New York, like many states, has moved its state tax deadline to July 15 to comport with federal deadlines that have also been extended because of the coronavirus pandemic. Some states have worried about those consequences.

David Friedfel, director of state studies with the New York policy research group Citizens Budget Commission, said the state should avoid issuing more debt than can be covered by delayed tax payments.

“Issuing debt to cover decreased tax liability will make things worse in the long term,” Friedfel said.

Assembly Democrats spent 5 hours over Zoom discussing the budget on Saturday, and another 9 hours on Sunday doing the same thing.

Most lawmakers agree that there has been very little pushback from the Assembly when it comes to giving the governor the power he wants in order to make mid-year budget cuts. This is in spite of having a well-respected budget watchdog in the legislature’s corner: the Citizens Budget Commission.

CBC Director of State Studies David Friedfel says this isn’t the time for the legislature to hand over to Cuomo the ability to amend the state budget each quarter, nor is it the time for the legislature to allow the State Division of Budget, rather than the Office of the Comptroller, to determine whether a reimbursement to the state is considered revenue or a reduction of expenses.

“The legislature is a separately elected body and they have a responsibility,” said Friedfel.

Assembly Republican Ed Ra agrees with Friedfel.

State Budget Director Robert Mujica's latest calculations put the shortfall up to $15 billion, his office said. State Comptroller Tom DiNapoli had estimated on March 17 that New York would fall $4 billion to more than $7 billion short of the governor's initial revenue projections.

During a typical recession, the state would lose about $8.5 billion in revenue – but "it wouldn't be shocking" for that number to climb higher as the fiscal year begins, said David Friedfel, director of state studies at the Citizens Budget Commission.

David Friedfel, with the fiscal watchdog group Citizens Budget Commission, said lawmakers can best retain their co-equal status by passing a bare-bones budget and coming back at a later date if necessary.

“The Legislature should be directly involved, not give that authority to the governor to implement,” Friedfel said. “That being said, this is a historic event and, not making light of the revenue shortfalls, but the state has closed massive gaps before and it can do it again.”

The coronavirus felled the fixtures of New York’s economic engine: Broadway is dark, Times Square is deserted and Wall Street is in tumult.

But as the pandemic forced restaurants, malls and hotels to close, and tens of thousands of workers to lose their paychecks, it also wreaked havoc on one inconspicuous victim: New York’s finances.

The city could face revenue shortfalls of between $4.8 billion and $6 billion over the next 15 months, according to the city comptroller, an estimate predicated on the theory that recovery efforts will begin to take hold between late May or end of June.

The Citizens Budget Commission, a nonprofit group, was less optimistic; Maria Doulis, vice president of the group, said the city could lose $20 billion in revenues over the next three fiscal years.

The city could bleed 750,000 jobs in the cultural, restaurant, retail, airline and other sectors, eliminating between $1.5 billion to $2 billion in wages per month, according to James Parrott, director of economic and fiscal policies at the Center for New York City Affairs at the New School.

State lawmakers have just one week until the state budget is due, and despite the coronavirus outbreak, they say they intend to meet the deadline and will use precautions to avoid meeting in large groups.

They face a daunting task of putting together a spending plan while a multibillion-dollar deficit grows each day.

New York State Comptroller Tom DiNapoli said on March 17 that the state’s $6 billion deficit could grow by $4 billion to $7 billion. Now, even those numbers appear outdated.

David Friedfel, with the fiscal watchdog group Citizens Budget Commission, said giving the governor new powers in the budget would set a bad precedent. He said it’s better to have the Legislature come back later in the year, when hopefully it will be safe to meet again, and consider the changes.

“They should come back in three months, six months, whenever is necessary in order to amend the budget,” Friedfel said. “It’s better to do that than to set up a system where the executive would enshrine themselves with additional power.”

Some, including the Republican minority party leaders in both houses of the Legislature, say lawmakers should do a bare-bones budget that sticks to spending-related items. They say there’s time to do other policy items later in the year, when hopefully it will be safe for the full Legislature to meet again and to once again allow lobbyists and interest groups into the Capitol. The building is currently closed to visitors.

Friedfel agreed: “Later on, when things return to normal, then you could come back and address those important policy issues.”

Despite passage of a stimulus bill in the Senate with just over $5 billion in aid to the state and city, the budget outlook for both continues to worsen.

The mayor asked agencies to find $1.3 billion in reduced spending over the next two fiscal years. The latest estimate from Comptroller Scott Stringer is that revenue lost because of the economic downturn will be at least $4.8 billion and as high as $6 billion for fiscal 2020, which ends June 30, and fiscal 2021.

The mayor’s plan “is a gentle-touch approach rather than a bold rapid response that recognizes the potential severity of the health and economic crises,” the Citizens Budget Commission said in a statement. “To meet the imminent challenges the savings plan should be significantly larger and explicitly focused on generating recurring savings in spending.”

New York City will have an on-time budget despite the spread of COVID-19 forcing $1.3 billion of cost-cutting measures, Mayor Bill de Blasio said on Tuesday. The Citizens Budget Commission is calling for far larger cost cutting and predicts that New York City could see $20 billion of lost revenues over three fiscal years, when comparing data from previous recessions.

Citizens Budget Commission President Andrew Rein said that while the final economic effects of the virus are still unknown, the revenue shortfalls could be dire and agencies should cut more.

“CBC analysis of prior recessions suggests a similar recession could result in up to $20 billion in revenue shortfalls over three fiscal years. The Office of the New York City Comptroller estimates the revenue shortfall in fiscal years 2020 and 2021 could total $6 billion, opening a fiscal year 2021 budget gap of that magnitude. This gap may expand once spending on the response is added and if the downturn proves worse that currently projected,” he said.

“Managing this challenge requires immediate action to begin reining in spending. A bold savings plan is needed to ensure the pandemic response can continue as necessary and the fiscal stability needed to ensure that services for the neediest New Yorkers are preserved,” Rein added.

“Mayor Bill de Blasio’s announcement that city agencies will be asked to find savings in the executive budget is important and necessary,” Rein said . “However, setting the savings target at $1.3 billion over two years is a gentle-touch approach rather than a bold rapid response that recognizes the potential severity of the health and economic crises. To meet the imminent challenges the savings plan should be significantly larger and explicitly focused on generating recurring savings in spending.”

Rein said the city’s goals should be set higher.

“The city should control all non-critical spending in the current year and increase the target size of next year’s savings program to $3 billion,” he said. “This savings program should be fundamentally different from past plans that relied primarily on debt-service savings, expense re-estimates, and funding shifts to state and federal revenue streams. Agencies should be charged with generating a menu of options for spending reductions that are rooted in improving efficiency, streamlining operations, and supporting more cost-effective operations. Previously, efficiency savings averaged just 0.23% of city-funded spending.”

Real estate is the largest contributor to the city’s tax base, with the Citizens Budget Commission projecting that property taxes brought in $24 billion of revenue for the city in fiscal year 2017, or 44 percent of all city tax revenue.

“The landlord is just a collection agent for the city,” Martin wrote. “Over the next few months, New Yorkers will find out what they’ve been paying for.” [NYP] — TRD Staff

New York Mayor Bill de Blasio is requiring city agencies to make budget cuts amid the worsening fiscal impact of COVID-19.

Speaking to reporters, de Blasio cited 12,339 confirmed cases in the city, or 35% of the count across the U.S. New York’s death count reached 125 on Monday night. The state and city are scrambling for hospital beds, with supplies such as surgical masks “absolutely critical.”

De Blasio, with no specifics, said his Office of Management and Budget, run by Director Melanie Hartzog, will run point on a “program to eliminate the gap,” or PEG.

The watchdog Citizens Budget Commission, long a proponent of PEG initiatives, said “[de Blasio was] right to implement a PEG now; agencies should act quickly and aggressively to identify recurring savings.”

De Blasio presented his $95.3 billion preliminary budget in late January and by law must release his executive budget next month. The mayor and the 51-member council must finalize a spending plan by July 1.

The independent watchdog group Citizens Budget Commission called on the mayor to increase the target for savings to $3 billion, as the city faces unprecedented uncertainties.

“It needs to be much bigger than what’s been done in the past and it needs to be focused on efficiency,” said Maria Doulis, of the CBC. The current economic pause and shutdown is different than anything the city has ever seen, she added.

In January, Mr. de Blasio presented his $95.3 billion preliminary budget, which was in the process of being evaluated by the city council when the virus began to spread.

“The fault is in backup emergency planning and how to expand capacity in an emergency,” said Brecher, who is also the senior adviser for health care policy at the independent Citizens Budget Commission. “The spike on this virus is going to be enormous and there hasn’t quite been enough emergency planning.

“I guess people just don’t like to think about unpleasant things,” Brecher said. “It’s denial … but we’re learning, sometimes you have to do it. The consequences of not doing it are pretty serious.”