Almost all of the newly projected $2.1 billion deficit in this year’s New York State budget can be traced to falling tax receipts.  But rising spending will represent a growing share of the problem over the next three years.  In fact, more than one-third of the projected growth in next year’s gap, and over half the growth in the gap for fiscal 2013, can be traced to spending increases beyond those forecast by the Division of the Budget (DOB) just three months ago.

Assuming no recurring savings are adopted to mop up this year’s red ink, the 2010-11 gap has more than doubled–and projected gaps for the two subsequent years, already large, have become downright humungous:


This chart graphically depicts how the gaps have widened since April:


Note how the gap nearly triples in size between the fiscal years ending 2011 and 2012.  Much of that increase reflects the scheduled expiration of federal stimulus aid; spending temporarily supported by the stimulus will be reclassified into the general fund starting in fiscal 2012.   Note, also, that general fund receipts are projected to hold their own after the scheduled Dec. 31, 2011 sun-setting of this year’s temporary personal income tax increase.

The drop in receipts is easy to explain: personal income taxes and sales taxes, reflecting job losses, a sharp drop in wages and investment income among high-income households, and reduced consumer activity.

But where–and why–is spending growing beyond the projections issued in Aprils?  The growth is concentrated in two categories:

School aid disbursements out of the general fund are up $241 million for 2010-11, a combination of higher aid claims from school districts and a drop in Lottery sales.  The impact of larger aid claims tends to mushroom in later years.  In addition, Lottery aid will be reduced by the Legislature’s failure to approve a Video Lottery Terminal franchise for Belmont Park.  As a result, the baseline school aid projection has been revised upwards by more than $700 million for 2011-12.

Pension contributions for the next three years have risen by a cumulative $2.1 billion.  The Enacted Financial Plan reflected the assumption that pension fund contributions would be capped by “amortization” legislation backed by Governor Paterson and state Comptroller Thomas DiNapoli.   But that bill stalled in the state Senate — and for good reason (even if political pettiness also played a role in its rejection).  So DOB adjusted the financial plan in this area.  It now projects that, in the absence of other action, the employer contribution rate, as a percentage of payroll, could rise from the current 7.2 percent to 24 percent by 2012-13.

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

Another Hochul To-Do: Timely Financial Reporting

The state will spend a record $212 billion in the current 2022 Fiscal Year, under the budget its elected leaders adopted in April. Read More

Health Research Inc. Turns Over its Payroll Records Despite Claiming To Be Exempt from FOIL

The full payroll records of more than 2,400 de facto state employees are available to the public for the first time after being released by Health Research Inc. Read More

Emergency Billions Pose Opportunity—and Risk—for NYS Schools

New York schools are to post publicly today plans for spending a huge pile of unexpected and unbudgeted cash. Read More

New York’s Medicaid Rolls Kept Pace with a Nationwide Surge During the Pandemic

New York's Medicaid and Child Health Plus programs added three-quarters of a million enrollees during the coronavirus pandemic, roughly matching the pace of a national surge in sign-ups. Read More

New York’s Medicaid and Public Health Crises Get Short Shrift in the New State Budget

In spite of an ongoing pandemic and spiraling Medicaid costs, New York's health-care system received surprisingly little attention in the new state budget. On issue after issue, law Read More

Empire State’s new budget is a bridge to nowhere

Looking ahead to an uncertain post-pandemic recovery, New York’s newly enacted state budget for fiscal year 2022 raises spending by staggering amounts that—barring an unlikely rapid return to peak 2019 economic activity in New York City—can't possibly be sustained for more than a few years. The budget is a mid-2020s fiscal disaster in the making: an incomplete bridge over a deepening river of red ink. Read More

Schumer’s First Spending Bill as Majority Leader Tailors Money for New York Medicaid

The pandemic relief bill includes a boost in Medicaid funding that appears to be tailor-made for Senate Majority Leader Chuck Schumer. Read More

A Letter From Washington Shrinks New York’s Budget Gap by $2 Billion or More

In a letter to governors two days after President Biden's inauguration, the U.S. Department of Health and Human Services said that the pandemic-related federal public health emergency "will likely remain in place for the entirety of 2021." Read More


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


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

Phone: 518-434-3100

General Inquiries:

Press Inquiries:


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 Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!