New York’s outyear budget gaps, the shortfall between planned state expenses and state tax receipts over the next three years, has exploded to more than $36 billion, just-released documents show.
The FY24 Enacted Budget Financial Plan, issued Friday afternoon by the state Division of the Budget (DOB), shows expenses will exceed revenues by $9.1 billion in fiscal 2025—the budget year for which Governor Hochul will present her spending plan in January. The gaps grow to more than $13 billion in fiscal 2026 and 2027.
Hochul’s FY24 budget proposal had anticipated smaller, more manageable gaps, beginning with $5.1 billion in fiscal 2025 and totaling $21 billion over the three years. The gap has widened for two reasons: the just-adopted state budget hiked spending $2 billion per year above what Hochul originally proposed, and DOB has since revised forecast tax receipts down significantly—including a $3 billion downgrade for the current fiscal year. That latter change comes after the state’s April tax collections came in $4 billion below what had been forecast in January.
New York state government isn’t in immediate danger of running out of money thanks to moves by Governors Andrew Cuomo and Hochul to build up reserves, with about $19 billion available. Tapping this nest egg outside a major emergency or economic downturn, however, would leave the state poorly positioned when such an event inevitably occurs—and it wouldn’t be enough to cover even two years of spending.
The new gap calculation is the clearest evidence to date that Albany’s three-year spending binge, which has seen both school aid and Medicaid costs explode and has been partially fueled by personal income and business tax hikes, can’t be sustained.
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