A host of uncertainties stemming from the ongoing COVID-19 pandemic continue to drive broad questions over New York's finances and state budget process, state Comptroller Tom DiNapoli found in a report released on Tuesday.
DiNapoli's annual report assessing the governor's budget comes as Gov. Kathy Hochul has submitted her first spending plan of her tenure, a $216 billion proposal that would balance spending and revenue over the next five years.
But even with those balanced budgets projected in the coming years and a state flush with cash due to increased taxes on upper income earners and federal aid, there are still question marks. Complications due to the pandemic — including inflation and supply chain problems — could hinder the economic recovery.
“Thanks to an unprecedented amount of federal aid as well as tax collections that are more than $10 billion higher than initially expected, New York is on solid fiscal footing,” DiNapoli said. “However, the pandemic’s continued uncertainty makes forecasting economic performance difficult. Policymakers should keep an eye on the years ahead when temporary federal funding will end and build up the state’s reserves, so we are better prepared for future emergencies or an economic downturn.”
The budget's picture, nevertheless, is significantly brighter. Budget gaps that had been estimated a year ago have been erased. Federal aid pumped into states as well as higher tax revenue has eliminated concerns for now over how major items can be paid for in the budget.
And yet, the state's job recovery has been sluggish over the last two years of the pandemic and there are fewer people who are in the labor force. The state budget office does not predict the return of pre-pandemic employment levels until 2024. Other forecasts peg that employment level won't return until 2027.
The budget is expected to pass by March 31.