Cash-strapped local governments would be "reckless" to borrow in the long term without a financial control board in place, Governor Andrew Cuomo on Thursday warned.
State and local governments are facing an unprecedented financial crisis due to the economic recession due to the COVID-19 pandemic. So far, efforts to secure federal aid to recoup lost tax revenue this year have stalled.
That has led some local governments, chief among them New York City, to consider borrowing plans. New York City officials, including Mayor Bill de Blasio, have called on state lawmakers to give them the authority to do so.
But Cuomo has given the idea a chilly reception given the costs that could be incurred down the road.
"What do you think is going to change in a year or two?" Cuomo said. "You're going to have the same fixed costs. And then you're going to have debt service."
Closing a budget gap without federal aid presents few decent options for policy makers and elected officials. Without money from Washington, Cuomo has called a last resort plan a mix of spending reductions and tax increases.
"There's going to no good way to do it," Cuomo said. "There's going to be no constructive way."
Meanwhile, Republicans in the state Senate urged members of Congress to back a federal aid package. The framing was a bit different from what Cuomo has called for, given GOP opposition in Washington to a state government bailout.
“New York is in a veritable crisis right now. Whether through profligate spending, dishonest projections, or losses incurred throughout the pandemic, One-Party-Rule has failed millions of our neighbors living through a spiraling state economy," said Senate Minority Leader Robert Ortt.
"While we wish our state had been better managed so we could face this and any other disastrous predicament head-on, we don’t believe that local governments, workers, small businesses, and service providers should be penalized for the mistakes of Albany Democrats. To preserve critical services and prevent devastating state tax hikes, we urge you to deliver a coronavirus stimulus package that could help everyday New Yorkers."
Ortt, along with Assembly Minority Leader Will Barclay, backed a bipartisan proposal supported by Congress's Problem Solvers Caucus, which is co-chaired by Republican Rep. Tom Reed of the Southern Tier.
“The only way to successfully overcome the significant challenges New York now faces is with help from our partners in Washington. The viability of our cities, our schools, our local governments, our workforce, and our entire infrastructure depends on federal action. Years of gross fiscal mismanagement and botched budgeting by Democrats put New York State in a precarious financial position – even during strong economic times," Barclay said.
"But the unprecedented impact of COVID now threatens families, small businesses, and municipalities in every corner of the state. We know a willingness exists among federal officials to deliver additional COVID relief, and we remain hopeful that they will find a way."