The coronavirus pandemic has just claimed its first big institutional victim: the New York state Legislature, which handed Gov. Andrew Cuomo broad and unprecedented leeway to cut state spending in the fiscal year that began Wednesday.
Under the circumstances, the Assembly and Senate really had little choice. Lawmakers in both parties know full well they lack the stomach for cutting — actually cutting — spending, much less approving historically large budget reductions. And they know better than to quarrel with Cuomo’s estimate that tax receipts have dropped a previously unthinkable $10 billion to $15 billion from the pre-pandemic forecast.
Meanwhile, the economic situation is in greater flux than ever seen at the start of a fiscal year. No one knows how big a budget bailout the state might actually receive from an expected fourth federal stimulus bill in a few months. Yet it’s highly unlikely to fill the entire gaping hole in New York’s budget.
So what can Cuomo now do, and when can he do it? The local-aid budget bill details the basics:
This is not quite the dictatorial overreach portrayed, both in private and on social media, by some lawmakers, especially Republicans.
First, it is temporary — this year only.
Second, as noted above, if legislators don’t like Cuomo’s cuts, they can enact their own alternative plan “by concurrent resolution,” via a combined vote of both houses — a crucial distinction, because such resolutions cannot be vetoed by the governor.
In the meantime, even now, Cuomo and the Legislature aren’t actually cutting spending — yet.
School aid, the largest piece of the budget, is essentially held flat in the final local-assistance bill. Even including “savings” recommended by Cuomo’s Medicaid redesign team, the adopted budget won’t cut Medicaid spending below this year’s levels, either.
So Cuomo and his budget director, Robert Mujica, can’t lose time. They need to make the first big budget cuts in the April measurement period — starting with school aid, which still must be significantly reduced.
Cuomo has talked a good game. “I believe postponing the problem in government, in life, you just make it worse,” he said. “Let’s not deceive ourselves.”
But while winning positive reviews for his response to the public-health crisis, he has actually spent much of the last month playing for time on the fiscal front.
Recall that the pandemic began to emerge in the final week of February, when stocks initially fell by a shocking 10 percent, but Mujica signed onto a “consensus” memo with legislative staff projecting the state would have $700 million more revenue to spend in the coming year.
As the economic meltdown accelerated, Cuomo continued to avoid talking about the worsening budget picture until March 10, when he announced he had asked state Comptroller Thomas DiNapoli to estimate the impact on revenues.
On March 17, DiNapoli came up with an initial estimate that revenues would be down $4 billion to $7 billion — which, Cuomo said at his daily briefing, “means our budget as we prepared it is possibly over-optimistic.”
At that point, the governor said the budget would have to include “a built-in mechanism to adjust the expenditures … so you don’t have to come back every 24 hours.”
And, nearly two weeks later, that mechanism is now in place.
The economic and fiscal outlook for New York is darker than at any time since the Great Depression. This much is clear: Now more than ever, the buck stops with the governor.
E.J. McMahon is research director at the Empire Center for Public Policy and a Manhattan Institute adjunct fellow.