ALBANY – State Comptroller Thomas DiNapoli raised warning flags Monday about the state budget, projecting that spending will exceed revenues over the next three years and could create a fiscal gap of $17.9 billion.
“It’s OK for now, there’s no reason for alarm,” DiNapoli said in an interview Monday after releasing his fiscal forecast. “The problem in an election year is everybody wants to go home and say, ‘I got more money for education and health care.’ You don’t go home and say, ‘I built up the reserves.’ That’s part of the problem.”
DiNapoli, a Great Neck Plaza Democrat, warned of growing projected fiscal gaps in coming years, the dwindling amount of borrowing capacity under the state constitution, and the threat of federal aid cuts by the Trump Administration and Congress. Meanwhile, Gov. Andrew M. Cuomo and the Legislature have failed to build up reserves to a level DiNapoli feels is adequate.
Budget deficits can force cuts in programs and increases in taxes.
The Cuomo administration responded that the state budget adopted in April has the state on secure financial footing.
“The enacted budget builds on a record of fiscal responsibility that has held spending growth to 2 percent for a record eight years and lowered state debt from when the governor took office,” said Cuomo’s budget spokesman, Morris Peters.
In one independent measure of fiscal stability, the Cuomo administration said the state has the second-highest investment credit rating possible from all three major ratings agencies – Fitch, Moody’s and Standard & Poor’s.
The rating for borrowing backed by personal income taxes and sales tax is at the highest level, according to the Cuomo administration.
E.J. McMahon of the nonpartisan Empire Center think tank suggested caution even though he believes the out-year fiscal gaps are manageable.
“Cuomo has been increasingly resorting to bookkeeping gimmicks,” McMahon said. He was referring to concern about using one-shot revenues for recurring expenses and the use of state authorities to push some spending and borrowing out of the state budget.
“The governor’s continuing failure to provide for larger reserves, and the projected growth in outstanding debt … means something has to give,” McMahon said.