New York’s budget deficit is not as large as previously projected, according to Governor Kathy Hochul’s budget office. The mid-year budget report also recommends that the state place limits on how much it spends to house and feed the migrants coming to New York.
In its mid fiscal year report, the state Division of the Budget 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 budget director Blake Washington, says 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 says 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, says 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.”
Hochul’s budget director also says that a $9.1 billion projected deficit for next year has been cut in half, to around $4.3 billion, and that future year projected gaps are now 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 of the state’s agencies to “hold the line” on spending in their requests for the new budget, in order to trim spending.
Orecki, with Citizens Budget Commission, says 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 warns, though, that even though the large gap has been reduced, New York still has a “structural imbalance” going forward. He says spending growth will need to be tamped down further to match the amount of tax revenues coming in.