Sometimes it takes understanding a past crisis to learn how to emerge from the present one.

“I really think this is a worse and more dangerous situation than we had in the ’70s,” said Stephen Berger, first executive director of the Financial Control Board. “I’m very concerned about the next two or three years.”

Berger joined other disco-era fiscal crisis veterans for a “Sages of the Ages” webinar Wednesday morning sponsored by the Citizens Budget Commission. The wide-ranging conversation drew parallels between the last budget crunch and the current one.

David Friedfel of the independent Citizens Budget Commission said the state budget adopted in April includes billions of dollars in planned capital spending that could be repurposed and $2.6 billion already approved in federal stimulus for schools. That reduces the current deficit Cuomo pegs at $13.3 billion to a more manageable $8 billion, before tapping into rainy day funds.

“There is a valid argument for New York State getting additional federal aid, but the $61 billion number is not what the state really needs or is likely to get, certainly,” Friedfel said. “If the state does all the other things it can do, then taxes should be the last thing they look at.

He said the danger of the legislative proposals to tax the rich would be forcing millionaires and Wall Street traders out of state.

“The state needs to be wary on the impact of its long-term economic competitiveness,” Friedfel said. He noted a taxpayer living in New York City making over $2 million already faces the second highest city and state tax income rate in the nation.

In the executive budget, the city drew down $900 million from the general reserve and $250 million from the capital stabilization fund. Total reserves for FY21 are now $2.18 billion.

The Retiree Health Benefits Trust fund drew down $2.6 billion and has a balance of $2.08 billion

Budget observers are especially watchful of any borrowing to cover operational costs, according to Maria Doulis, vice president of the Citizens Budget Commission. De Blasio’s budget includes no borrowing,

“We’ve seen how debt can get state and local governments, and even national governments across the world, into trouble because it’s just a slippery slope,” Doulis said on a Bond Buyer podcast. “It becomes seen as an easy option when it’s not.”

"I think given the size of the state’s deficit, furloughing select employees in a targeted way is something that should be on the table," said Dave Friedfel, director of state studies at the Citizens Budget Commission, a nonpartisan think tank. "With so many people in the private sector and elsewhere losing their jobs and going on unemployment ... certainly, looking at it makes sense."

Friedfel noted that the state's adjusted financial plan in the midst of the pandemic also calls for $500 million in personnel savings this year, with some of that possibly resulting from holding off on pay raises or new hires.

Thousands of businesses have closed down during the pandemic, forcing millions into unemployment, and local governments and school districts across New York have begun furloughing or laying off workers. The city of Watervliet, for instance, recently furloughed its police chief, underscoring the types of unprecedented cuts that school and local municipal leaders are facing.

State budget legislation passed this year also gave Cuomo the ability to make further cuts on a rolling basis based on changing revenue estimates. The governor’s Medicaid Redesign Team only identified about $1.6 billion in savings, rather than the $2.5 billion it set out to find. Overall, Medicaid spending is set to increase by 3 percent, or about $500 million, in fiscal year 2021, despite cuts.

But the short-term boost from the HEROES Act would lower the incentive for New York to bump up any proposed cuts, according to Patrick Orecki, a senior research associate at the Citizens Budget Commission.

Myers and some other advocates say the state should base Medicaid spending primarily on need, rather than fiscal considerations.

Maria Doulis of the Citizens Budget Commission discusses the city's challenges amid the coronavirus pandemic. Paul Burton hosts

A congressional source told POLITICO that a vote in the House "looks imminent." The bill's prospects in the Republican-controlled Senate, in its current form, are dim to say the least.

New York will likely end up with a “grab bag” approach to filling the shortfall, said David Friedfel, director of state studies at the Citizens Budget Commission, a fiscal watchdog group. He’s expecting “broad cuts across all areas,” as well as a look at potential new revenue sources, such as using reserve funds and shifting some spending tabbed for capital projects into operating expenses.

Medicaid will be one casualty — to the consternation of those who believe that would be short-sighted during a health care crisis — although the state already was attempting to pull back its spending. The Legislature in April approved $2.2 billion of the proposed savings backed by the state's Medicaid Redesign Team, which Cuomo had tasked with identifying efficiencies in the program.

A majority of the federal funding the city will get comes from Washington's third and largest ‘stimulus’ bill, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which set aside $2 trillion "in direct support to households, businesses, states, some local governments, and the health care industry," according to the IBO report.

"The federal stimulus bills have provided significant funding, but most is to cover new pandemic related spending,” wrote Ana Champeny, Director of City Studies at Citizens Budget Commission, a nonprofit fiscal watchdog, in an email to Gotham Gazette. “The City plans to use about $2 billion in federal aid to help close its budget gaps. But this will not solve the whole problem or address the significant risks that the economy will be worse than projected and that the State may make significant local aid cuts. The City should identify significantly more recurring savings to manage this fiscal crisis, even if it receives additional federal aid in the future.”

De Blasio predicts a $6.6 billion budget gap next year– though experts say the figure could be double.

Andrew Rein, president of the independent Citizens Budget Commission, said the mayor should take a close look at payroll.

“You have to scrutinize every single hire, new position, you have to look at it within the context that we have to seriously shrink city government right now because we don’t have the revenues to support all the things that we used to do,” Rein said.

According to a Citizens Budget Commission analysis conducted last year, the Coney Island route would increase the city's subsidy to $24 per trip—2,257 percent more than what's allocated to the average subway or bus rider. To date, the de Blasio administration has refused to allocate a dime to help expand the Citi Bike network.

During the last week of April 2019, the entire NYC Ferry system served around 97,000 riders. That same week, Citi Bike logged 568,000 trips.

Friedfel said that the most likely course of action for the state, with those restrictions in mind, is to cut Medicaid reimbursement rates across the board. Although he wouldn’t say definitively the impact that change would have, the hospitals that see the most Medicaid patients and thus rely on those state payments – public hospitals – stand to lose the most.

Although the financial plan focuses largely on slashing aid to localities, there are still other areas where the state can find savings to reduce the size of cuts to the major areas of school aid and Medicaid. One example is further reductions in state operations, the state’s third-largest expense. While Cuomo has threatened a 20% reduction in school aid, he has only cut state operations by 5.3%. “If you look at the way (savings) targets played out, (Cuomo’s) actually sparing his own state agencies compared to what is in local,” McMahon said. The financial plan said the state has imposed a hiring freeze and placed limitations on new contracts or purchases. But a freeze on April 1 salary increases only will last three months. Withholding raises for a full year would result in $260 million in savings during the current fiscal year that would “offset the need for reductions elsewhere in the budget,” according to the financial plan. Friedfel also said that potential furloughs should also be a part of the state’s playbook, even if they potentially come with their own complications.

ew York City and the state are looking at huge drops in tax revenues thanks to the coronavirus — and neither Mayor Bill de Blasio nor Gov. Andrew Cuomo seem to have any good ideas about what to do beyond hoping for a federal bailout.

The state can make do by slashing its aid to local governments, but de Blasio’s fecklessness runs the risk that he’ll force the Financial Control Board to push the city into receivership.

The crisis “makes it a necessity to reinvent government services,” insists Andrew Rein, the president of the Citizens Budget Commission. “Resources will be squeezed,” he adds, “so getting more value out of every dollar spent will be critical.”

Rein notes that “labor relations” must change, too: Work rules and job titles need to provide more flexibility; retiree health benefits can be trimmed significantly.