ALBANY – New York’s recently enacted state budget provides critical funding, however, state lawmakers should be cautious with increased spending due to economic downturn concerns, a new report found.
State Comptroller Tom DiNapoli, a Democrat, released his annual report Thursday following the passage of the $229 billion spending plan. The report found spending increased nearly 4% from last year, even as there is a projected drop in revenues and as temporary federal aid from the pandemic expires.
DiNapoli applauded the funding of some critical programs in the report, such as completing the phase-in to fully funding the state’s Foundation Aid formula for schools. The state was required to fully fund the school aid formula by this year’s budget as part of the 2021 settlement of New Yorkers for Students’ Educational Rights v. New York State. The case was filed in 2014 to compel the state to fulfill its constitutional obligation to fully fund public schools. The case focused on the Schenectady and New York City school districts.
“The Enacted State Budget funds critical services, including fully funding Foundation Aid for our schools, programs to help New Yorkers that are still struggling in our post-pandemic world and stabilizing the MTA after massive ridership declines,” DiNapoli said in a statement. “It also comes at a time when revenues appear to be softening, inflation persists, and the federal government has yet to reach a deal on the debt ceiling. The state has made progress in building up reserve funds, but policymakers need to carefully monitor the economy and work to put the state on a sustainable fiscal course.”
A report released by DiNapoli’s office earlier this week demonstrated the Democrat’s concerns shared in Thursday’s report. It found personal income tax collections in April totaled $7.5 billion — nearly 50% below last year. It found, while a decrease was expected, the revenues were nearly 40% lower than projected.
Thursday’s report also notes that much of the increased spending is from recurring costs that could present a growing fiscal challenge for the state in the event of an extended economic downturn.