Mr. Cuomo warned only a 12 months in the past that, with out important federal support, the state was gazing a frightening $15 billion deficit due to the pandemic, and must enact a “doomsday” finances with tax hikes and spending cuts. Earlier than him, former Gov. David A. Paterson confronted a ballooning state deficit and state debt through the Nice Recession, which roiled the economic system and decimated the state coffers.
Ms. Hochul inherited a state wanting down the street at years of balanced budgets, thanks partly to income from earnings tax will increase on the rich that the Democratic-controlled Legislature handed final 12 months. That provides the governor extra flexibility to steer cash to fund her most fast priorities, despite the fact that she’s going to face the standard frenzy of lawmakers and particular curiosity teams with concepts of their very own of methods to spend the state’s more money.
However New York’s rosy fiscal outlook masks some uncertainty: The present projections depend on a major inflow of pandemic-era federal support, about $22 billion over 4 years, an unsustainable income supply that may evaporate over time. State officers used a big a part of the federal support on this 12 months’s finances, which included $2.3 billion to assist tenants late on hire and a $2.1 billion fund to supply one-time funds for undocumented employees.
And with a lot of the state finances reliant on tax income from high-income earners, lingering questions on inhabitants loss, the way forward for distant work and the way rapidly Manhattan will rebound might have seismic results.
New York misplaced greater than 300,000 individuals prior to now 12 months, in line with census data — the best lack of any state. New York Metropolis’s 9.4 p.c unemployment fee is greater than double the nationwide common. Reversing that pattern, partly by telegraphing that New York is open for enterprise, will probably be essential for the governor.
Ms. Hochul dedicated to putting 15 p.c of the state’s working bills into reserves — a historic quantity, however lower than the 17 p.c determine beneficial by unbiased finances analysts.
Nonetheless, fiscal specialists mentioned that with a lot cash to work with, the governor might assist put New York on a path to monetary stability, or improve spending on new packages to assist individuals struggling through the pandemic and shore up floundering ones, specializing in youngster care, well being care, housing, training, transportation and inexperienced infrastructure.
“We truly have the funds for to do each — that’s the superb factor,” mentioned Andrew Rein, president of the nonpartisan Residents Finances Fee. “The chance is the feeding frenzy, the fiscal cavorting, the fiscal hangover.”