By Post Editorial Board
If you live in New York, brace for some serious fiscal pain.
State Comptroller Thomas DiNapoli, a Democrat, is sounding the alarm on Albany’s rapidly deteriorating fiscal outlook — citing a jaw-dropping $36 billion cash shortfall over the next four years, as the economy weakens, tax revenue falls and spending spirals.
In a worrisome new report, DiNapoli notes that the cumulative gap through 2027 grew by a total of $15.6 billion, or about 75%, in just the three months leading up to the adoption of this year’s budget back in late April.
And get this: The shortfall would’ve been closer to a mind-numbing $50 billion if the Division of the Budget hadn’t re-timed payments (basically an accounting move).
Make no mistake: These are not the usual out-year gaps.
As DiNapoli noted, they’re “well above typical forecasted levels over the previous 15 years.”
Meaning they can’t be plugged as easily as usual budget holes; they’re way too big.
“The state’s fiscal outlook has changed considerably over the past year, and significant economic and fiscal risks could further upend the state’s finances,” warned DiNapoli.
And, no, the left-wing Fiscal Policy Institute’s Nathan Gusdorf is not right to claim the $19.5 billion in state cash reserves will be enough to handle future budget gaps.
“The governor and the Legislature prudently increased New York’s reserve funds, but that cannot replace fiscal discipline or be relied upon to plug recurring budget gaps,” the comptroller notes.
“While there is no quick fix, a proactive approach by state leaders to align recurring revenues with recurring spending could help preserve the economic competitiveness of our state and avoid cuts to critical programs New Yorkers rely on.”
How did the state get to this point?
DiNapoli sums it up in four words: “Spending up, revenue down.”
He cites slowing income growth and market volatility on Wall Street amid a cooling economy.
In the next four years, state outlays are projected to grow by 17.8%, almost $22 billion, while revenues fall more than 10%.
Clearly Gov. Kathy Hochul and the Democratic-controlled Legislature didn’t plan for the future: Despite federal pandemic relief aid coming to an end, she and lawmakers massively ramped up New York’s already exorbitant spending for education and Medicaid.
And now, raising taxes is not an option.
In 2021, Albany slapped a whopping $4.3 billion tax surcharge on wealthy New Yorkers, on top of an existing millionaires’ tax (that was supposed to expire more than a decade ago but somehow didn’t).
That made New York’s state-and-local tax burden the highest in the nation, fueling the flight of . . . wealthy taxpayers, who took their tax revenue with them.
DiNapoli himself has noted that the number of millionaires who left the state in 2021 was almost three times higher than in 2019.
This week he warned that more tax hikes would only further hurt state income-tax collections.
Hmm. You just know things are grim when a liberal Democrat like DiNapoli is calling for spending restraint and warning against more tax bumps.
DiNapoli deserves credit for flagging the dangers.
The sooner Albany heeds his advice — and curbs spending — the less pain New Yorkers will have to endure down the road.
But time is quickly running out.
