WEBVTT - New York State Comptroller Thomas DiNapoli Talks State Reserves 

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Federal funding cuts from

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<v Speaker 1>President Trump's One Big Beautiful Bill are worsening New York

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<v Speaker 1>State's finances. According to our next guests, the state's deficit

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<v Speaker 1>jumps to thirty four billion dollars over three years now

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<v Speaker 1>as a share of total spending, that would be the

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<v Speaker 1>biggest since the global financial crisis. I'm pleased to welcome

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<v Speaker 1>back Thomas Napoli, Controller of the State of New York,

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<v Speaker 1>to Bloomberg headquarters. So a thirty four billion dollar shortfall

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<v Speaker 1>gets your attention. And that's assuming that New York States

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<v Speaker 1>revenues and expenses are coming in as expected. How does

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<v Speaker 1>revenue and expenses look so far this fiscal year as

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<v Speaker 1>compared to projections.

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<v Speaker 2>Well, actually, this year's looking a little better, at least

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<v Speaker 2>as far as the first quarter, looking at the July numbers,

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<v Speaker 2>so we're coming in higher than projected.

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<v Speaker 3>So that's good news really for the coming year.

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<v Speaker 2>In our fiscal year started April first, it looks like

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<v Speaker 2>the current year budget.

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<v Speaker 3>Will hold together.

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<v Speaker 2>The most immediate impact of the federal change is one

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<v Speaker 2>hundred and fifty million dollars hit as far as healthcare

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<v Speaker 2>in this year's budget when you look at the first

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<v Speaker 2>quarter numbers, we were up about five hundred and eighty million,

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<v Speaker 2>So you know, assuming the economy holds up, we should

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<v Speaker 2>be able to manage it. The problem is those out

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<v Speaker 2>year budget gaps, as you point out, thirty four billion.

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<v Speaker 3>In the out years, and that thirty four.

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<v Speaker 2>Billion does not include the full impact of the restructuring

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<v Speaker 2>of the federal State relationship, which is going to have

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<v Speaker 2>an ongoing negative impact as far as federal receipts that

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<v Speaker 2>we've depended on for many years, particularly on healthcare, So.

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<v Speaker 1>It doesn't reflect that. At what point do you get

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<v Speaker 1>clarity on that?

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<v Speaker 2>Well, I think we're still trying to analyze the fine print.

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<v Speaker 2>I mean, I think for next year, certainly on healthcare alone,

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<v Speaker 2>you're talking about at least three billion dollar hit, you know,

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<v Speaker 2>for next year, So that could make that gap even

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<v Speaker 2>larger than we have already talking about over seven billion

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<v Speaker 2>dollar gap at least for the next year. But a

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<v Speaker 2>cumulu thirty four billion is really of great concern. What

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<v Speaker 2>it really means is we need to start planning now

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<v Speaker 2>so that we can avoid the kinds of change is

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<v Speaker 2>either in terms of cuts or revenue impact that could

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<v Speaker 2>hurt new Yorkers.

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<v Speaker 1>Let me just stick on a healthcare system for a

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<v Speaker 1>bit here, because there are different estimates for how much

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<v Speaker 1>the One Big Beautiful Bill will affect in New York State,

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<v Speaker 1>and Governor Kathy Holko had said that it would cost

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<v Speaker 1>been your healthcare system about thirteen billion dollars a year.

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<v Speaker 1>What is your estimate?

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<v Speaker 2>I would go along with that estimate, And I think

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<v Speaker 2>part of what you have to consider as well is

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<v Speaker 2>not just the direct impact of the cuts and some

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<v Speaker 2>of the administrative costs. It'll be increase, but we anticipate

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<v Speaker 2>that one to a half billion New Yorkers could lose

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<v Speaker 2>health care coverage. What's going to happen in terms of

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<v Speaker 2>the quality of their life? And if folks don't have

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<v Speaker 2>health care coverage, they're still going to show up at

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<v Speaker 2>the hospital emergency room if they're not covered, going to

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<v Speaker 2>have to be paid for somehow. So there may be

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<v Speaker 2>additional costs that we're not factoring in yet. So there's

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<v Speaker 2>still a lot of uncertainty. Most of it, though, is

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<v Speaker 2>going to be on the negative side.

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<v Speaker 1>So as a state doing enough to prepare itself for

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<v Speaker 1>our potential massive cuts to all the services that it

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<v Speaker 1>does provide.

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<v Speaker 3>You know, the state is not to be able to

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<v Speaker 3>backstop all the cuts.

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<v Speaker 2>We just talked about healthcare, but the nutrition programs, the

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<v Speaker 2>SNAP program, what we used to call food stamps, is

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<v Speaker 2>a big area. The changes as far as some of

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<v Speaker 2>the energy programs, some of what we had been expecting

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<v Speaker 2>for infrastructure dealing with climate change.

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<v Speaker 3>You accumulate all of that.

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<v Speaker 2>I mean, you could be talking about tens of billions

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<v Speaker 2>dollars in terms of.

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<v Speaker 3>Long term cuts.

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<v Speaker 2>I wish we had taken a few more steps to

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<v Speaker 2>building contingencies in this year's budget. We do have some reserves,

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<v Speaker 2>but we're not going to be able to backstop all

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<v Speaker 2>of the shortfall that we're anticipating.

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<v Speaker 1>So Governor Hockle has said that she will not approvent

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<v Speaker 1>any tax hikes in the coming year. But with a

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<v Speaker 1>three four billion dollar budget hole over three years, does

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<v Speaker 1>the state need to raise taxes in coming years?

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<v Speaker 2>That's going to be the negotiation between the legislation the governor.

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<v Speaker 2>I mean, obviously, we do have a concern in New

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<v Speaker 2>York about taxpayer migration. That has been an issue. We

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<v Speaker 2>don't want to lose our taxpayers. We depend very much

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<v Speaker 2>on the revenues coming out of Wall Street, so we

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<v Speaker 2>hope despite all of the uncertainty, I think Wall Street

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<v Speaker 2>still seems to be doing okay. We get tremendous tax

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<v Speaker 2>revenue from Wall Street, so we hope those markets will

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<v Speaker 2>stay strong. So I think what you're going to see

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<v Speaker 2>for next year is we start the budget process.

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<v Speaker 3>It'll kickoff in November.

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<v Speaker 2>Certainly when the legislature of the governor ricaven in January,

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<v Speaker 2>they're going to have I think a much tougher negotiation

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<v Speaker 2>on the budget, on spending questions, on revenue questions, and

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<v Speaker 2>I hope we don't resort to more debt as a

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<v Speaker 2>way to solve some of these issues.

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<v Speaker 3>Right.

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<v Speaker 1>Well, I mean this also opens a door for a

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<v Speaker 1>lot of other voices here, and I'm thinking here of

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<v Speaker 1>the New York City mayoral candidate Zoramamdanni. He want a

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<v Speaker 1>broad swath of support on his proposal to raise taxes

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<v Speaker 1>on the rich. And given these kinds of thirty four

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<v Speaker 1>billion dollars shortfall headlines, do you support that proposal? Donnie's proposal?

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<v Speaker 2>Well, one of the dage being controllers, I don't have

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<v Speaker 2>a vote in any of this. What I do say

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<v Speaker 2>is that the budget has to be balanced. So either

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<v Speaker 2>you're going to if we have a shortfall, you have

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<v Speaker 2>to either cut programs or you're gonna have to raise revenue,

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<v Speaker 2>whether that's income taxes or other kind of taxes. I'm

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<v Speaker 2>hoping we also start to be a little smarter about

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<v Speaker 2>how we spend our money, because there are ways to

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<v Speaker 2>save money without hurting services, without hurting people. I always say,

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<v Speaker 2>just look at our control or what it's on. The

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<v Speaker 2>Medicaid program is one way to save significant amounts of money.

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<v Speaker 2>But you know, keep in mind, for New York City,

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<v Speaker 2>the state legislation, the governor would have to approve any

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<v Speaker 2>tax hick as far as synchrome tax, so that proposal

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<v Speaker 2>will be part of the broader negotiation. Assuming that proposal

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<v Speaker 2>comes up again, we'll see what happens in the mayoral

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<v Speaker 2>election this year.

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<v Speaker 1>All right, Thomas and Napoli, thank you so much for

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<v Speaker 1>joining us. He is a comptroller of the State of

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<v Speaker 1>New York warning about this thirty four billion dollars shortfall

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<v Speaker 1>over the next three years.