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Abstract: 

The New York State fiscal year begins on April 1. The budget process for FY 2021 began in January 2020 with a relatively optimistic outlook, but by March, the COVID-19 pandemic changed the prospects. Projected revenue losses created a $13.3 billion budget gap, 12.6% of expenditures. In a remarkable response, the legislature adopted a budget that would be out of balance as soon as the revenue shortfalls showed up. The budget director was given the unusual authority to reduce aid to local governments by any amount needed to achieve a balanced budget. Budget-balancing reductions in aid to local governments would have disproportionately negative impacts on school districts and municipalities that serve high percentages of low-income and minority populations. The adopted budget also gives the budget director increased borrowing authority, suggesting that if COVID-19 continues and additional federal aid is not forthcoming, the state may repeat past practices of borrowing to address operating budget deficits.

Keywords: New York State; state budgeting; COVID-19 impacts¸ state aid to local governments, deficit financing

Affiliations:  1: Syracuse University; 2: Syracuse University.