Additionally, DOB Releases Preliminary Economic Impact Assessment by the Boston Consulting Group on the effects of the COVID-19 Pandemic on the State Economy
The New York State Division of the Budget announced today the FY 2021 Enacted State Budget Financial Plan, which projects a $13.3 billion shortfall, or 14%, in revenue from the Executive Budget Forecast released in January and estimates a $61 billion decline through FY 2024 as a direct consequence of the COVID-19 pandemic. As a result, in the absence of Federal assistance, initial budget control actions outlined in the Financial Plan will reduce spending by $10.1 billion from the Executive Budget. This represents a $7.3 billion reduction in state spending from FY 2020 levels.
Released with the Financial Plan is an assessment of the pandemic’s impact on the New York State economy developed by Boston Consulting Group at the State’s request. Prior to March 2020, under Governor Cuomo’s leadership, New York enjoyed a decade of prosperity. During that decade, 1.3 million jobs were created — a 20% increase in private sector employment — to reach a record high as unemployment dropped from 8.9% to 3.7% and wages rose by 47%. However, now, as a result of the COVID-19 pandemic, New York State’s economy will lose $243 billion over the course of the full recovery, the equivalent of 14% of the State’s Gross Domestic Product (GDP). The COVID-19 recession will be deeper and the recovery longer than the 2008 Great Recession and the recession that followed the terrorist attacks of September 11, 2011.
The BCG assessment aligns with DOB’s economic projections and revenue estimates that it will drop by $13.3 billion this fiscal year and $61 billion over the next four years.
"Above all, our efforts to stop the spread of the virus are working to save lives, and now we are also addressing the economic realities the pandemic is causing as we move New York forward and build back better than before," said Robert Mujica, New York State Budget Director. "Unlike the federal government`, New York State must balance its budget and in the absence of federal assistance, we will have to make deep cuts which could impact a broad range of services. New York reflects 8% of U.S. GDP, and without federal support our ability to help lead the nation to economic recovery will be weakened."
The $10.1 billion in spending reductions from the levels proposed in the Executive Budget include an $8.2 billion reduction in "aid-to-localities," a broad spending category that includes funding for health care, K-12 schools, and higher education as well as support for local governments, public transit systems, and the State’s not-for-profit partners who deliver critical services to the most vulnerable New Yorkers. State agency operations will be reduced by 10%, along with other savings.
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