(The Center Square) — A New York watchdog group is calling on Gov. Kathy Hochul to pull the reins on government spending and pump more money to the state’s rainy day fund as the Democrat prepares to file her next budget.
In a new report, the nonpartisan Citizens Budget Commission said New York faces myriad fiscal challenges from a housing and affordability crisis and outmigration to rising energy demand and exposure to climate change risks. Changes in federal policy and cutbacks in federal funding complicate those challenges, the report’s authors said.
“The State’s budget outlook is precarious. Communities across the state are economically stagnant. Weak educational outcomes continue, despite nation-leading spending,” the report’s authors said.
New York is facing a projected budget deficit of more than $10 billion in the next fiscal year, with revenue gaps widened by federal cuts and funding freezes. Hochul will file her preliminary budget in January.
The CBC report outlines a series of “smart, but difficult choices” the Hochul administration and Democratic legislative leaders could take “to put New York on a path to overcome these challenges, stabilize the budget, and help all New Yorkers thrive.”
A key challenge for the state government will be getting its fiscal house in order, with state spending expected to grow by more than 12% this year. The report’s authors said New York’s fiscal foundation is “cracked but repairable” if they dial back on spending and use tax money more effectively.
“It’s time the state use the peoples’ money better: support effective programs and cut those that don’t work even if popular, stop sending more money to shrinking and very wealthy school districts, end ineffective economic development tax incentives, and save to protect New Yorkers through times both flush and lean,” they wrote. “All strategies are increasingly important as the state prioritizes its own resources in response to federal changes.”
The report also called on the state government to do more to improve its economic, competitiveness, affordability and quality of life, which they claimed are contributing to an exodus of New Yorkers to other states. While the nation’s population has grown 20.9% since 2000, New York’s has grown only 4.7%. Public school enrollment has declined 12% since 2021, they noted.
“That paints a picture of a state in stasis,” they wrote. It’s time to rev the engine again, streamlining environmental review to supercharge housing production, reforming the tort system to reduce insurance costs, leveraging proven tax incentives to grow businesses, and holding the line on taxes.”
On energy policy, the state should prioritize a good state of repair for existing energy systems, such as natural gas pipelines, and ensure investments in the shift towards clean energy, focusing on cost-effective strategies that balance affordability, environmental, and economic needs.
“New York has limited resources with which to help its residents; every dollar should be put to its best and highest use,” the report’s authors wrote. “Eroding federal support, housing and affordability pressures, climate change, high taxes, and outmigration all put a finer point on that reality. Smart choices can power New York State’s continued success.”
