The mayor has compared the coronavirus crisis to the worst financial disaster of the 20th century, saying Tuesday, “the only comparison you can make ... is the Great Depression, which scares me to death to even say that.”

Last month, economists surveyed by Reuters gave an 80% chance the U.S. economy would enter a recession, usually defined as two consecutive quarters of reduced growth, this year.

De Blasio’s budget revision “does not really rise to the level needed to be able to tackle the massive revenue shortfalls the city will be experiencing,” Maria Doulis of the nonprofit Citizens Budget Commission told the Daily News.

“It’s a really critical moment and more needs to be done to restrain spending and limit inefficiency than what’s in this PEG program,” she said, using the acronym for de Blasio’s Proposal to Eliminate the Gap in the budget.

Citizens Budget Commission President Andrew S. Rein on Friday commended leaders for refraining from enacting what he called “anticompetitive tax increases,” as well as reducing spending on schools and beginning to deal with structural costs from Medicaid.

But Rein criticized lawmakers for creating the midyear modification process, arguing it allows them to defer hard choices while lacking transparency and accountability. He also criticized the extension of the state’s film tax credit, even if it is reduced in scope, as well as the reauthorization or broadening of programs including STARTUP-NY, the Excelsior Jobs Tax Credit and New York City-based Industrial and Commercial Abatement Program, or ICAP, and Relocation and Employment Assistance Program, or REAP.

“The enacted budget also continues economic development programs without any serious evaluation or evidence of their effectiveness,” Rein said.

The state’s $177 billion budget for fiscal 2020-21 included legislation requiring the state comptroller to annually withhold $200 million in sales tax revenue from New York City, and $50 million annually from counties outside of the city. The funds will instead be redirected to the newly created “New York State Agency Trust Fund, Distressed Provider Assistance Account,” according to the legislation.

The comptroller’s office is charged with determining each of the 62 county’s share of the $50 million.

The Citizens Budget Commission, a nonprofit fiscal watchdog group, in its analysis called the provision “poorly conceived.”

In total, with federal aid that passes through to schools and local government, the state budget totals $177 billion, according to Cuomo's budget division.

“It’s aspirational,” said David Friedfel, director of state studies for the independent Citizens Budget Commission. “It’s a best-case scenario … it may not come to fruition.”

The appropriation of $105.8 billion in state spending for the 2020-21 fiscal year that began Wednesday is the same level of funding Cuomo proposed in early January. That was an optimistic proposal that counted another year’s ride of a red-hot economy when the coronavirus was only a problem in a rural province in mainland China.

However, thanks to the option to delay cuts, the major reductions in hospital payments may not occur until after the crisis has resolved. According to an analysis done by the Citizens Budget Commission, two of the three changes that would lead to cuts to hospitals – changes to the Indigent Care Pool distributions, which helps hospitals cover the costs of low-income patients, and new efficiency measures for Health + Hospitals – are questionable under the federal coronavirus bill. That means that some of the most contentious cuts – those to hospitals – may not happen while hospitals are struggling to contend with a surge in COVID-19 patients.

Patrick Orecki, a senior research associate at the Citizens Budget Commission who authored the analysis, also told City & State that a large chunk of the hospital cuts reduce payments to financially sound hospitals, a reform he said has been needed for years. And Hammond said that there’s a new fund to help safety-net hospitals, like the city’s public network, to steel them against negative impacts from cuts. State Sen. Gustavo Rivera, chair of the Senate Health Committee, counted that fund as a minor victory among what he called the “misconceived proposals” in a statement.

The budget generally consists of 10 bills, but this time around it only has nine. The content of the final – the health and mental hygiene bill – was included in other different bills instead. The education bill, introduced Thursday morning, functioned as this year’s “big ugly” – that is, it included many unrelated but outstanding issues that were all packed together into a single measure. Those included amendments to bail reform enacted on Jan. 1 and Medicaid reforms.

Despite warnings from Cuomo about drastic budget cuts, the final budget turned out to be not much smaller than the $178 billion spending plan that the governor had originally proposed. According to Citizens Budget Commission Director Director of State Studies David Friedfel, this makes it likely the state budget director will use new authority included in the budget to enact rolling cuts throughout the year. The budget also authorizes the state to issue $11 billion debt in order to address expected loss in revenue. That includes $8 billion in short term debt to account for the delay in receiving state taxes, after Cuomo postponed the filing date from April 15 to July 15. Friedfel warned against converting that into long-term debt, which the state could be left paying off for years or decades.

New York state is also in a fiscal jam, with a potential $15 billion deficit in the coming year. That could pressure state payments to the city, which total $15 billion a year.

Some municipal watchdogs think that New York should have done more to be ready for a potential crisis. "The city was not well prepared coming into this," says Andrew Rein, the president of the Citizens Budget Commission, an independent civic group. "It came into this with a large workforce and relatively small amounts of reserves. Good times are when you should have been socking money away."

Based on the experience of past recessions, he projects that the city could face a total budget gap of $7 billion to $8 billion over the current and next fiscal year—above the comptroller's recent worst-case estimate.

Rein warns that "sacred cows" must be addressed to reduce the budget. "Labor has to be part of the solution." Salaries and benefits for city employees consume 55% of municipal outlays. The city could ask the unions for a wage freeze to avoid layoffs.

The budget outlines $177 billion in spending — just a billion less than Gov. Andrew Cuomo proposed pre-crisis, despite revenues collapsing by at least $15 billion. The Legislature even pushed Cuomo into dropping much of his Medicaid savings.

Yes, lawmakers gave Cuomo’s budget director the power to slash spending as needed starting next month. But it plainly will be necessary. As Maria Doulis of the Citizens Budget Commission put it, they “passed something akin to a wish list and punted to the state budget director to figure out what can and should happen later.”

The piecemeal strategy to Medicaid changes will ensure New York can access an estimated $6 billion in emergency federal funds — with the caveat that states not alter their Medicaid programs. The final plan dropped a Cuomo proposal to shift some Medicaid costs to localities.

In turn, the state will withhold $50 million annually of sales tax receipts from counties and $200 million from New York City to hold in a Distressed Providers Assistance Account, said David Friedfel, director of state studies for the Citizens Budget Commission.

Notably, the budget did not include tax increases, even as some progressive Democrats downstate pushed the governor to tax the rich to help the state deal with its projected budget shortfall.

The Cuomo administration said Thursday that insurers would allow individuals and businesses facing financial hardship to defer paying premiums through June 1. Insurers also have waived copays for Covid-19 lab testing, and some are eliminating patient cost-sharing payments for Covid-19 treatment.

"Like every other segment of the health care sector, our member health plans have jumped in to do their part to combat the coronavirus and protect the health of all New Yorkers despite being asked to shoulder hundreds of millions of dollars in rate cuts the last several years," Eric Linzer, president of the state Health Plan Association said. "Unfortunately, it appears that closing the Medicaid gap falls disproportionately on health plans."

New York could stand to benefit from federal aid designed to help state governments respond to Covid-19, but provisions in that bill restrict the ways states can change their Medicaid programs if they accept funding. An analysis by the Citizens Budget Commission found the state could receive the full $4.5 billion it's eligible for in federal aid by delaying some impermissible Medicaid changes while at least half the redesign team's initiatives could be implemented immediately.

Andrew Rein, president of the independent Citizens Budget Commission, said in a statement that while financial uncertainties may necessitate ongoing budget revisions, but noted concerns about how the process will work. The approved modification measure requires the Division of Budget to notify the legislature of a 1% revenue shortfall or over-spending with the DOB then empowered to make cuts if lawmakers don’t form a plan within 10 days.

“Flexibility and speed are necessary at this time, but this authority should not be used to employ unwise fiscal maneuvers,” Rein said. “The Legislature should generate its own contingency plans as soon as possible, so that it can productively respond within the 10-day period if it so chooses.”

School districts will also have to grapple with potential budget cuts during the school year. Lawmakers approved a plan that allows the budget director to check on tax revenue during three points of the fiscal year. If revenue is at least 1% off of the state’s projections, the director can cut aid to towns and cities across New York. Cuomo has suggested they can also boost dollars if more money comes in. (Officials would have to notify the legislature, and the legislature would have 10 days to approve an alternate plan.)

That was concerning to some education observers and state lawmakers, who worried it gave extraordinary power to the governor’s office.

“I don’t think the state budget should be balanced from the outset on an expectation of making mid-year cuts,” said Dave Friedfel, director of state studies for the Citizens Budget Commission.