New York City leaders, including Governor Kathy Hochul and Mayor Eric Adams, are proceeding with their budget agendas despite the looming threat of reduced federal funding. The recent presidential victory of Donald Trump and Republican control of Congress have raised concerns about the impact on state and city budgets.
Ana Champeny, director of research for the fiscal watchdog Citizens Budget Commission, notes that city and state budget makers face uncertainty due to the unclear policies and their potential economic effects. Despite this, Hochul’s administration has announced a $2 billion increase in tax receipts for the current fiscal year, while Adams has increased the city budget by $3 billion.
However, experts warn that reduced federal spending could have significant consequences, including cuts to Medicaid, education, and other programs. The state dependence on federal money is approximately $85 billion, with most of it going towards Medicaid and education.
The city’s reliance on federal aid is also concerning, with $8 billion in funding for crucial programs such as education, cash assistance, health care, and child care. If Republicans were to slash these funds, the impact would be severe.
While some local officials are holding out hope that Republicans won’t go along with sharp reductions in spending, others, including Rep. Ritchie Torres, acknowledge that there will be limits to what can be done. Progressive Democrats have called for the state to step in to fill any holes, but this is unlikely due to financial constraints.
One potential solution could be lifting the $10,000 cap on federal deductions for state and local taxes, which would save New Yorkers $19 billion a year. However, even increasing the cap to $20,000 would not be feasible due to budgetary concerns.
The city comptroller, Brad Lander, warns that there is no way for the city and state to fill in all the cuts they are at risk of having. With reduced federal funding on the horizon, New York City leaders must navigate a complex web of uncertainty and potential financial strain.
Source: https://www.thecity.nyc/2024/12/02/adams-hochul-spend-despite-trump-cuts