“The days of wine and roses are over,” famously declared newly elected Gov. Hugh Carey in 1975 amid New York City’s fiscal crisis. It might be a quote that state leaders resurface next year as New York barrels toward its first major deficit since Andrew Cuomo took office in 2011. The state’s enacted budget financial plan, quietly released a week ago on the final day of the legislative session, estimates a grim picture after Gov. Kathy Hochul enjoyed her first two budgets filled with federal money from the Covid-19 pandemic and better-than-expected tax revenue when New Yorkers started to spend again. The budget gap for the coming fiscal year that starts April 1 ballooned from $5.1 billion to $9.1 billion. In two years, the gap went from $8.6 billion to $13.4 billion, the plan showed. Those are sizable gaps — on par with the cost-cutting Gov. David Paterson did in 2009 and 2010 during the recession. And when Cuomo took office, he needed to look at cuts in school aid, Medicaid and state agencies to make up a $10 billion gap. So if you’re thinking next year’s budget fight will be focused on Hochul’s housing agenda that failed this year, think again. The threat of cuts — or at least freezes — to programs and services are real after years of spending sprees that included record school aid, which is the state’s largest expense. “The new gap calculation is the clearest evidence to date that Albany’s three-year spending binge, which has seen both school aid and Medicaid costs explode and has been partially fueled by personal income and business tax hikes, can’t be sustained,” wrote Ken Girardin, a fellow at the fiscally conservative Empire Center. Girardin noted Cuomo and Hochul rightly built up the state’s reserves to $19 billion for when a downturn comes, but he also warned that dipping too deeply into it would leave the fund short for the years ahead. The new budget deficit estimates come from a combination of $2 billion in additional spending that Hochul and lawmakers agreed to in this year’s overall $229 billion budget, along with tax receipts that continue to disappoint. In April, tax receipts were $4 billion below estimates. “The increase in the gaps over the Financial Plan period (FY 2025 through FY 2027) are principally due to additional downward revisions in projected tax receipts,” the state's enacted financial plan says. What was left unsaid: The next budget year looks like it could be a painful one — and the latest test for the Democratic-led Legislature and Hochul. IT’S FRIDAY. Programming Note: We’ll be off this Monday for Juneteenth and back in your inboxes Tuesday. Have a great weekend! WHERE’S KATHY? Delivering remarks at Jamaica Hospital Medical Center for emergency department expansion and modernization, attending the funeral of Captain Christopher Garrow and announcing economic development. WHERE’S ERIC? Making an announcement on housing and homelessness, delivering remarks at a city government “Hiring Hall” event, participating in a flag-raising ceremony for the Philippines, attending the Women in Motion Arthritis Foundation Awards Luncheon and meeting with South Africa’s Western Cape Premier Alan Winde. QUOTE OF THE DAY: “One commissioner at a time," Edward A. Caban, the NYPD’s first deputy commissioner, told Playbook on Thursday when asked if he is interested in succeeding outgoing Commissioner Keechant Sewell. Caban is reportedly one of the mayor’s favored candidates for top cop.
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