The state has options to provide insurance to the 1.1 million New Yorkers that remain without coverage despite current expansive options, according to a recent report from Citizens Budget Commission, a nonpartisan budget watchdog, and Community Service Society, a nonprofit advocating for low-income New Yorkers.

New York’s economic competitiveness and recovery would be better served by restraining recurring spending and rolling back last year’s tax increases that made New York’s combined business and top personal income-tax rates the highest in the U.S., said Citizens Budget Commission President Andrew Rein in a news release. The CBC is a business-backed budget watchdog group.

“As strong as the receipts and federal aid are, this year’s budget negotiations risk a feeding frenzy that could destabilize the state’s future finances,” Rein said.

New York plans on increasing its reserves to $19.4 billion by the fiscal year beginning April 1, 2024. The state should raise them by an additional $2.5 billion, the CBC said.

Alex Heil, the vice president of research for the nonpartisan, nonprofit Citizens Budget Commission, argued that the law wouldn’t be effective until landlords had more concrete guidelines from the DOB.

“This is a complex piece of legislation that is going to have a big impact on the sector that produces 70 percent of the greenhouse gas emissions for the city,” he said. “It’s not like anybody who owns real estate is going to do this a couple months before. The more certainty you provide, the more effective these policies will be.”

“This is an unprecedented opportunity to take care of New Yorkers’ needs and take care of the future,” said Andrew Rein, president of the budget watchdog group the Citizens Budget Commission. But he also expressed concern about a potential upward spiral in spending once negotiations with lawmakers begin.
Said Rein: “The risk there is a feeding frenzy in budget negotiations with the legislature. Usually the governor’s budget is a floor.”

Such an increase may not be enough. Since New York relies so heavily on taxes from wealthy residents whose income jumps when stocks, bonds and real estate soar and declines dramatically when markets fall, New York State needs as much as 27% of spending in a rainy-day fund, the Citizens Budget Commission argues.

“There is no way the 15% should be lowered in negotiations,” Rein added.

Yet the Citizens Budget Commission, a nonpartisan fiscal watchdog, took Hochul to task over the scale of this budget proposal.

"New York's competitiveness, stability, and recovery would be better served by taking steps to restrain recurring spending, to ensure State programs are targeted and managed for results, and to start to roll back last year's tax increases that made New York's combined business and top personal income tax rates the highest in the nation," President Andrew Rein wrote.

Citizens Budget Commission president Andrew Rein commended Hochul for presenting a balanced plan but said the state should still take “steps to restrain recurring spending.”

“We actually have enough money to do both — that’s the amazing thing,” said Andrew Rein, president of the Citizens Budget Commission, a fiscally conservative watchdog. “The risk is the feeding frenzy, the fiscal cavorting, the fiscal hangover.”

Budget watchdog groups said the governor should also include plans for better fiscal management. The Citizens Budget Commission’s Patrick Orecki said that includes contributing more to the state’s chronically low rainy day fund, cutting New York’s highest in the nation income taxes, and preparing for the inevitable next economic downturn.

“It’s a great opportunity for the state,” said Orecki. “We know that at some point a more typical recession will happen. The state has been chronically inadequately prepared.”

Orecki said the governor should keep a close eye on the extra school aid spending to make sure it is used wisely. And he said Hochul should also reign in economic development programs which have under-delivered on promised job creation.

Hochul is also facing pressure to spend more on some programs. She’s proposed aid to up to 100,000 families to help pay for child care, but some state lawmakers said the state’s child care system is broken, and it needs a much greater investment.

Orecki said the governor should resist pressure to overspend. He said the state is already facing a “fiscal cliff” in 2025, when the federal pandemic relief money runs out.

“What does the budget look like in fiscal year 2026 and thereafter, without that federal aid?” he asked.

"The fiscal outlook is vastly better than last year and we’ve never seen a four-year financial plan that is balanced. So this is unprecedented," said Andrew Rein, president of the Citizens Budget Commission, a Manhattan-based group and longtime monitor of the state’s finances

Fiscal watchdogs, such as the CBC and the Empire Center, are saying the state can help many who were hurt financially by the pandemic but also should boost fiscal reserves, such as the state’s "Rainy Day Fund," because the federal help will soon dry up.

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As the Citizens Budget Commission notes, state government is using its windfall funds “to accelerate already high spending growth.” The CBC warns that “imprudent use” of COVID-related federal aid is “creating a ‘fiscal cliff,’ with approximately $3.5 billion in recurring program spending supported” by aid only through 2025. Where will the state find the cash to fund those programs after that?

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To her credit, the gov has opposed more tax hikes: “I’m not interested in driving people out of this state,” she’s said. So unless the economy grows far faster than projected, she faces only one other choice: roll back spending.

Another recession is inevitable sooner or later, the CBC also rightly warns, yet the state’s rainy-day reserves are insufficient to weather the storm. Hochul needs to shore them up.

The Citizens Budget Commission, among other researchers, have called for the tax credit program to be phased out and eliminated