Runaway spending on government Kathy Hochul and the state Democrats’ election-year record $220 billion budget have left New York facing deficits for the next five years, watchdogs warned Tuesday, saying continued loose spending by Albany’s leaders is could make things worse for a generation.
“In any case, it seems clear that the governor and the legislature should have shown more fiscal restraint,” said Peter Warren, director of research at Empire Center for Public Policy.
Falling tax revenues mean a budget deficit of $310 million next year, which would grow to about $3.5 billion for the next two years before rising to $6.2 billion in the fiscal year beginning April 1, 2026, according to a report. state budget update released Monday evening.
The state budget grew $47 billion between 2020 and 2022, with expensive items such as record high funding for public schools, a controversial tax credit for film and TV productions, pension increases for state workers and an expansion of health care for some undocumented migrants.
Budget watchdogs say state policymakers should curb spending going forward while rethinking funding commitments made under previously increased budget forecasts that saw budget surpluses for years, thanks in part to federal COVID-19 funding.
“This significant shift – from five years of balanced budgets to larger and ultimately multibillion-dollar budget deficits – reinforces the need to build reserves, vigilantly curb spending growth, and identify and implement long-term cost savings,” said Andrew Rein. , president. of the Citizens Budget Commission, in a statement.
Fiscal restraint ahead would help the state overcome a projected drop in tax revenues of $1.9 billion in the fiscal year beginning April 1, 2023, compared to previous estimates.
Job growth in the Empire State is now projected to grow by 4.3% in 2022, compared to the 4.9% projected in the state budget passed last April.
But according to the new budget update, it is expected to slow down to just 0.8% next year.
The state has so far restored only 80.1% of the jobs previously lost during the pandemic, and a full recovery before 2026 is increasingly unlikely.
Tax conditions could worsen in New York if Hochul signs the bill signing outstanding legislation that could cost the state billions more in coming years — including a tax subsidy for “green chip” makers that Hochul supported weeks ago when the state apparently still left with cash.
“It authorizes tax credits for semiconductor manufacturers from half a billion a year, up to $10 billion over twenty years. Hochul is expected to sign it into law. If she does, it will be in full knowledge of the facts that it will increase the deficits that DOB is now forecasting,” Warren said.