State Comptroller Thomas DiNapoli said in a report today that New York is in its strongest position financially in years, but it remains to be seen how the state will control costs and achieve surpluses in future years, as Gov. Andrew Cuomo outlined in his budget proposal. The governor’s $137.2 billion budget plan includes $2 billion in tax cuts, which would be funded through surpluses.
The comptroller, the state’s chief fiscal officer, annually examines the budget proposed by the governor and the budget that is enacted by the Legislature. Cuomo released his recommended budget in January, and lawmakers have until March 31, the last day of the fiscal year, to adopt one for 2014-15.
Based on projections from the governor’s Division of the Budget, the state faces the risk of $1.5 billion in budget gaps in 2015-16, $2.2 billion in 2016-17 and $3.4 billion in 2017-18 if unspecified savings from the 2 percent spending limit are excluded.
“The Executive Budget holds the promise that New York can achieve ongoing balance after decades of structural gaps,” DiNapoli said in a statement. “Still, without specific proposals on how spending will be limited to 2 percent in the coming years, it remains to be seen how the state will stay on track and how future surpluses can be achieved, especially if the pace of economic recovery slows.
“The state needs a long-term plan to close future budget gaps, as I have called for, or we could get sidetracked and fall back on short-term solutions,” he said.
The report said it may be a challenge to hold spending increases in state operating funds to 2 percent because programs that account for more than half of that money are projected to rise faster than 2 percent. The budget, for example, projects that the state’s share of Medicaid spending will increase 15 percent between the current fiscal year and 2017-18, to $24.6 billion.
Risks to the proposed state financial plan include the pace of economic recovery and its impact on tax receipt projections, uncertainty over revenues from public authority transfers, reliance on federal assistance and the gap risk associated with the assumed 2 percent spending limit in the out years, according to the report. The budget relies on about $4.6 billion in temporary funds and an additional $2.7 billion in temporary federal disaster aid.
The Division of the Budget estimates the state will end the current fiscal year with a $301 million surplus, but there would have to be continued growth through March to make that happen, DiNapoli said.