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Comptroller sees challenges ahead for New York

New York State is facing significant economic challenges three years after the COVID-19 pandemic first struck. The state comptroller, Tom DiNapoli, released a report on Thursday, outlining the issues that the state is currently grappling with. These include ongoing inflation, higher interest rates, and expiring federal aid.

According to DiNapoli’s report, the budget proposed by Governor Kathy Hochul this year may exacerbate the situation. He warned that the tax revenue estimates for a slower economy could be even worse than anticipated. Additionally, the budget could strip his office of oversight powers.

DiNapoli’s report also highlighted the use of a loophole in the state’s debt laws to help pay for the long-awaited Gateway Tunnel project. However, he cautioned against increasing debt levels, expressing concern about the affordability of debt and the transparency of current debt practices.

The comptroller urged lawmakers to reject certain budget proposals, including those that exempt around $12.8 billion from competitive bidding and oversight requirements. He warned that these proposals would leave too much in the dark and undermine accountability.

State lawmakers and Governor Hochul are currently negotiating a $227 billion spending plan, which is expected to be passed by April 1, the start of the state’s fiscal year. However, the budget is being negotiated against the backdrop of ongoing economic challenges and a lower labor force participation rate than three years ago.

DiNapoli cautioned that budget gaps in the coming years could be even bigger if the recession is more severe or lasts longer than expected. He also warned that budget language could end oversight and competitive bidding for some contracts, including some of the state’s Managed Long Term Care plans.

Despite the challenges, DiNapoli is backing proposals in Hochul’s budget that would move more money into the state’s “rainy day” fund in order to offset the loss of revenue in the event of a recession. The Hochul proposal would increase the fund for “economic uncertainties” to $13.5 billion by the end of the fiscal year.

In light of the report’s findings, DiNapoli emphasized the need for New York to carefully prepare for both the short- and long-term economic challenges ahead.

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