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Facing a $6 billion state budget hole this upcoming fiscal year, Gov. Andrew Cuomo is seeking to tighten spending — and if history is any indicator, the city will be in his crosshairs.
At a speech in Manhattan Monday, Cuomo said he isn’t planning on proposing any revenue raisers or new taxes in his upcoming State of the State address Wednesday or his executive budget proposal, leaving little room for anything but cuts and cost shifting.
“A one-shot cash revenue is not the answer,” Cuomo said at an Association for a Better New York luncheon. “Fix the problem. Money tries to paper over the problem, and I’m not in the papering-over business.”
Mayor Bill de Blasio, already used to taking funding hits from Albany, anticipates this upcoming budget will follow that pattern amid concerns about cuts to social service programs and more.
“The pattern over the last few years is that we’ve had real challenges in Albany and we’ve had to fight hard to minimize the damage for New York City,” the mayor said Monday at the Police Academy in College Point.
“I certainly start with that assumption, but [the] magnitude’s really hard to tell at this point,” de Blasio added.
Despite a slowing economy, the city’s finances are in solid shape, making them ripe territory for the governor to pressure the mayor to shoulder some costs or cuts, budgetary experts say.
“The city’s economy has done much better in recent years than that of the state,” said Ronnie Lowenstein, director of the city Independent Budget Office. “Particularly when the state is facing a deficit, you need to find ways to address it— looking down the Thruway is a very common thing to do.”
Medicaid Cleaves Gap
The $6 billion hole stems largely from the state’s overspending on Medicaid, according to the Cuomo administration — attributable to increased enrollment, ballooning costs of long-term care, the minimum wage hike and federal funding cuts.
The Cuomo administration already has taken steps to reduce the budget gap by slashing Medicaid payments by 1% — a move that’s expected to save $124 million in the final quarter of this fiscal year and another $496 million during the next fiscal year, beginning in April.
In previous years, Cuomo has attempted to bolster the state’s finances by having the city pick up the cost of various programs and proposals, with mixed success.
Four years ago, in the midst of a feud with de Blasio, Cuomo called on the city to increase its contribution to the City University of New York system and have the city absorb the tab on its Medicaid costs. Coupled with other planned changes from Albany, the proposals could have dealt the city a nearly $1 billion budget blow.
The city thwarted the attack on its coffers with the help of Assembly Speaker Carl Heastie (D-Bronx). But that wouldn’t be the last time Cuomo would ask the city to pony up.
Cuomo successfully forced de Blasio to split the bill for emergency subway repairs in 2018. That cost the city $418 million.
In April, the city estimated that it would take a $300 million hit to its 2020 budget from state budget cuts, cost shifts and unfunded mandates.
Asked if the administration would be cutting or reducing funding to New York City in the upcoming budget cycle, a senior advisor to the governor said decisions would be announced later this month during Cuomo’s budget address.
“Opinions are relevant when they are based on facts, and we will present actual numbers and options when we do the budget, as otherwise, this is all just speculation,” said the advisor, Rich Azzopardi.
Social Service Cuts Eyes
Reductions in state aid to the city would likely amount to cuts in social services, rather than cuts to education, said Ana Champeny, director of city studies at the Citizens Budget Commission.
Changes to Medicaid could disproportionately impact Health + Hospitals, the city’s public health system, which serves a large share of uninsured and Medicaid patients, Champeny said.
Rather than go for big cuts, the state previously has been “tinkering at the edges” and making smaller slices to state aid that comes to the city, something Champeny expects to happen again.
“I have concerns that the proposals to close the state gap will negatively impact the city, either by shifting costs to the city, or tapping city resources for revenue,” she said.
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