Cuomo warns of 20% cuts if more federal aid doesn't arrive

ALBANY — Gov. Andrew M. Cuomo said Monday he might look to cut aid to schools, hospitals and local governments 20% if the federal government doesn’t send more money to state governments to deal with the coronavirus pandemic.

Cuomo, a Democrat, and the Democratic-controlled State Legislature approved a $177 billion state budget on April 3 which covered over a $10 billion hole by effectively counting on money they don’t have yet and asking Washington for more help.

The possibility of school cuts is simultaneously a tactic to prod Washington and a very real potential threat, fiscal analysts said. If no help arrives, cuts probably will have to happen. Even if 20% proves an overstatement, the reduction could still be significant.

“The revenue shortfalls are real — this isn’t an attempt to cut spending for some other purpose,” said Dave Friedfel, state studies director for the Citizens Budget Commission of New York, a watchdog group.

“The state really did build its budget on idea it would be doing substantial cuts if it did not get more federal help,” Friedfel said. “The two big areas of state spending are education and Medicaid. So if you have to cut, that’s where you have to go.”

Cuomo will get a chance to make his case in a meeting with President Donald Trump on Tuesday.

“He’s coming to the Oval Office tomorrow afternoon,” Trump said Monday. “Andrew is going to be coming in with some of his people and we’re looking forward to that.”

Cuomo's spending reduction proposals could come as soon as mid-May.

As one of the emergency powers the legislature granted the governor to deal with the virus, Cuomo can change the state budget as soon as May 1. But practically speaking, he would have to wait until mid-May when the state’s next cash report is published.

The state share of the overall budget was expected in January to be about $105 billion. Instead, it’s about $95 billion, the Cuomo administration has said. Rather than cut spending when they approved the budget, lawmakers kept it unchanged and crossed their fingers for federal aid.

“This year, the state budget is a function of whatever the federal government can give us,” Cuomo said Monday. He is expected to issue a report on the state’s financial condition by the end of the week.

For weeks, the governor has been sounding alarms about the forms and restrictions on aid packages approved by Congress. First, he objected to conditions that blocked his administration from forcing counties to pick up a bigger share of Medicaid costs — though he worked around it in the budget, to a degree, by making counties cover a fund for distressed hospitals.

Now, Congress is discussing another $400 billion aid package centering on helping small businesses and its employees, as well as hospitals.

Negotiations hit a snag Monday, reportedly because Democrats are demanding for more direct aid to state and local governments and Republicans are calling that a non-starter.

Against that backdrop, Cuomo said the bipartisan National Governors Association has renewed its call for an additional $500 billion in direct aid to states. Without it, the governor said he would look to make cuts.

“If they exclude state government again, our state forecast will project without any federal funds … you would be cutting schools 20%, local governments 20% and hospitals 20% and this is the worst time to do this,” the governor said.

“You have to look at this as a worst-case scenario, which by the way would be pretty catastrophic,” David Albert, spokesman for the New York State School Boards Association, said of the potential 20% reduction, which would amount to about $5.5 billion in an overall $27 billion education budget.

“But still, it’s an alarm bell,” Albert said. “So obviously, we are all hoping there will be additional federal funding in a form that can help schools.”