DiNapoli warns of fiscal dangers as NY tries to emerge from pandemic

DiNapoli warns of fiscal dangers as NY tries to emerge from pandemic

New York State Comptroller Tom DiNapoli encouraged vigilance over the state’s spending as it slowly emerges from the coronavirus pandemic, saying in a report released this week that it must work toward sustainable spending as federal relief expires.

The comptroller notes that the state’s projected stability over five years is in part a product of the current fiscal climate, and has diverged from plans in previous eras that involved deep cuts to Medicaid and school spending to plug deficits.

“While [the state budget department] forecasts that the General Fund is balanced through SFY 2026-27, the Financial Plan identifies a number of risks that could negatively impact actual results, including climate change, the COVID-19 pandemic, and federal policy and funding changes,” the report from DiNapoli reads

The state passed a $220.5 billion budget in April that included significant investments in sectors long hampered by financial uncertainty, such as education. Schools are seeing a boost in spending under a multi-year pledge to fully fund the Foundation Aid formula, paired with a windfall of relief funds from Washington.

Similarly, child care — an industry long beset with financial troubles and rampant closures that have left families in a lurch — received a pledge of $7 billion from the state over four years, more than half of which will go to New York City.

But DiNapoli said general fund spending may run the risk of exceeding current projections. As an example, the report cites projections for Medicaid enrollment, which the plan estimates will peak at 7.7 million in the 2022-2023 fiscal year and fall to near pre-pandemic levels the year after, at a projection of 6.1 million enrollees.

“If Medicaid enrollment declines at a slower rate than projected or fails to decline as much as projected, the State will incur significant additional costs,” the report reads.

DiNapoli’s report comes at a time of economic anxiety across the country, fostered by surging gas prices and skyrocketing rents in major cities including New York. To help states address this, multiple relief packages were rolled out by the federal government — but the one-time injections in spending have constraints.

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