Next year Governor Cuomo wants to once again limit a spending increase in the budget at 2 percent. But increasingly that's a difficult task.

Let's start with the good economic news: New York's unemployment rate last month stood at 3.9 percent. The state's main revenue generator, the personal income tax, has not slowed down much.

But here's the bad news: the state's Medicaid program could have a budget gap of $3 billion, a deficit the Cuomo administration blames on rising costs from the minimum wage, increased enrollment and an aging population.

David Friedfel of the Citizens Budget Commission says it could lead to cuts in spending.

“It's such a big chunk of money that most likely there will have to be cuts in Medicaid and potentially elsewhere in the budget,” Friedfel said. “The second biggest pot of money would be education aid.”

Complicating matters is Governor Andrew Cuomo's plan to once again cap a spending hike in the state budget at two percent, further limiting options.

“An actual two percent cap would have really significant impact on state spending, particularly given how Medicaid has grown over the last year, which really came as a surprise,” said Friedfel.

This question contains four pretty straightforward proposals. One would put in motion an effort to establish a so-called “rainy day” fund that would allow the city to save money during good economic times to pay for hardships down the road. It would also require changes to state legislation, because New York is required to balance its budget each year, a vestige of the fiscal crisis in the 1970's. Creating and using a rainy day fund is something fiscal watchdogs like the Citizens Budget Commission have long advocated for.

Another proposal would set minimum budgets for the Public Advocate and Borough Presidents. While the CBC does not generally support this, they think the importance of the rainy day fund outweighs their reluctance on other matters.

There are also two other proposals related to the financial information the mayor must give to the council for the budget process, essentially providing that information sooner than it's currently required.

From year to year, New York has been delaying the last payment of the fiscal year for Medicaid costs, rolling it over from March 31 to April 1. That allows the Cuomo administration to boast that it stayed within its self-imposed spending cap, but it pushes the deficit onto the next fiscal year. At the end of that year, the state again finds itself short, and the cycle repeats.

The state has been able to pull that off in the past, but at the end of the last year, the delayed payment — $1.7 billion — was about four times as big as the bills it rolled over in the past. Now, analyses by the Citizens Budget Commission and Empire Center for Public Policy say delaying bills again may not entirely do the trick, and that balancing the budget may require spending cuts. The Citizens Budget Commission, a New York City group that monitors the state budget as well as the city's, says cuts may be necessary even if the state opts to roll over some of the balance due again next April.

As you can see, the MTA has a lot of debt. Currently, about 16 percent of its annual operating budget goes straight towards paying off its debt. Do not pass Go, do not fund a single train, go straight to Debt Service.

That number will only keep rising in the years to come. In August, after the MTA approved the 2020 budget, the Citizens Budget Commission warned the transportation agency’s budget woes are dire. The MTA’s plan (like, their actual plan) going forward is to amass a cumulative deficit of $740 million by 2023, even though by law they must balance their budget every year.

That’s not even the worst of it. The CBC warned this forecast, dire as it is, is based on “four assumptions that point to an even more alarming fiscal outlook.” Mainly, the MTA is assuming it can execute its transformation plan flawlessly and realize its “highly optimistic estimates” (in the CBC’s words) for savings. The MTA also assumes it will be able to save $251 million by running its organization more efficiently (or cutting service) in 2023—not by 2023; in 2023—but doesn’t say how. Nor is it clear, the CBC warns, how these two plans—the operations savings plan that originated within the MTA years ago and the state-mandated transformation plan hyped by Cuomo’s people—interact, or if they double-count savings, because each is too vague to sufficiently interrogate.

But most worryingly, the plans continue to assume “unprecedented continued economic growth” (again, CBC’s words), a state of affairs that many experts not only caution may come to an end but may do so in disastrous fashion.

Despite the surplus personnel, the DOE continues to beef up its workforce.

“We hired over 5,000 teachers over the summer,” Chancellor Richard Carranza boasted in a radio interview on Hot97 last month.

DOE spokeswoman Danielle Filson corrected Carranza, saying the department hired about 4,800 new “teachers, guidance counselors and social workers.”

When school started in 2018, the DOE had 1,200 employees in the ATR at a cost of $136 million, a study by the Citizens Budget Commission found.

Amid a strike against General Motors, union leaders have lobbied Cuomo to sign an eleventh-hour bill to make striking workers eligible for unemployment benefits after one week. That’s up from seven weeks under current law.

And in a year that saw the passage of landmark rent reform long opposed by powerful developers, a bill to better protect rent-regulated renters from being forced out by landlords also remains in limbo.

Other remaining bills include exempting breastfeeding women from jury duty, and a ban on the aerial application of the widely used pesticide chlorpyrifos starting in January.

The non-partisan Citizens Budget Commission wants Cuomo to veto 18 bills that enhance pension or disability benefits — legislation that costs at least $71 million in the first year alone.

Cuts to health care spending in New York may be needed to offset underestimated Medicaid costs, according to two fiscal watchdogs reports.

The analyses from the Citizens Budget Commission and Empire Center for Public Policy conclude that the needs of the state's more than six million Medicaid recipients have been repeatedly miscalculated due to the constraints of a self-imposed spending cap championed by Gov. Andrew M. Cuomo, which may necessitate spending reductions or finding new revenues to maintain a balanced budget.

The issue emerged last spring, when the state delayed a $1.7 billion payment for Medicaid costs — about four times the size of payments delayed in recent years — so that it would count for the fiscal year beginning in April and not pierce the previous year's cap.

"The spending target is set (by the cap), and they're supposed to figure out how to live within that and they didn't do that," Citizens Budget Commission Director David Friedfel said of the budget created by Cuomo and the state Legislature.

The problem is likely to repeat itself, based on the first quarter financial update, but it could be worse due to last year's payment being on this year's books. Friedfel says it's possible payments could be delayed again, but he believes additional actions would still be needed to maintain a balanced budget.

A policy seminar titled Medicaid Migraine, held Wednesday by the fiscal watchdog group the Empire Center as part of the Gov. Hugh L. Carey Policy Forum, addressed the rapidly increasing health care costs in New York that led to Gov. Andrew Cuomo’s budget office delaying a $1.7 billion payment to providers last year.

The delayed payment was not made public at the time, but it was discovered in an audit by the state comptroller’s office four months later.

Cuomo’s budget officials have not ruled out repeating the delay again. They say they might put off the final Medicaid payment in the current fiscal year until the next fiscal year. Hammond said that would just worsen the problem.

“Medicaid is such a large program,” Hammond said. “Even a small percentage growth adds up to billions of dollars, and when that compounds year after year after year, it adds up to a lot of money.”

The Medicaid budget deficit in New York could be as high as $7 billion over the next four years, according to the watchdog group Citizens Budget Commission.

Some of the factors that have been driving up costs are higher labor expenses for hospitals and nursing homes. The minimum wage has increased, and public worker union employees have received raises. Those costs have grown outside of the constraints of the global spending cap. More people enrolled in Medicaid under the federal Affordable Care Act, also known as Obamacare, and the state also took over some of the counties’ share of Medicaid costs.

With just nine days until the start of early voting, New Yorkers will be asked to accept or reject five ballot questions that could change the City Charter, essentially the New York City constitution. The first question would make changes to local elections and the second would revamp the Civilian Complaint Review Board, the agency responsible for overseeing the New York City Police Department.

The third question is under the umbrella of “Ethic and Governance” and it includes several items. One proposal — a relatively uncomplicated lobbying reform — would increase the amount of time a former elected or senior administration official must wait until going before an agency in which she or he served. The current law requires a one-year gap; This proposal would increase it to two years.

Changes to the city budget are proposed in question four. One proposal endorsed by the fiscal watchdog group, Citizens' Budget Commission, would begin the process of setting up a rainy day fund where the city could set aside money during good economic times to pay for needed services and expenses during down times. It also would require changes to state legislation. This is all because New York is required to balance its budget each year, an outgrowth of the fiscal crisis in the 1970's.

The fifth and final question makes changes related to the city's land-use rules, essentially giving more time to Community Boards and Borough Presidents to review development proposals. Read the complete language of each ballot question here.

Local officials praised the formation of the working group, which will convene for 10 weeks, as a way for local residents to have a say in what needs to be addressed at the Chelsea NYCHA developments.

The group will include local NYCHA residents, several housing advocate groups, local elected officials, members of Community Board 4, city officials from NYCHA and the Deputy Mayor for Housing and Economic Development.

“My neighbors who live in Fulton and Elliot-Chelsea Houses deserve better than the current state of their buildings and we all agree that we must act to improve their homes and their lives,” said Speaker Corey Johnson, who represents Chelsea. “The process by which we get there must be community driven and must allow NYCHA residents the opportunity to determine their own futures. This working group will help facilitate that. I look forward to working with my neighbors, my colleagues and advocates to build the consensus we need to get this critical project done right.”

Officials said the working group will address NYCHA’s funding crisis and explore all options for raising money for Chelsea’s developments, while also discussing tenant protections.

“We look forward to joining a productive conversation about how NYCHA can best improve quality of life for the residents of the Fulton Houses, Chelsea-Elliot Houses, and Chelsea Addition,” said Andrew Rein, president of the nonprofit Citizens Budget Commission. “Finding a timely solution to addressing the developments’ significant capital needs by improving management and better utilizing NYCHA’s assets will benefit thousands of public housing tenants and ensure that their deeply affordable housing units will be preserved for future generations.”

The MTA’s $51.5 billion plan to modernize New York City’s crumbling transit system will saddle it with $38 billion in debt — on top of the $44 billion it already owes, according to Moody’s credit agency.

By 2026, the MTA’s debt will be over four times its annual revenue, creating a potentially disastrous scenario for an agency already answering massive deficits with service cuts and fare hikes.

To avoid financial calamity, “MTA could turn to additional fare increases or service cuts that would exacerbate negative ridership trends, and its financial position could decline further,” Moody’s said in its Oct. 3 rating determination, which deemed MTA bonds a sound short-term investment.

But without money to fund its next capital plan, the MTA won’t be able install elevators, replace old trains and buses, modernize its signal system or rehab stations.

That makes new borrowing worth it because if the capital plan it funds works as intended, ridership should increase — and with it, revenue, according to Moody’s Oct. 9 follow-up analysis.

“The new debt load would be partially balanced by system investments that will foster economic expansion and ridership growth, as well as generate new asset value for MTA,” the analysis said.

The increasing debt is not an immediate red flag, but rather “a warning sign that you have to make sure you have the revenues to cover it,” Citizens Budget Commission president Andrew Rein told The Post.

“Given that we have these capital needs, you don’t want to stop what you have to do,” he said.

“Cash-strapped” is not just a cute adjective that always precedes the noun “MTA.” It’s a harsh reality.

Just as subway and bus service is finally improving, and the MTA is preparing to make massive, long-term repairs paid for with congestion pricing, the regional transit agency is facing a cash crunch so severe that service cuts now seem inevitable — and they’d come exactly at the worst possible time, advocates and elected officials are warning.

Speaking to a crowd at a TransitCenter event last Tuesday night, Assembly Member Amy Paulin laid out a dark scenario for bus and subway riders. Paulin noted that the MTA was expected to borrow money for both the 2015-2019 capital plan and the upcoming 2020-2024 capital plan, and that borrowing costs eat into the MTA’s operating budget.

“There’s still going to be a gap,” Paulin said about the funding formula for the upcoming $51-billion capital plan. “That gap is important for us to reckon with because in order to borrow money, you have to pay the cost of that borrowing, and that’s in the annual operating fund. To borrow all of that money, we have to pay attention to the deficit it’s going to cause in the operating budget. And that deficit is going to have to be realized by perhaps sacrifices going forward.”

The MTA’s operating budget deficit is large, and is only slated to get larger. Earlier this summer, Rachael Fauss and John Kaehny of Reinvent Albany called the agency “fiscally exhausted.” Based on the MTA’s own data, the total amount required just to service the underlying debt will rise to $3.22 billion by 2022 — a year when the entire operating budget deficit is projected to hit $976 million. And those projections came before the MTA announced it would hire 500 new police officers in an attempt to deal with homeless individuals living in the subway system.

That hiring spree will not help matters, according to the Citizens Budget Commission.

“Over the 2020-2023 financial plan, the cost of the 581 officers and supervisors will exceed $260 million,” the budget watchdogs wrote. “This amount combined with the MTA’s currently projected cumulative financial plan deficit of $740 million results in a $1-billion operating budget gap over the next four years.”