Hochul tells cabinet to moderate spending amid economic uncertainty
New York Governor Kathy Hochul said she told her cabinet they may have to be careful with state spending next year as inflation continues to rise and Wall Street fall.
Hochul held his first meeting with top advisers and heads of state agencies since the end of the legislative session. She told them that while the state budget looks balanced through the end of the fiscal year, they will need to have more modest spending targets for next year and prepare for a possible recession.
“We talked about moderating expectations,” Hochul said.
Just a few months ago, New York was teeming with money from federal COVID-19 relief programs. But Hochul said the cost of everything has gone up and Wall Street, which provides 18% of the state’s total revenue, has gone down, and those trends are expected to continue for some time.
“What we are very intentional about is not creating gaps during the year or creating a scenario where we could not afford to pay for what we committed to this year” , said the governor.
She said she has no plans to reimpose a hiring freeze at this time, and that there are 15,000 state government positions that are vacant and need to be filled.
The governor’s comments come as state comptroller Tom DiNapoli released a new report on the $8.1 billion the state owes the federal government in loans that paid unemployment insurance benefits to New Yorkers at the height of the pandemic. The state’s debt is second only to California, and New York is one of seven states that still owe the federal government money. The comptroller warned that if New York does not make a substantial payment soon, interest charges will rise and could hamper the state’s “employment recovery amid growing economic uncertainty.” DiNapoli said tax bills will rise for state companies, which will have to help pay down debt.
Hochul’s budget director Robert Mujica said state enterprises have always had to shoulder a portion of any unemployment insurance debt to the federal government, and he doesn’t expect that to change. .
“These are tougher challenges than we’ve ever seen before, so the size is more important,” Mujica said. “It’s going to be spread over many years.”
Business groups including Upstate United have said the state has received billions of dollars in COVID relief grants and should not pass the costs on to local businesses.
“Millions of families who are already squeezed by historic inflation rates will finally pay the tab of New York’s remaining $8.1 billion debt to Washington,” said Justin Wilcox, executive director of Upstate United. , in a press release.
Mujica left the door open to using state money to pay off some debt in the future, if there is available revenue.
Hochul said the state government is taking some steps to help New Yorkers struggling with higher costs. She said the state’s share of gasoline taxes has been suspended until 2023. So far, however, that hasn’t resulted in lower costs at the pump.