The ultimate price of the coronavirus remains undetermined,” DiNapoli said in a statement. “What is clear is that Washington must do more to help stabilize state and local government finances to avoid drastic cuts that would hurt hospitals, schools and vital services.”
The Division of Budget is projecting a $15 billion deficit from revenue losses after the fast-spreading virus forced non-essential businesses to shut down last month. New York Gov. Andrew Cuomo extended the state’s stay-at-home-order until at least May 15.
DiNapoli's report estimated $9 billion to $10 billion of delayed receipts from New York extending its tax filing deadline to July 15 from April 15. He said while New York received nearly $3.8 billion in federal COVID-19 relief funds, the total amount of aid from Washington needed for cash-flow and budget-balancing needs remains to be determined.
The enacted $177 billion budget signed by Cuomo April 3 provides provisions for mid-year reductions to help manage spending. DiNapoli urged the DOB to go beyond its statutory reporting requirements to provide more frequent detailed public updates on fiscal developments including monthly revenue updates.
The final budget also authorized an additional $21.4 billion in new and increased state-supported debt authorizations including $11 billion for cash flow or deficit financing purposes. DiNapoli said while short-term borrowing to offset delayed revenues may be an appropriate strategy, decisions on longer-term borrowing for operating cost should proceed with caution.
“Tax revenues will be substantially lower in the near term because of the pandemic, and likely well beyond,” DiNapoli said. “The road ahead is a challenging one and will require a long-term strategy.”