Press Release State Budget

CBC Releases Strategy for Closing NYS Budget Gap

May 22, 2020

Today the Citizens Budget Commission (CBC) released a report outlining the hard choices New York State’s leaders should make to close the fiscal year 2021 budget gap and significantly reduce outyear budget gaps—with a far smaller reduction to local aid than proposed in the Enacted Budget Gap-Closing Plan.

These hard choices are informed by three principles: (1) minimizing harm, particularly to New Yorkers most in need, and maximizing benefit for the greatest number of New Yorkers; (2) maintaining New York’s long-run attractiveness as a business location and place of residence; and (3) preserving intergenerational equity, so that future New Yorkers are not obligated to pay for today’s services rather than their own needs.

The State’s Enacted Budget Gap-Closing Plan includes an $8 billion, or 11.5 percent, cut to local aid. The Budget Director has said localities should prepare for a possible 20 percent cut to schools, local governments, and hospitals if the federal government does not provide fiscal relief. While reinforcing the need for additional federal aid, the CBC’s recommended actions would reduce the State’s proposed 11.5 percent local aid cut to 1 percent in fiscal year 2021.

Instead of a 20 percent school aid cut for the next four years, the CBC recommends reducing local aid to wealthy school districts with sufficient local resources to provide a sound basic education by $800 million in fiscal year 2021. CBC also recommends continuing the work of the Medicaid Redesign Team with the goal of meeting its originally designated target, which would still allow Medicaid to grow 4 percent annually.

An additional $3.3 billion in fiscal year 2021 resources come from reducing unproven capital spending on economic development and other low priority projects and shifting funding from pay-as-you-go capital resources backed by tax revenues and special settlement funds to appropriate debt financing. Freezing implementation of middle class tax cuts at this year’s rate and broadening the sales tax base would increase revenues by $774 million. Reserves and rainy day fund balances close another $3.0 billion of the fiscal year 2021 gap.

Making these hard choices also reduces future gaps to $8.2 billion in fiscal year 2022, $9.4 billion in fiscal year 2023, and $10.0 billion in fiscal year 2024. The report affirms that it is necessary and important for the federal government to provide additional federal aid to forestall even harder choices.

Read the report on the CBC strategy for the New York State budget here.