New York has amassed a $20 billion reserve fund as potential protection against slowing tax revenues.
However, fiscal analysts warn that tapping into this substantial reserve could put the state’s finances at risk. The fund, often referred to as the “rainy day” fund, has grown significantly over the past five years from $1.7 billion and now represents around 16% of the anticipated state operating funds for the upcoming fiscal year.
Governor Kathy Hochul’s top budget official emphasized the importance of the fund in a recent op/ed, amidst looming budget gaps due to increased spending and the projection of less robust tax receipts.
Ken Girardin of the Empire Center think tank noted the limitations of the fund, particularly in the event of an economic downturn. Given New York’s heavy reliance on personal income tax revenue, the state could be significantly impacted by a down economy.
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