New York

State Fiscal Briefs

January 2020

New York’s budget basics

According to the National Association of State Budget Officers (NASBO), New York’s total expenditures in fiscal year (FY) 2019 were $170.9 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2019 were $2.1 trillion, ranging from $4.5 billion in South Dakota to $311.3 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, New York’s combined state and local direct general expenditures were $282.8 billion in FY 2017 (the most recent year census data were available), or $14,434 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $9,449.

New York’s largest spending areas per capita were public welfare ($3,624) and elementary and secondary education ($3,517). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

New York’s combined state and local general revenues were $298.5 billion in FY 2017, or $15,238 per capita. National per capita general revenues were $9,573. New York uses all major state and local taxes. After federal transfers, New York’s largest sources of per capita revenue were property taxes ($2,902) and individual income taxes ($2,877).

New York’s politics

Governor Andrew Cuomo, a Democrat, was elected in 2018 with 60 percent of the vote. The next gubernatorial election is in 2022.

Democrats control both the Assembly (106 Democrats to 43 Republicans) and Senate (40 Democrats to 23 Republicans). Control of the governor’s mansion and each house of the legislature gives Democrats a trifecta in New York. The entire legislature is up for election in 2020 because both members and senators serve two-year terms.

New York’s budget institutions, rules, and constraints

New York uses an annual budget. The legislature must pass a balanced budget, but it can carry a deficit over into the following year. There are no further tax and expenditure limits in New York. There are limits on total authorized debt and debt service incurred by the state.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

New York’s recent fiscal debates

  • In 2016, New Yorkers claimed the largest average state and local tax (SALT) deduction ($21,779). As a result, the $10,000 cap on SALT deductions in the 2017 Tax Cuts and Jobs Act (TCJA) had a significant effect on the state’s taxpayers. Although the TCJA lowered most New Yorkers’ federal tax (as it did nationally), the federal tax cuts were generally smaller in New York than in states with lower or no state income tax because of the SALT cap. In response to the TCJA, Governor Cuomo said, “Washington has launched an all-out, direct attack on New York State’s economic future.” New York enacted legislation that allowed taxpayers to replace their state and local taxes with charitable gifts to the government (since the federal government does not cap charitable deductions), but the US Treasury Department blocked this workaround. New York, along with Connecticut, Maryland, and New Jersey, is fighting the TCJA in court.
  • New York limits local governments to property tax revenue growth of 2 percent or the rate of inflation (whichever is less). The restriction applies to all local governments in the state except for New York City. The cap was established in 2011 and made permanent in 2019. The cap has shifted much of the state’s K–12 education funding away from local property taxes and to the state’s individual income tax.
  • In 2019, New York City became the first city to enact congestion pricing, called “Central Business District Tolling.” The Metropolitan Transportation Authority will install electronic tolling devices around a section of Manhattan that will, when the program goes live in 2021, charge drivers who enter the zone a once-a-day fee. The tolls have not been set, but the revenue is dedicated to MTA capital projects.

New York’s current budget

Governor Andrew Cuomo released his FY 2020 budget in January 2019. The budget increased education spending by nearly $1 billion, or 3.6 percent, including funds for a universal preschool program and grants for high-need school districts. The budget also allocated more spending for the state’s Excelsior Scholarship program, which helps New Yorkers attend public universities for free. Governor Cuomo framed his plan as a “Justice Agenda,” which also included more funds for health care and infrastructure in addition to education, in his 2019 state of the state address.

The legislature passed its budget in March 2019. The enacted budget generally followed the governor’s recommendations, including $1 billion in new funds for education and an expansion of the Excelsior Scholarship program. Additionally, for the ninth consecutive year, the state’s budget limited overall spending growth to below 2 percent.

New York is the only state that begins its fiscal year on April 1. This became problematic after the TCJA led many taxpayers to shift their income into tax year 2017 to benefit from the uncapped SALT deduction. This also led to lower-than-expected state tax revenue in late 2018 but robust state tax revenue growth in spring 2019. However, the surge in income tax revenue occurred after New York had enacted its budget.

Governor Cuomo gave his 2020 state of the state address in January 2020.

For more on New York’s budget, see