New York state agencies are being ordered to freeze spending in their budget proposals for the next fiscal year as the state faces major budget gaps in the years ahead. 

In a letter to agency commissioners Wednesday, New York state Budget Director Blake Washington Wednesday said budget requests should not exceed what was approved in this year's $229 billion budget. This is what's known as the annual "call letter" outlining the governor's priorities and any fiscal constraints. 

"Changing economic winds pose a challenge to New York’s financial position," Washington writes in the letter. "Extraordinary amounts of post-pandemic Federal fiscal stimulus have ended. The Federal Reserve tightened its monetary policy, and the robust tax collections fueled by market activity and prior year tax increases have subsided. As a consequence, our revenue forecasts have been revised downward, resulting in multi-year budget gaps."

The state Division of Budget is projecting budget gaps totaling $36 billion over the next three years. Those break down to $9.1 billion next year, $13.9 billion for following year and $13.4 billion for the year after that. The gaps are $15 billion higher than previous projections and the Division of the Budget points to decreasing tax revenue and federal aid while spending increases. 

The state budget is required to be balanced by law. Budget deficits fluctuate and are based on expectations of revenue and spending targets as they stand now. New York's reserve funds are up to $19.5 billion after investments over the last five years. However, Washington outlines Gov. Kathy Hochul does not want to raise taxes or rely on reserve funds.

"Acknowledging our fiscal constraints while ensuring fundamental public services and programs are preserved is the task ahead," Washington writes. "The road to a balanced budget might seem daunting, but I am confident that through sound decision-making, strategic investments, and fiscal discipline, we can continue to show the compassion, care, and leadership that New York is known for."

Agency budget requests are due Oct. 11. The governor will present a budget to the state legislature in January, kicking off weeks of hearings and negotiations before the final budget is due April 1.