New York Gov. Andrew Cuomo's proposed fiscal 2017 budget maintains a controlled spending policy, according to Standard & Poor's. Analyst Eden P. Perry noted in a Feb. 10 comment that Cuomo's fiscal plan unveiled on Jan. 13 would continue the state's recent record of emphasizing structural balance. The $145.3 billion proposal would increase total spending by 1.7% and is the sixth consecutive budget to fall below a 2% cap that Cuomo implemented in 2011. Perry also credits the plan for being balanced without use of one-time revenues and added that if New York adheres to the 2% spending benchmark it will have surplus operations through the 2020 fiscal year.
"In our view, New York State's financial projections, as laid out in the fiscal 2017 budget proposal, indicate a commitment to structural balance and positions the state well in the event of an economic downturn," Perry wrote. "From a credit perspective, the stability a controlled spending environment lends a government is a positive."
S&P rates New York AA-plus with a stable outlook.
Perry notes that the state's debt position has declined for four consecutive years and is now at 4.6% from 6.0% in 2010.
However, Perry pointed out that bonded capital spending will rise by "a substantial" 18.5% in fiscal 2017 if the proposed budget passes and is slated to increase again by 11.4% in 2018.
"Although the increased spending in fiscal years 2017 and 2018 will address much needed investment in infrastructure, we are concerned that the state may pull back on investing in the out years, which would likely put pressure on its long-term economic growth prospects," said Perry.
