1 00:00:02,520 --> 00:00:08,879 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Federal funding cuts from 2 00:00:08,880 --> 00:00:11,880 Speaker 1: President Trump's One Big Beautiful Bill are worsening New York 3 00:00:11,880 --> 00:00:15,160 Speaker 1: State's finances. According to our next guests, the state's deficit 4 00:00:15,240 --> 00:00:18,120 Speaker 1: jumps to thirty four billion dollars over three years now 5 00:00:18,160 --> 00:00:20,360 Speaker 1: as a share of total spending, that would be the 6 00:00:20,440 --> 00:00:23,480 Speaker 1: biggest since the global financial crisis. I'm pleased to welcome 7 00:00:23,520 --> 00:00:26,239 Speaker 1: back Thomas Napoli, Controller of the State of New York, 8 00:00:26,440 --> 00:00:30,160 Speaker 1: to Bloomberg headquarters. So a thirty four billion dollar shortfall 9 00:00:30,240 --> 00:00:33,200 Speaker 1: gets your attention. And that's assuming that New York States 10 00:00:33,280 --> 00:00:37,560 Speaker 1: revenues and expenses are coming in as expected. How does 11 00:00:37,680 --> 00:00:40,479 Speaker 1: revenue and expenses look so far this fiscal year as 12 00:00:40,520 --> 00:00:41,560 Speaker 1: compared to projections. 13 00:00:41,720 --> 00:00:44,600 Speaker 2: Well, actually, this year's looking a little better, at least 14 00:00:44,640 --> 00:00:47,200 Speaker 2: as far as the first quarter, looking at the July numbers, 15 00:00:47,400 --> 00:00:49,160 Speaker 2: so we're coming in higher than projected. 16 00:00:49,280 --> 00:00:52,240 Speaker 3: So that's good news really for the coming year. 17 00:00:52,280 --> 00:00:55,000 Speaker 2: In our fiscal year started April first, it looks like 18 00:00:55,080 --> 00:00:56,400 Speaker 2: the current year budget. 19 00:00:56,040 --> 00:00:56,800 Speaker 3: Will hold together. 20 00:00:57,080 --> 00:01:00,120 Speaker 2: The most immediate impact of the federal change is one 21 00:01:00,200 --> 00:01:02,640 Speaker 2: hundred and fifty million dollars hit as far as healthcare 22 00:01:02,880 --> 00:01:04,959 Speaker 2: in this year's budget when you look at the first 23 00:01:05,040 --> 00:01:07,360 Speaker 2: quarter numbers, we were up about five hundred and eighty million, 24 00:01:07,480 --> 00:01:10,640 Speaker 2: So you know, assuming the economy holds up, we should 25 00:01:10,640 --> 00:01:12,479 Speaker 2: be able to manage it. The problem is those out 26 00:01:12,520 --> 00:01:16,000 Speaker 2: year budget gaps, as you point out, thirty four billion. 27 00:01:16,319 --> 00:01:19,080 Speaker 3: In the out years, and that thirty four. 28 00:01:18,880 --> 00:01:22,360 Speaker 2: Billion does not include the full impact of the restructuring 29 00:01:22,400 --> 00:01:24,880 Speaker 2: of the federal State relationship, which is going to have 30 00:01:24,959 --> 00:01:28,400 Speaker 2: an ongoing negative impact as far as federal receipts that 31 00:01:28,440 --> 00:01:31,720 Speaker 2: we've depended on for many years, particularly on healthcare, So. 32 00:01:31,640 --> 00:01:33,880 Speaker 1: It doesn't reflect that. At what point do you get 33 00:01:33,880 --> 00:01:34,560 Speaker 1: clarity on that? 34 00:01:34,920 --> 00:01:37,400 Speaker 2: Well, I think we're still trying to analyze the fine print. 35 00:01:37,680 --> 00:01:39,839 Speaker 2: I mean, I think for next year, certainly on healthcare alone, 36 00:01:39,840 --> 00:01:42,480 Speaker 2: you're talking about at least three billion dollar hit, you know, 37 00:01:42,520 --> 00:01:46,160 Speaker 2: for next year, So that could make that gap even 38 00:01:46,280 --> 00:01:48,800 Speaker 2: larger than we have already talking about over seven billion 39 00:01:48,840 --> 00:01:51,600 Speaker 2: dollar gap at least for the next year. But a 40 00:01:51,680 --> 00:01:54,800 Speaker 2: cumulu thirty four billion is really of great concern. What 41 00:01:54,800 --> 00:01:57,400 Speaker 2: it really means is we need to start planning now 42 00:01:57,920 --> 00:02:00,400 Speaker 2: so that we can avoid the kinds of change is 43 00:02:00,440 --> 00:02:02,720 Speaker 2: either in terms of cuts or revenue impact that could 44 00:02:02,760 --> 00:02:03,480 Speaker 2: hurt new Yorkers. 45 00:02:03,880 --> 00:02:06,080 Speaker 1: Let me just stick on a healthcare system for a 46 00:02:06,120 --> 00:02:08,160 Speaker 1: bit here, because there are different estimates for how much 47 00:02:08,200 --> 00:02:11,080 Speaker 1: the One Big Beautiful Bill will affect in New York State, 48 00:02:11,360 --> 00:02:13,840 Speaker 1: and Governor Kathy Holko had said that it would cost 49 00:02:14,040 --> 00:02:17,640 Speaker 1: been your healthcare system about thirteen billion dollars a year. 50 00:02:17,919 --> 00:02:19,000 Speaker 1: What is your estimate? 51 00:02:19,680 --> 00:02:22,239 Speaker 2: I would go along with that estimate, And I think 52 00:02:22,320 --> 00:02:24,360 Speaker 2: part of what you have to consider as well is 53 00:02:24,400 --> 00:02:27,680 Speaker 2: not just the direct impact of the cuts and some 54 00:02:27,760 --> 00:02:31,279 Speaker 2: of the administrative costs. It'll be increase, but we anticipate 55 00:02:31,320 --> 00:02:33,200 Speaker 2: that one to a half billion New Yorkers could lose 56 00:02:33,240 --> 00:02:35,639 Speaker 2: health care coverage. What's going to happen in terms of 57 00:02:35,680 --> 00:02:38,200 Speaker 2: the quality of their life? And if folks don't have 58 00:02:38,240 --> 00:02:40,520 Speaker 2: health care coverage, they're still going to show up at 59 00:02:40,520 --> 00:02:43,560 Speaker 2: the hospital emergency room if they're not covered, going to 60 00:02:43,560 --> 00:02:45,600 Speaker 2: have to be paid for somehow. So there may be 61 00:02:45,639 --> 00:02:49,040 Speaker 2: additional costs that we're not factoring in yet. So there's 62 00:02:49,040 --> 00:02:51,600 Speaker 2: still a lot of uncertainty. Most of it, though, is 63 00:02:51,639 --> 00:02:52,800 Speaker 2: going to be on the negative side. 64 00:02:53,040 --> 00:02:54,920 Speaker 1: So as a state doing enough to prepare itself for 65 00:02:54,919 --> 00:02:57,600 Speaker 1: our potential massive cuts to all the services that it 66 00:02:57,600 --> 00:02:59,079 Speaker 1: does provide. 67 00:02:59,120 --> 00:03:00,440 Speaker 3: You know, the state is not to be able to 68 00:03:00,480 --> 00:03:01,440 Speaker 3: backstop all the cuts. 69 00:03:01,480 --> 00:03:04,200 Speaker 2: We just talked about healthcare, but the nutrition programs, the 70 00:03:04,200 --> 00:03:06,200 Speaker 2: SNAP program, what we used to call food stamps, is 71 00:03:06,240 --> 00:03:08,200 Speaker 2: a big area. The changes as far as some of 72 00:03:08,240 --> 00:03:10,680 Speaker 2: the energy programs, some of what we had been expecting 73 00:03:10,680 --> 00:03:12,800 Speaker 2: for infrastructure dealing with climate change. 74 00:03:12,800 --> 00:03:13,839 Speaker 3: You accumulate all of that. 75 00:03:14,120 --> 00:03:15,799 Speaker 2: I mean, you could be talking about tens of billions 76 00:03:15,880 --> 00:03:17,040 Speaker 2: dollars in terms of. 77 00:03:16,960 --> 00:03:17,880 Speaker 3: Long term cuts. 78 00:03:18,440 --> 00:03:20,280 Speaker 2: I wish we had taken a few more steps to 79 00:03:20,320 --> 00:03:23,520 Speaker 2: building contingencies in this year's budget. We do have some reserves, 80 00:03:23,919 --> 00:03:25,639 Speaker 2: but we're not going to be able to backstop all 81 00:03:25,680 --> 00:03:27,320 Speaker 2: of the shortfall that we're anticipating. 82 00:03:27,720 --> 00:03:30,000 Speaker 1: So Governor Hockle has said that she will not approvent 83 00:03:30,040 --> 00:03:32,120 Speaker 1: any tax hikes in the coming year. But with a 84 00:03:32,160 --> 00:03:34,720 Speaker 1: three four billion dollar budget hole over three years, does 85 00:03:34,720 --> 00:03:36,680 Speaker 1: the state need to raise taxes in coming years? 86 00:03:37,000 --> 00:03:39,960 Speaker 2: That's going to be the negotiation between the legislation the governor. 87 00:03:40,000 --> 00:03:41,800 Speaker 2: I mean, obviously, we do have a concern in New 88 00:03:41,880 --> 00:03:44,840 Speaker 2: York about taxpayer migration. That has been an issue. We 89 00:03:44,880 --> 00:03:47,560 Speaker 2: don't want to lose our taxpayers. We depend very much 90 00:03:47,600 --> 00:03:49,400 Speaker 2: on the revenues coming out of Wall Street, so we 91 00:03:49,480 --> 00:03:52,080 Speaker 2: hope despite all of the uncertainty, I think Wall Street 92 00:03:52,080 --> 00:03:54,520 Speaker 2: still seems to be doing okay. We get tremendous tax 93 00:03:54,520 --> 00:03:56,600 Speaker 2: revenue from Wall Street, so we hope those markets will 94 00:03:56,600 --> 00:03:58,839 Speaker 2: stay strong. So I think what you're going to see 95 00:03:58,840 --> 00:04:00,640 Speaker 2: for next year is we start the budget process. 96 00:04:00,680 --> 00:04:01,920 Speaker 3: It'll kickoff in November. 97 00:04:02,240 --> 00:04:05,040 Speaker 2: Certainly when the legislature of the governor ricaven in January, 98 00:04:05,120 --> 00:04:07,400 Speaker 2: they're going to have I think a much tougher negotiation 99 00:04:07,520 --> 00:04:11,000 Speaker 2: on the budget, on spending questions, on revenue questions, and 100 00:04:11,040 --> 00:04:12,760 Speaker 2: I hope we don't resort to more debt as a 101 00:04:12,760 --> 00:04:14,680 Speaker 2: way to solve some of these issues. 102 00:04:14,840 --> 00:04:15,040 Speaker 3: Right. 103 00:04:15,520 --> 00:04:18,080 Speaker 1: Well, I mean this also opens a door for a 104 00:04:18,120 --> 00:04:20,400 Speaker 1: lot of other voices here, and I'm thinking here of 105 00:04:20,400 --> 00:04:23,560 Speaker 1: the New York City mayoral candidate Zoramamdanni. He want a 106 00:04:23,560 --> 00:04:27,040 Speaker 1: broad swath of support on his proposal to raise taxes 107 00:04:27,080 --> 00:04:29,560 Speaker 1: on the rich. And given these kinds of thirty four 108 00:04:29,560 --> 00:04:35,200 Speaker 1: billion dollars shortfall headlines, do you support that proposal? Donnie's proposal? 109 00:04:35,640 --> 00:04:37,320 Speaker 2: Well, one of the dage being controllers, I don't have 110 00:04:37,320 --> 00:04:39,240 Speaker 2: a vote in any of this. What I do say 111 00:04:39,360 --> 00:04:41,800 Speaker 2: is that the budget has to be balanced. So either 112 00:04:41,839 --> 00:04:44,360 Speaker 2: you're going to if we have a shortfall, you have 113 00:04:44,400 --> 00:04:47,560 Speaker 2: to either cut programs or you're gonna have to raise revenue, 114 00:04:47,560 --> 00:04:50,039 Speaker 2: whether that's income taxes or other kind of taxes. I'm 115 00:04:50,040 --> 00:04:52,200 Speaker 2: hoping we also start to be a little smarter about 116 00:04:52,240 --> 00:04:54,479 Speaker 2: how we spend our money, because there are ways to 117 00:04:54,520 --> 00:04:58,120 Speaker 2: save money without hurting services, without hurting people. I always say, 118 00:04:58,120 --> 00:04:59,599 Speaker 2: just look at our control or what it's on. The 119 00:04:59,600 --> 00:05:03,120 Speaker 2: Medicaid program is one way to save significant amounts of money. 120 00:05:03,360 --> 00:05:05,159 Speaker 2: But you know, keep in mind, for New York City, 121 00:05:05,800 --> 00:05:08,360 Speaker 2: the state legislation, the governor would have to approve any 122 00:05:08,760 --> 00:05:11,360 Speaker 2: tax hick as far as synchrome tax, so that proposal 123 00:05:11,400 --> 00:05:14,160 Speaker 2: will be part of the broader negotiation. Assuming that proposal 124 00:05:15,160 --> 00:05:17,239 Speaker 2: comes up again, we'll see what happens in the mayoral 125 00:05:17,240 --> 00:05:18,000 Speaker 2: election this year. 126 00:05:18,400 --> 00:05:20,680 Speaker 1: All right, Thomas and Napoli, thank you so much for 127 00:05:20,720 --> 00:05:23,000 Speaker 1: joining us. He is a comptroller of the State of 128 00:05:23,040 --> 00:05:26,080 Speaker 1: New York warning about this thirty four billion dollars shortfall 129 00:05:26,120 --> 00:05:27,599 Speaker 1: over the next three years.