“Hope for the best and prepare for the worst” is a favorite saying of Governor Cuomo, who has rolled it out again to describe how the state will deal with the Coronavirus.

But when it comes to the revenue forecast underlying the next state budget, Cuomo effectively is hoping for better and preparing for more of the same.


This is an installment in a special series of #NYCoronavirus chronicles by Empire Center analysts, focused on New York’s state and local policy response to the Coronavirus pandemic.


The more laid-back approach is reflected in Sunday’s Consensus Forecast Report, in which Budget Director Robert Mujica and legislative fiscal committee staffs agree that revenues for fiscal 2020 and 2021 will be a combined $700 million higher than forecast last month in Cuomo’s FY 2021 Executive Budget.

If the Coronavirus disruption had not developed over the past few months, that might be seen as a conservative number. At least a quarter of the $700 million in projected new revenues is already in hand, based on January tax receipts that came in $170 million above the cash-flow projection in the governor’s budget. As usual, the Legislature began the consensus-building process with higher revenue estimates than the governor’s Division of the Budget: $1.1 billion from Senate Majority Finance, and $1.7 billion from Assembly Majority Ways and Means.

But all of those forecasts predated the full brunt of last week’s bad news about the spread of the Coronavirus outbreak and the meltdown in the stock market, which experienced its most rapid correction (a drop of at least 10 percent in major indexes) since the 2008 financial crisis. The big question now is whether the correction, with or without a worst-case viral pandemic, will turn into a deeper and more prolonged bear market and recession.

The Consensus Forecast Report acknowledged there are “multiple and elevated risks to the economic outlook,” including “an exceedingly significant downside risk” stemming from the spread of the Coronavirus. On the other hand, the same paragraph in the report states “a quick resolution of the Coronavirus outbreak” could lead to a stronger rebound.

In any year, under any circumstances, adding $700 million to the revenue estimate is like tossing chum into an Albany pool full of hungry legislators and interest groups—not a great idea right now, given the added downside risks.

But if the governor truly means to abide by his 2 percent self-imposed spending cap, the $700 million can’t be spent on anything. Given the exceptionally shaky economic outlook, the most prudent course would be for Cuomo to follow up the consensus report by announcing the added $700 million—if it actually materializes—will be put in reserves. That’s what he did this time last year; if he hadn’t, he’d be facing an even bigger problem than the multi-billion dollar Medicaid deficit.

As state Comptroller Thomas DiNapoli keeps warning, the state needs to build up its comparatively low rainy-day funds. “As the financial capital of the world, New York is particularly sensitive to economic downturns, which can put a significant strain on our budget,” the comptroller said back in December. And now the threat of a downturn is larger than it’s been in several years.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

New York’s Hospital Industry Ranks Near the Bottom of Two Quality Report Cards

New York's hospitals remain near the bottom of two quality report cards. The state's hospitals received the lowest rate of any state except Nevada and DC. Read More

Proposed minimum staffing law could push some nursing homes to employ fewer licensed nurses

Some New York nursing homes are likely to scale back their use of higher-trained personnel if proposed minimum staffing ratios become law, according to a review of existing employment patterns. Read More

Surprising upside in NY census total points to bigger shift in Albany

The official 2020 U.S. Census of NY's population—topping 20 million for the first time—is significantly larger than previous estimates. Read More

Empire Downward: Pandemic policy responses are hindering NY’s recovery

New York has been trailing most states in the race to recover from the economically devastating coronavirus pandemic, recent employment data have shown. Read More

New York’s ‘Bluest’ Counties Have the Lowest COVID Vaccination Rates for Older Residents

New York's bluest counties are posting the lowest coronavirus vaccination rates for older residents, a striking contrast with the pattern in the U.S. as a whole. The disparity appea Read More

New York’s ‘Single Payer’ Health Plan Would Disrupt Coverage for Out-of-State Commuters, Too

Under the latest version of the single-payer bill – which has broad support on Democrats in the Legislature – hundreds of thousands of commuters from other states would face the replacement of their current health insurance with a Medicaid-like plan funded with tax dollars and managed by Albany. Read More

The Public Can Now See the Vaccine Task Force Recommendations that the Cuomo Administration Held Back

Even as Governor Cuomo touted vaccine approvals by a state-appointed panel of experts, his office was withholding the group's detailed findings from public view. The governor's six- Read More

Job recovery picks up steam in NY, but still far behind rest of U.S.

New York's private-sector job recovery accelerated in March—but remained far behind the national pace on a year-to-year basis Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100
Fax: 518-434-3130
E-Mail: info@empirecenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo "...the Empire Center is the think tank that spent months trying to pry Covid data out of Mr. Cuomo's government, which offered a series of unbelievable excuses for its refusal to disclose...five months after it (the Empire Center) sued, Team Cuomo finally started coughing up some of the records." -Wall Street Journal, February 19, 2021

SIGN UP TO READ ABOUT THE ISSUES IMPACTING NEW YORKERS.