The New York state government has once again missed its April 1 budget deadline.
Based on the budget proposals from the governor, Senate and Assembly, the watchdog group Citizens Budget Commission has some concerns.
In a new report, the CBC highlighted problems including out-year budget gaps, questionable tax moves, and no contingency plan for the risk that the state loses its federal funding.
"This year's budget story is one that is more about what is not on the table than what is," the report's authors, Patrick Orecki and Stevan Marcus, wrote.
What's not on the table: "A plan to fund vital capital needs at the MTA, efforts to improve service delivery of the State's massive budget, or meaningful policies to address New Yorkers' most pressing financial need in housing."
Hochul's budget would be a 10.9% increase over the
That growth is possible, Orecki said, because of the "cash glut" the state amassed through temporary tax increases, the last of its federal COVID aid, and stronger-than-expected economic performance. But he doubts that these levels of spending are sustainable.
To accompany the big spending, Hochul's executive budget featured big out-year gaps. The FY 2029 budget would have an $11 billion gap, according to the report.
"The state always, pretty much, projects budget gaps in the out-years of the financial plan, so it's not strange to see multi-billion-dollar gaps there," Orecki said. "The concern, when we look at it, is the fact that those gaps have generally gotten bigger over the last few years."
Orecki argued the structural imbalance is even worse than it appears: more than $7 billion of the revenue in those calculations comes from non-recurring sources, like temporary taxes or prepayments. The structural imbalance is really $18.2 billion, Orecki said.
The budget also lacks a plan to cope if New York loses its federal funding from a Trump adminitration hostile to blue states and social programs. The state received $90.8 billion of federal funding in FY 2025 — more than a third of the state budget.
"Even what might be viewed as incremental or marginal cuts in something like the Medicaid program can be hundreds of millions, even billions of dollars, pretty quickly," Orecki said.
The report recommended that the state set aside its surplus revenue from last fiscal year so it can try to compensate for potential lost grants or Medicaid spending. In the long run, the report said, any federal cuts would likely be recurring and large enough that the state cannot replicate them.
"You can't count on using just money that you set aside to permanently deal with these cuts," Orecki said. "So it would mean coming up with a permanent solution to back-filling a portion of what you lose from the federal government, but also maybe finding some savings to offset what you've lost from federal aid as well."
Hochul chose "affordability" as the theme of this year's budget cycle. Her proposal would cut taxes, temporarily enhance the child tax credit, and distribute the past year's surplus to New Yorkers through "inflation refund checks."
The report argued these measures will be spread too thinly to make much difference for taxpayers and the money would be better spent elsewhere. The inflation refund checks, for instance, would be $300 for single taxpayers and $500 for married taxpayers filing jointly.
"This would squander $3.1 billion by sprinkling it across the state," the report said. "One-time checks to the majority of New York residents will not bring down their cost of living over time and will provide only marginal temporary relief to a large swatch of recipients, if at all."
Orecki suggested a better use for the $3.1 billion: filling the funding gap in the MTA's 2025-2029 capital plan.
Between Hochul, the Assembly and the Senate, none of the budget proposals offered a solution to the $33 billion funding gap in the MTA's next capital plan. In fact, Hochul's proposal grew the gap, lowering the state and city's contribution by $1 billion each.
New York could plug that gap with around $1 to $2 billion of annual revenue, state
The CBC presented an alternative in a report last month.
$10 billion of that would come from the state. Orecki suggested diverting the funds from the other new spending Hohcul proposed this year, such as a $1.7 billion increase in K-12 school aid.
"If you look at things like school aid or Medicaid or the economic development subsidies that the state gives out," Orecki said, "I think for this capital plan, you could very easily come up with the cash within the state's budget to provide that directly to the MTA."
The report recommends the MTA generate another $6.8 billion of revenue by "modestly" increasing fares, tolls, and vehicle registration fees.
This would leave a $16 billion gap for the state to fill.
"To fill this, state leaders should select sources that preserve the region's competitiveness and are apportioned fairly," the report said. "They may choose to further add city and state appropriations, user fees, or charges, as presented above "
One provision of the executive budget would give the governor the permanent authority to issue up to $4 billion of short-term revenue anticipation notes. The CBC wants to scrap it.
This power was first granted to the governor in the first year of the pandemic, Orecki said; under Andrew Cuomo New York issued the anticipation notes in 2020, but no governor has used the power since. Still, every year since 2020, the governor has proposed making it permanent, and in every budget, the legislature has extended it for one more year.
"In our opinion, including that authority for the executive at this point only creates a risk that you're going to borrow money you don't need to be borrowing," Orecki said.
