State budget woes loom

From: POLITICO New York Playbook PM - Tuesday May 16,2023 08:44 pm
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May 16, 2023 View in browser
 
POLITICO New York Playbook PM

By Joseph Spector


Members of the New York Assembly debate budget bills.

New York is facing potentially large budget gaps as tax revenue appears to be slowing. | Hans Pennink, File/AP Photo

A sharp drop in tax revenue and a rise in state spending could be setting the state up for the highest budget deficits in a decade, fiscal watchdogs are warning.

Late Monday, Comptroller Tom DiNapoli released the state’s monthly cash report, showing that tax receipts in April were about $11 billion, which is more than $4 billion below state estimates, the fiscally conservative Empire Center noted.

As concerning, the center said, is that personal income tax receipts fell about 49 percent from April 2022 to April 2023 compared to the 17 percent drop that the state budget estimated.

DiNapoli warned after the state budget was passed May 3 that spending might outpace revenue in the coming years. The state is already estimating gaps of $5.1 billion next fiscal year and $8.6 billion in two years – which would be the largest since Gov. Andrew Cuomo took office in 2011.

"With an end to federal pandemic aid approaching and the possibility of an economic downturn, it is unclear how recurring obligations will match recurring revenue in the years ahead, which could mean outyear budget gaps that put future funding of critical programs in jeopardy,” he said in a statement.

Fiscal watchdog groups raised concern about the current budget for the fiscal year that started April 1, which increased spending by 5 percent and $2 billion more than what Hochul proposed in February – including record school aid and increasing the film-tax credit from $425 million to $700 million a year.

“The lone significant state spending reduction is not a reduction at all; it just shifts hundreds of millions of dollars in state Medicaid costs onto counties and New York City,” the Citizens Budget Commission, a business-backed group, said in a statement.

For her part, Hochul said the $229 billion budget includes $19.5 billion in the state’s rainy day fund to protect programs and services if state deficits grow. And the budget included Hochul’s proposal to further increase the statutory limit on allowable rainy day reserves.

“The economy remains volatile…reminding us why we had to be prudent this year, and we'll have to be prudent heading in the years ahead,” she said when she announced a budget deal last month.


From the Capitol

Bill Perkins is pictured. | AP Photo

Former state Sen. Bill Perkins, who also served in the City Council, passed away at age 74 on Tuesday, his wife said. | AP Photo

RIP BILL PERKINS: State and city leaders were mourning the death Tuesday of former state senator and City Council member Bill Perkins. He was 74.

His wife, Pamela Green Perkins, announced his death in a statement, saying he died at home in Harlem “after a lifetime fighting for justice, equality and to make the voices of our community heard."

Perkins was part of a long lineage of powerful Harlem leaders, and colleagues remembered him for his passion for his work. He served two stints in the City Council, from 1998 to 2005 and then again from 2017 through 2021. In between, he spent a decade in Albany in the state Senate, largely in the minority as Republicans controlled the chamber at the time.

Senate Majority Leader Andrea Stewart-Cousins said Perkins pushed for nation-leading laws to prevent against the use of lead paint and fought for LGBTQ+ rights, as well as being one of the first public officials to stand with the Central Park Five “throughout their fight for justice.”

Perkins’ wife noted that he was also the first New York elected official in 2008 to endorse Barack Obama for president.

“New York has truly been made better by his service, and we will continue to honor his legacy in our work as representatives,” Stewart-Cousins said in a statement.

Added City Council President Adrienne Adams: “I admired Bill for always fighting for his beliefs and never wavering from his convictions — a quality that we can all look up to.” — Joseph Spector

On The Beats

Rep. Elise Stefanik (R-N.Y.) looks on during a press conference.

North Country Rep. Elise Stefanik continued Tuesday to criticize the state budget and a provision that will ultimately ban gas stoves in new construction in many cases. | Francis Chung/POLITICO

GOP HOUSE MEMBERS HIT GAS BAN: The Republican House members from New York are unsurprisingly not thrilled with the passage of a ban on gas in most new buildings.

They want Hochul to “reverse” the law approved by the state Legislature as part of the budget.

“Natural gas appliances give hard-working families an affordable way to cook their meals and heat their homes,” states the letter signed by Reps. Elise Stefanik, Andrew Garbarino, Nick Lalota, Nicholas Langworthy, Mike Lawler, Brandon Williams, Anthony D'Esposito, Marc Molinaro, Claudia Tenney and Nicole Malliotakis. “Not only are natural gas appliances the preferred appliances for many New Yorkers, they also are reliable and can be critical during emergency situations.”

The zero-emission requirement for new buildings includes exemptions for emergency generators. Most gas furnaces do not work without electrical service. The state’s building codes council is tasked with implementing the new requirements that will begin to go into effect for single-family new homes in 2026. — Marie J. French

REAL ESTATE: The median asking price for a home in New York City surpassed $1 million this April for the first time since 2018, according to a new report from StreetEasy. At $1,049,000, the median asking price was up 7.6 percent from April 2022, while the number of listings that went into contract was down 29 percent over the year.

Kenny Lee, an economist at StreetEasy, wrote that given high mortgage rates, “it’s no surprise that sales this year have been more modest compared to 2021 and 2022, when unusually low mortgage rates led to surging buyer demand.” Still, he noted buyers remain active in the market, leading to “one of the strongest sales markets so far this year compared to the past decade.” — Janaki Chadha

EDUCATION: A number of school districts were not in compliance with the state Education Department’s 2020 data privacy regulations to protect students, teachers and principals’ personal data, according to an audit by state Comptroller Tom DiNapoli’s office.

About 30 percent of school data breaches reviewed by DiNapoli’s office were not reported to SED within 10 days as mandated, according to the audit. And in 40 percent of cases, it was unclear if affected individuals were informed as incident reports often did not include the date of notification.

Tina Kim, deputy Ccmptroller of state government accountability, said SED and school districts had responsibility to protect student data and systems well before the Covid-19 pandemic but remote learning increased reliance on information technology services, apps and third party programs. Schools, she said, were not prepared for “the heightened cyber risks.”

“Cyber security incidents at New York’s schools more than tripled over the last 3 years, resulting in personal information of students, families or teachers being compromised,” Kim said in a statement. “Whether through human error, data breaches or costly ransomware attacks, when personal information is on the internet, it is at risk for identity theft and other types of fraud.” The audit covered the period of March 2020 through November 2022. — Madina Touré

HOSPITAL STAFFING: NYC Health + Hospitals spent $549 million on temporary nurses in 2022, officials testified Tuesday at a City Council budget hearing. Nurses made an average of $120 per hour under contracts that typically lasted 12 to 16 weeks.

The previously undisclosed figures shed light on the extent of the public health system’s staffing woes during the Covid surge prompted by the omicron variant and even after cases subsided. The spending on temporary staff is driving Health + Hospitals’ shortfall for the 2023 fiscal year, executives said earlier this year. — Maya Kaufman

Around New York

— Via Times Union:HGTV announces ‘Small Town Potential’ series in Hudson Valley.”

— Medaille students will be able to finish their program of study at Daemen after the university closes at the end of August because of budgetary constraints. (Buffalo News)

— Central New York’s first-ever corgi race is coming this summer in Vernon. (Upstate New York)

Texas company wants to expand New York's largest landfill, despite local opposition,” WNYC reports.

 

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