State releases details of $239 billion budget

The official size of this year’s state budget is $239 billion, according to the state Division of the Budget, which shared the official spending plan last Friday, complete with tabulations and estimates for the upcoming fiscal year and beyond. The $239 billion figure is a bit larger than initially thought; when the budget was passed earlier this month, its size was reported as $237 billion. But there are often discrepancies between the two figures.

The Division of the Budget reported that during the course of budget negotiations between Gov. Kathy Hochul and legislative leaders, $3.1 billion in expenditures were added to the budget – which included $2.4 billion of one-time costs, such as $1.1 billion to stabilize the healthcare industry in New York and $350 million for the Supplemental Child Tax Credit. This year’s budget also includes $1.5 billion for the state’s reserves, bringing the state’s total reserves to $21.1 billion in preparation for possible economic downturns.

The Division of the Budget is projecting a growing general fund deficit that could reach $7.25 billion in three years, worrying some analysts.

The gaps are explained by projected spending growth that outpaces projected tax receipts. The healthcare and education sectors combined account for two-thirds of the growth since the 2022 fiscal year and the growth shows no signs of slowing down. The Division of the Budget report forecasts that the size of the state budget will increase by 5% each year, while tax revenue will only increase by 3.5% on average each year, leading to a “structural imbalance.”

The Citizens Budget Commission, a fiscally conservative watchdog group, believes that the projected budget gaps mask even greater financial concerns for the state. In a Tuesday report, it said that the state’s structural deficit could exceed $16 billion in the 2028 fiscal year, after accounting for debt pre-payments, temporary tax increases and rolled over resources. 

“State leaders basically have two choices,” Citizens Budget Commission President Andrew Rein said. “They can either try to bring spending growth down to what it was in the teens, or they can continue to kick the can down the road.” 

The left-leaning Fiscal Policy Institute argued that the Division of the Budget’s revenue projections were too pessimistic. 

“These gaps are largely driven by very conservative revenue projections for future years,” the organization said in a statement Tuesday. “If revenue simply keeps pace with inflation in future years, as is typical outside of severe recessions, the gaps will disappear without further policy action.”

This year’s state budget will run until April 1, 2025, when lawmakers will need to approve a new spending plan for New Yorkers.