New York fiscal experts forecast increased spending as budget deadline approaches

As the April 1 budget deadline looms, Governor Kathy Hochul and the Democratic-led state legislature are preparing for crucial negotiations. With just one month left, fiscal experts convened on Friday to determine the state’s financial standing and allocate funds for vital sectors such as healthcare and education.

The recent annual update, presented in Albany on Wednesday, February 28, during an economic and revenue consensus forecasting meeting, sets the stage for upcoming deliberations. According to Blake Washington, Director of the State Division of the Budget, reaching consensus among fiscal experts is pivotal for ensuring a timely budget enactment by the end of March.

Per New York’s constitution, Governor Hochul and the legislature’s budget teams must reach a mutual agreement on the final budget figure by March 1, marking the commencement of intense negotiations. Patrick Orecki, Director of State Studies at the Citizens Budget Commission, describes this phase as the prelude to substantive budget talks, where both parties establish the available financial resources.

Encouraging economic indicators paint a favorable picture, as highlighted during the Albany meeting. Washington expressed optimism about modest growth projections for the state and the nation, with recession concerns abating and New York City’s job market rebounding to pre-pandemic levels. Fiscal hawks also acknowledge stronger tax receipts, indicating an additional billion dollars in state revenue compared to previous estimates.

However, challenges persist on the horizon, as emphasized by State Senator Liz Krueger, Chair of the Finance Committee. While increased funding helps bridge gaps, concerns linger regarding significant out-year deficits projected from 2026 to 2028, amounting to $5 to $10 billion. Additionally, the outcome of the 2024 elections could reshape New York’s federal funding landscape, impacting the state’s financial dynamics.

Lawmakers remain attuned to pressing issues such as the soaring cost of living and the scarcity of affordable housing, factors contributing to New York’s record outmigration. State Assemblyman Ed Ra highlighted these concerns, underscoring the urgency of addressing the state’s underlying challenges.

Governor Hochul’s proposed $233 billion spending plan sets the stage for forthcoming deliberations. Over the ensuing weeks, negotiations will intensify as the governor and the legislature navigate differing priorities to allocate New York’s tax revenue effectively.