#New York cuts spending projections by $4 billion

New York has cut spending projections by $4 billion, thanks to freezes on hiring, new contracts and pay raises, as the Cuomo administration hopes for an influx of federal aid, according to a state report released Thursday.

The state Division of Budget released its fiscal year 2021 first quarterly budget financial plan, showing that the state projects to reduce spending from this year’s budget through June by nearly $4 billion compared to spending over the same period last year.

In addition to the hiring freeze, new contracts and pay raises across all state agencies were instituted as a way to cut spending, and the state temporarily held back 20 percent of its payments to local governments and non-profit organizations.

A $177 billion dollar fiscal plan comprised of state and federal funds has now been scaled back due to the projected $4 billion dollars in reduced state spending.

The Cuomo administration warned that if the federal government does not come through with aid for the Empire State, the projected $4 billion cut could become permanent.

The financial plan released Thursday estimates a revenue loss of $14.5 billion for one year as a result of the COVID-19 pandemic that left millions of New Yorkers out of work.

Projections in the newly released plan also estimate a $62 billion revenue loss through the 2024 fiscal year as a “direct consequence” of the contagion that has left more than 25,000 New Yorkers dead and more than 420,000 infected, the state budget office said.

“New York has so far safely re-opened large portions of the economy after curbing the spread of COVID-19, and while we remain vigilant to sustain our re-opening, the pandemic has done more damage to our economy than the Great Recession and is driving a fiscal crisis,” state Budget Director Robert Mujica said.

The Cuomo administration has been hoping that the federal government’s next COVID-19 relief package will contain additional aid for struggling state and local governments amid the health crisis, but negotiations in Washington for more aid do not appear promising.

“The Federal government must put an end to its months of dithering and deliver funding to states because if they don’t the temporary withholdings turn into permanent reductions, which would have devastating impacts on schools, hospitals, police and fire departments, along with other critical services, and weaken New York State’s ability to lead the national economic recovery as the producer of nearly 10 percent of national GDP,” Mujica said.