State Comptroller Thomas DiNapoli is cautioning that New York’s proposed State Fiscal Year 2027 Executive Budget would put the state on a spending path that outpaces revenue growth, leading to projected cumulative budget gaps of $27.5 billion through SFY 2030.
In a new analysis, DiNapoli said growing fiscal uncertainty — driven largely by shifting federal policies — is placing additional pressure on state finances and threatening key safety net programs.
“The Executive Budget for the upcoming state fiscal year comes at a time of unusual fiscal uncertainty,” DiNapoli said, warning that federal actions could reduce funding, increase state costs, and limit access to services such as health coverage and nutrition assistance.
Federal Actions Deepen Fiscal Risk
According to the New York State Division of the Budget, federal receipts are expected to drop by $9.4 billion, or 10%, in SFY 2027 compared to the previous year. Officials attribute the decline to changes tied to a federal tax and policy bill enacted in July under Donald Trump.
The largest hit involves the state’s Essential Plan, with funding projected to fall by $10.8 billion from SFY 2026 levels. Social welfare aid is also expected to decrease by $270 million.
The report notes that the New York State Department of Health has requested federal approval to end its Section 1332 State Innovation Waiver and return to the Basic Health Program. If denied, about 525,000 people could move to Medicaid, potentially leaving the state responsible for the full cost if federal matching funds are not available.
Under current projections, the Essential Plan would phase out entirely in SFY 2027, forcing many enrollees to seek other coverage or risk losing insurance.
Officials also flagged concerns about instability in federal funding for child care, food assistance, clean energy efforts, and major infrastructure projects such as the Gateway Hudson Tunnel Project.
Oversight and Transparency Concerns
DiNapoli also criticized provisions in the Executive Budget that would scale back oversight by the Office of the New York State Comptroller.
The proposal would raise discretionary purchasing thresholds to $300,000 and remove the requirement for comptroller approval on certain centralized contracts. His office estimates the changes could exempt more than $3 billion in taxpayer spending from independent review, with at least $4 billion potentially removed from oversight and competitive bidding rules.
“Independent oversight and broader competition in the procurement process are not obstacles but essential checks,” DiNapoli said.
Revenues Up, But Spending Growing Faster
DOB increased its revenue forecast by $22.9 billion over the financial plan period, largely due to stronger personal income tax collections fueled by wage growth and higher bonuses in the finance sector.
Surpluses of $2.4 billion in SFY 2026 and $3.5 billion in SFY 2027 are projected, but those funds are earmarked for one-time costs, new initiatives, debt prepayments, and offsetting future shortfalls.
While overall spending is expected to grow just 0.7% in SFY 2027, long-term projections show expenditures outpacing revenues. State Operating Funds disbursements are forecast to rise 21.5% through SFY 2030, compared to 8.7% growth in receipts.
DOB projects future gaps of:
- $6 billion in SFY 2028
- $9 billion in SFY 2029
- $12.5 billion in SFY 2030
Medicaid remains a major cost driver. Since SFY 2019, state-share Medicaid spending has increased by $20.7 billion, or 89%, and is projected to grow another $12.9 billion — nearly 30% — by SFY 2030. DiNapoli warned that continued growth could crowd out funding for education, infrastructure, and public safety.
Capital Spending and Debt Levels Rising
The five-year capital plan for SFYs 2027 through 2031 proposes $106.1 billion in spending, $4.6 billion more than the prior plan.
State-supported debt is expected to climb nearly 60% over five years, from $61.6 billion to $98.3 billion. More than 95% of that debt comes through public authorities rather than direct voter approval.
Debt service payments are projected to increase nearly 40% during that time. By SFY 2031, the state is expected to be close to its statutory debt cap, with just $351 million in remaining capacity.
Rainy Day Reserves at Record High — But No Growth
The Executive Budget continues building statutory reserves. By SFY 2028, the Rainy Day Reserve Fund is projected to reach $10 billion, with another $1.6 billion in the Tax Stabilization Reserve Fund — totaling $11.6 billion, a record level.
However, overall principal reserves are expected to remain flat at $14.6 billion. As spending grows, those reserves will shrink as a share of the budget. To meet the Division of the Budget’s 15% reserve target, the state would need to add another $7.7 billion in SFY 2026.
Caution Urged as Budget Talks Begin
As negotiations on the SFY 2027 budget get underway, DiNapoli urged lawmakers to take a cautious approach.
“With growing fiscal risks and uncertainty from Washington, policymakers must ensure the state remains prepared for economic instability while maintaining essential services,” he said.
The full report is available through the Office of the State Comptroller.
