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 says she told them that even if 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 says 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 likely to continue for some time.
“What we are very intentional about is not creating annual gaps or creating a scenario where we could not afford to pay for what we committed to this year,” the governor said. .
She says she has no plans to reimpose a hiring freeze at this time. She says 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 releases a new report on the more than $8 billion ($8.1) the state owes the federal government in loans that paid benefits unemployment insurance 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 warns that if New York does not make a substantial payment soon, interest charges will rise and could hamper the “recovery of jobs amid growing economic uncertainty.” DiNapoli says tax bills will rise for state companies, which will have to help pay down debt.
Hochul’s budget director, Robert Mujica, says 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 were tougher challenges than we’ve ever seen before, so the size of this one is bigger,” Mujica said. “It will be spread over many years.
Business groups including Upstate United say 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 eventually foot the bill for New York’s remaining $8.1 billion in debt to Washington,” the groups Justin Wilcox said in a statement.
Mujica left the door open to using state money to pay off some debt in the future, if there is available revenue.
Hochul says the state government is taking some steps to help New Yorkers struggling with higher costs. She says 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.