Blair Horner: The 2018 State Of The State

Jan 1, 2018

New York State’s constitution requires that “The governor shall communicate by message to the legislature at every session the condition of the state, and recommend such matters to it as he or she shall judge expedient.” Since the early 20th Century, governors have delivered a State of the State speech in addition to delivering a written document. Traditionally, the address was usually held on the first Wednesday of January and presented to an audience of state legislators, dignitaries and other guests. However, for the last two years, the governor did not hold the State of the State on that date. After a two-year hiatus, the governor is scheduled to issue his message on January 3rd, the kickoff of the 2018 legislative session.

Whenever the State of the State address is held, it is supposed to discuss the “condition of the state” and what the governor proposes to recommend. This year, there are four big “shadows” that are being cast over the state and its budget.

“Shadow 1”: The state budget deficit. According to the state Comptroller, New York State is projected to face a $4 billion deficit in the next fiscal year. The Comptroller also estimates that the current fiscal year (which ends on March 31, 2018) will be around $1.8 billion short. Those estimates are somewhat at odds with what the Cuomo Administration’s budget people have been saying – they expect a balanced budget for this year and a shortfall next fiscal year.

Whoever is right, what is clear is that next fiscal year the state will be facing a significant budget deficit of its own making. There will likely be a budget deficit in the billions of dollars. That makes it even more daunting to initiate new spending programs, particularly when those shortfalls are the result of changes in the federal budget. Which leads to the second “Shadow.”

“Shadow 2”: The changes in federal tax policy will exacerbate the state’s budget deficit. As mentioned, New York already faces a $4 billion deficit for the fiscal year that starts April 1st. Changes resulting from the deal struck between President Trump and the Congress will make that worse. Undoubtedly, some New Yorkers will win and some will lose under the plan, but the immediate impact on the state’s finances will be negative.

The nation’s already enormous budget shortfall will be gargantuan once the new tax plan kicks in – it is estimated that the federal tax changes will increase the nation’s debt by $1.5 trillion over the next decade. The resulting deficits will create enormous pressure to cut domestic programs, many of which benefit people in the state. Under a 2010 law, the increased deficit could force automatic spending cuts to Medicare and other programs, many of which New York relies upon to help their poorest residents.

In addition, the deficit likely increase pressure on important health programs. For example, it is estimated that a $1 billion hole could result if the feds defunds a portion of the state’s Basic Health Plan, which provides low-cost health insurance to residents earning less than twice the federal poverty level. And, in March, the state will run out funds for Children’s Health Insurance Plan (CHIP), a joint state-federal healthcare program, if it is not renewed by Congress. The state relies on $1 billion in federal CHIP funds to insure 330,000 children.

The question will be, will the state make up the difference? And if so, that will add significant pressure to a state budget already straining under its own deficit.

“Shadow 3”: The governor, the state Comptroller, the Attorney General and all state legislators are up for re-election this year. How will elected officials crow about their successes if they have to cut deeply into popular programs? Of course, they will do all they can to blame the President and the Congress —with considerable justification, as mentioned earlier. But budget cuts usually leave voters in a surly mood – not one that incumbents like to face in an election year.

“Shadow 4”: Corruption. In each month for the first six months of 2018, there will be another corruption trial beginning. It starts this month with a former top aide to the governor facing trial. His associate and another close ally of the governor have already pleaded guilty and are cooperating with prosecutors. In all of these cases the defendant is entitled to a presumption of innocence, and may all be ultimately vindicated.

But the spectacle of the trials and the revelations of Albany’s unseemly political behaviors will likely be distasteful to New Yorkers. And this is an election year.

There will be lots of issues tackled this legislative session, some issues that are known and still that are unknown. But those four “shadows” will float over and likely impact the session. How the governor and state lawmakers react to them will likely set the stage for the November elections, which coincides with the mid-term elections for Congress and will be viewed as a referendum on the Trump administration.

It is important that New Yorkers demand more openness, honesty, and fairness of Albany’s political class as this tough session runs its course. Hope springs eternal at the beginning of the New Year for more open, accountable and responsive government at all levels.

Blair Horner is executive director of the New York Public Interest Research Group.

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