It’s not unusual for state budgets to project cash shortfalls for future years, but the gaps are supposed to shrink as those years approach. New York’s holes are growing.
As the Empire Center’s E.J. McMahon notes this week, the latest budget update puts next year’s gap at $4 billion, up by $500 million just since February.
It’s even worse the following years: Gaps for FY 2021 and FY 2022 swelled from just over $5 billion in February’s projections to about $7 billion each in this month.
And who knows how much bigger they’ll grow over time — especially if the economy cools?
True, as state Comptroller Tom DiNapoli reported last month, “revenues are currently strong.” But he also noted that this year’s budget “fails to build up rainy-day reserves.” The state ended FY 2018 with a $9.4 billion balance, yet its leaders squirreled away none of it.
This year’s plan was also built on a slew of accounting tricks: shifting expenses off-budget; re-estimating costs and revenue to make the books balance; assuming nonprofit health providers will become for-profit firms and gin up $500 million a year for the state in the process.
It also hikes spending, allows for new “back-door borrowing” and hides more outlays from the public, DiNapoli notes. All of which puts Albany in precarious shape, even if revenues don’t fall steeply.
Fact is, everyone expects leaner times in the not-too-distant future: Goldman Sachs economists note the current expansion is already 95 months old, the third-longest since 1854, and warn that the “medium-term risk of a recession” is growing.
Which is why Albany’s failure to sock away funds and control spending is so foolish. With future-year gaps now ballooning quickly, New York is headed for trouble.
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