New York’s budget deficit is not as large as previously projected, according to Gov. Kathy Hochul’s budget office.
In its mid-year budget report released Monday, the Division of the Budget also recommends that New York limit its investment in the care and housing of the tens of thousands of migrants who are entering the state.
The budget office, led by Blake Washington, said the state already committed $1.5 billion to assist New York City in the crisis and is adding nearly $350 million more to fund housing at Floyd Bennett Field, a former naval air base.
Washington said instead of footing the bill for “indefinite stays in hotel rooms,” the state must consider limiting its help to legal aid services and case management workers to connect the asylum-seekers with jobs.
Hochul, who last month warned that spending on the migrant crisis could reach $4.5 billion, now says that amount would be “unsustainable.”
“We are at capacity,” Hochul said. “I just want to make sure that we're managing expectations. Because I also have to manage an entire budget that funds education, health care, child care and other services that New Yorkers want to make sure are not cut.”
Patrick Orecki with the watchdog group Citizens Budget Commission said it’s wise to try to control spending in a crisis that’s been largely left to the state and New York City to manage and finance — and is proving to be longer and more costly than originally anticipated.
“The obvious, and, I think, most reasonable and fair solution, would be for the federal government to step up and address, on both the policy and the dollars, this issue that is a federal problem,” Orecki said. “But the city and the state can't count on that. At this point, there's no reason to expect that relief is coming. So it is something that the city and state will have to deal with and manage themselves.”
Washington also said that a $9.1 billion projected deficit for next year has been cut in half, to about $4.3 billion, and that future-year projected gaps are lower as well.
The deficits are due to a decrease in tax collections, especially income tax payments. And federal relief payments during the pandemic, which left the state flush with cash, have now ended.
In September, Hochul asked all state agencies to “hold the line” on spending in their requests for the new budget.
Orecki said that’s welcome news.
“That generally is a good thing, because the state has found over the course of the year so far, some places where there's underspending and they can use that to close gaps, and also some recurring savings as well, which is good,” he said.
Orecki warned, though, that even though the large gap has been reduced, New York still has a “structural imbalance” going forward. He said spending growth will need to be tamped down further to match the amount of tax revenues that are coming in.
