State Comptroller Report Warns of State’s Fiscal Outlook Being In Decline

Tom DiNapoli

State Comptroller Tom DiNapoli warns of the State’s fiscal outlook being in decline.

In a report released by the State Comptroller’s Office, DiNapoli said the 2023-24 budget plan shows looming gaps cumulatively totaling $36.4 billion through fiscal years 2026-27.

He cites declines in revenue from a weaker economic forecast, stock market volatility, and increases in recurring spending as reasons for the deteriorating outlook.

DiNapoli said in a media release, “The Governor and the Legislature prudently increased New York’s reserve funds, but that cannot replace fiscal discipline or be relied upon to plug recurring budget gaps. While there is no quick fix, a proactive approach by state leaders to align recurring revenues with recurring spending could help preserve the economic competitiveness of our state and avoid cuts to critical programs New Yorkers rely on.”

DiNapoli said one reason the outlook worsened by June was that Governor Kathy Hochul and state lawmakers added $1.9 billion in spending to the $229 billion final budget.

The Division of Budget also changed its forecast to predict the national economy will weaken and cost New York jobs in 2024. It lowered its estimates for future tax income by a total of $25 billion over four years because of reduced personal income tax payments.

DiNapoli said reserve funds at the end of the 2022-23 fiscal year totaled $6.3 billion. Given the size of the estimated gaps and risk of economic downturn, DiNapoli recommended the transfer the $13.2 billion in fund balance designated by the the State Division of Budget for “economic uncertainties” and controlled by the Executive into the statutory rainy day reserves on a monthly basis over the course of the fiscal year.

He said if all the funds were deposited, the statutory reserves would total $19.5 billion, which is 17% of projected General Fund disbursements in SFY 2023-24. DiNapoli added that if that’s not done that Hochul should develop and clearly state criteria for using the funds designated for “economic uncertainties.”