Deep cuts to spending by state government could worsen the financial and social upheaval created by the coronavirus pandemic, the Fiscal Policy Institute found in a paper set to be released on Wednesday. 

The report comes as state and local governments need billions of dollars to shore up their finances, which have been devastated by the pandemic and subsequent economic freeze meant to reduce the spread of the virus. 


What You Need To Know


  • New York has lost billions in revenue and could lose much more.

  • A report from a progressive think tank recommends tax increases on the rich.

  • Taxing the rich could lead to more people moving out of the state.

  • Cuts of up to 20 percent for some areas possible.

There are the immediate issues of liquidity as well as recovering from the pandemic. And there is the longer-term need for sustained revenue. 

The report calls for a three-pronged approach: Getting federal assistance in the form of direct aid, short-term borrowing and tax the richest New Yorkers. 

"Austerity budgeting may seem sensible, but it would do more harm than good by setting our state further back," said Ron Deutsch, the group's executive director.

"Hard times only become harder if our first response is to choke off revenue to hospitals, schools, small businesses, and fire teachers, nurses, aides - all the indispensable people and services that make our communities great. For the last ten years, our state has cut public services to the bone which did not help prepare us for a pandemic. Simply repeating the same fiscal plan will not get the state on solid financial footing, build in resiliency, or strengthen us to meet the next challenge.” 

​Gov. Andrew Cuomo has not embraced further tax increases and is similarly unenthusiastic about massive borrowing on the local government to cover operating expenses. 

Cuomo has said cuts of up to 20 percent for schools, health care and local governments are possible if the federal government does not provide aid to states hard hit by the crisis. 

New York faces an estimated $61 billion gap combined over the coming fiscal years.