Financial watchdogs in New York are proceeding with caution. There is a good possibility that the federal government will shut down by Sunday due to a hard line taken by the House Freedom Caucus, which is pushing for deeper spending cuts than some of their fellow Republicans are willing to vote for, not to mention Democrats.
According to state Comptroller Tom DiNapoli, there is no upside for New York if a federal government shutdown goes ahead.
“I don’t see any silver lining in even one minute of a government shutdown,” he told Capital Tonight.
He also predicts, that, depending on how long a shutdown continues, it could spell bad news for state and city agencies dealing with migrants.
“The big issue on everybody’s mind is the migrant crisis. So, to the extent that there would be any other [federal] help in that regard, there’s a concern what impact would be there,” he said. “[Also] immigration courts have appointments that could be held up."
The comptroller pointed out that many federal employees wouldn’t be paid if there’s a shutdown and reimbursements to the state for federal programs would be delayed.
“Our economy is very precarious right now. We all know that. What will this do to the financial markets? What will it do for Wall Street? I care as an investor for the pension fund for the state and if the stock market goes down – it’s already been volatile and up and down,” he said.
The other news that has budget watchdogs on alert is Gov. Kathy Hochul’s request to state agencies via her budget director to keep spending flat.
Out-year budget gaps totaling $35 billion prompted the state’s budget director to issue a letter to agencies last week urging them to freeze spending in their budget proposals for the next fiscal year.
There’s a $9 billion budget gap projected for next year and $13 billion gaps for each of the following two years.
In what’s called an annual “call letter” – a letter outlining the governor's priorities and any fiscal constraints. Budget Director Blake Washington said budget requests should not exceed what was approved in this year's $229 billion budget.
“The budget, $229 billion, the highest in history, was built on a premise that is not holding up,” DiNapoli said.
While DiNapoli said he believes this year’s budget “will hold together," the state’s top fiscal watchdog also had a warning for both taxpayers and lawmakers, touching on the hot-button issue of outmigration.
“We have to be mindful that we are taking in less money than we were a year ago. Some of that has to do with Wall Street being off in terms of profits and bonuses,” he said. “We also have to deal with the issue of taxpayer migration, which is a whole other topic, but we have to face that there has been a net decrease in higher income New Yorkers.”
“It’s not the stampede out of the state that some of the critics say, but we do have to recognize – and we need to study this a little more carefully – we are losing some of our higher-end taxpayers and we are very much dependent on the personal income tax. We want to keep all these folks here.”
The comptroller's office recently issued two reports that DiNapoli also discussed on Capital Tonight, one on the challenges facing rural New York counties and an audit of the Nourish NY program.