Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Federal funding cuts from
Speaker 1: President Trump's One Big Beautiful Bill are worsening New York
Speaker 1: State's finances. According to our next guests, the state's deficit
Speaker 1: jumps to thirty four billion dollars over three years now
Speaker 1: as a share of total spending, that would be the
Speaker 1: biggest since the global financial crisis. I'm pleased to welcome
Speaker 1: back Thomas Napoli, Controller of the State of New York,
Speaker 1: to Bloomberg headquarters. So a thirty four billion dollar shortfall
Speaker 1: gets your attention. And that's assuming that New York States
Speaker 1: revenues and expenses are coming in as expected. How does
Speaker 1: revenue and expenses look so far this fiscal year as
Speaker 1: compared to projections.
Speaker 2: Well, actually, this year's looking a little better, at least
Speaker 2: as far as the first quarter, looking at the July numbers,
Speaker 2: so we're coming in higher than projected.
Speaker 3: So that's good news really for the coming year.
Speaker 2: In our fiscal year started April first, it looks like
Speaker 2: the current year budget.
Speaker 3: Will hold together.
Speaker 2: The most immediate impact of the federal change is one
Speaker 2: hundred and fifty million dollars hit as far as healthcare
Speaker 2: in this year's budget when you look at the first
Speaker 2: quarter numbers, we were up about five hundred and eighty million,
Speaker 2: So you know, assuming the economy holds up, we should
Speaker 2: be able to manage it. The problem is those out
Speaker 2: year budget gaps, as you point out, thirty four billion.
Speaker 3: In the out years, and that thirty four.
Speaker 2: Billion does not include the full impact of the restructuring
Speaker 2: of the federal State relationship, which is going to have
Speaker 2: an ongoing negative impact as far as federal receipts that
Speaker 2: we've depended on for many years, particularly on healthcare, So.
Speaker 1: It doesn't reflect that. At what point do you get
Speaker 1: clarity on that?
Speaker 2: Well, I think we're still trying to analyze the fine print.
Speaker 2: I mean, I think for next year, certainly on healthcare alone,
Speaker 2: you're talking about at least three billion dollar hit, you know,
Speaker 2: for next year, So that could make that gap even
Speaker 2: larger than we have already talking about over seven billion
Speaker 2: dollar gap at least for the next year. But a
Speaker 2: cumulu thirty four billion is really of great concern. What
Speaker 2: it really means is we need to start planning now
Speaker 2: so that we can avoid the kinds of change is
Speaker 2: either in terms of cuts or revenue impact that could
Speaker 2: hurt new Yorkers.
Speaker 1: Let me just stick on a healthcare system for a
Speaker 1: bit here, because there are different estimates for how much
Speaker 1: the One Big Beautiful Bill will affect in New York State,
Speaker 1: and Governor Kathy Holko had said that it would cost
Speaker 1: been your healthcare system about thirteen billion dollars a year.
Speaker 1: What is your estimate?
Speaker 2: I would go along with that estimate, And I think
Speaker 2: part of what you have to consider as well is
Speaker 2: not just the direct impact of the cuts and some
Speaker 2: of the administrative costs. It'll be increase, but we anticipate
Speaker 2: that one to a half billion New Yorkers could lose
Speaker 2: health care coverage. What's going to happen in terms of
Speaker 2: the quality of their life? And if folks don't have
Speaker 2: health care coverage, they're still going to show up at
Speaker 2: the hospital emergency room if they're not covered, going to
Speaker 2: have to be paid for somehow. So there may be
Speaker 2: additional costs that we're not factoring in yet. So there's
Speaker 2: still a lot of uncertainty. Most of it, though, is
Speaker 2: going to be on the negative side.
Speaker 1: So as a state doing enough to prepare itself for
Speaker 1: our potential massive cuts to all the services that it
Speaker 1: does provide.
Speaker 3: You know, the state is not to be able to
Speaker 3: backstop all the cuts.
Speaker 2: We just talked about healthcare, but the nutrition programs, the
Speaker 2: SNAP program, what we used to call food stamps, is
Speaker 2: a big area. The changes as far as some of
Speaker 2: the energy programs, some of what we had been expecting
Speaker 2: for infrastructure dealing with climate change.
Speaker 3: You accumulate all of that.
Speaker 2: I mean, you could be talking about tens of billions
Speaker 2: dollars in terms of.
Speaker 3: Long term cuts.
Speaker 2: I wish we had taken a few more steps to
Speaker 2: building contingencies in this year's budget. We do have some reserves,
Speaker 2: but we're not going to be able to backstop all
Speaker 2: of the shortfall that we're anticipating.
Speaker 1: So Governor Hockle has said that she will not approvent
Speaker 1: any tax hikes in the coming year. But with a
Speaker 1: three four billion dollar budget hole over three years, does
Speaker 1: the state need to raise taxes in coming years?
Speaker 2: That's going to be the negotiation between the legislation the governor.
Speaker 2: I mean, obviously, we do have a concern in New
Speaker 2: York about taxpayer migration. That has been an issue. We
Speaker 2: don't want to lose our taxpayers. We depend very much
Speaker 2: on the revenues coming out of Wall Street, so we
Speaker 2: hope despite all of the uncertainty, I think Wall Street
Speaker 2: still seems to be doing okay. We get tremendous tax
Speaker 2: revenue from Wall Street, so we hope those markets will
Speaker 2: stay strong. So I think what you're going to see
Speaker 2: for next year is we start the budget process.
Speaker 3: It'll kickoff in November.
Speaker 2: Certainly when the legislature of the governor ricaven in January,
Speaker 2: they're going to have I think a much tougher negotiation
Speaker 2: on the budget, on spending questions, on revenue questions, and
Speaker 2: I hope we don't resort to more debt as a
Speaker 2: way to solve some of these issues.
Speaker 3: Right.
Speaker 1: Well, I mean this also opens a door for a
Speaker 1: lot of other voices here, and I'm thinking here of
Speaker 1: the New York City mayoral candidate Zoramamdanni. He want a
Speaker 1: broad swath of support on his proposal to raise taxes
Speaker 1: on the rich. And given these kinds of thirty four
Speaker 1: billion dollars shortfall headlines, do you support that proposal? Donnie's proposal?
Speaker 2: Well, one of the dage being controllers, I don't have
Speaker 2: a vote in any of this. What I do say
Speaker 2: is that the budget has to be balanced. So either
Speaker 2: you're going to if we have a shortfall, you have
Speaker 2: to either cut programs or you're gonna have to raise revenue,
Speaker 2: whether that's income taxes or other kind of taxes. I'm
Speaker 2: hoping we also start to be a little smarter about
Speaker 2: how we spend our money, because there are ways to
Speaker 2: save money without hurting services, without hurting people. I always say,
Speaker 2: just look at our control or what it's on. The
Speaker 2: Medicaid program is one way to save significant amounts of money.
Speaker 2: But you know, keep in mind, for New York City,
Speaker 2: the state legislation, the governor would have to approve any
Speaker 2: tax hick as far as synchrome tax, so that proposal
Speaker 2: will be part of the broader negotiation. Assuming that proposal
Speaker 2: comes up again, we'll see what happens in the mayoral
Speaker 2: election this year.
Speaker 1: All right, Thomas and Napoli, thank you so much for
Speaker 1: joining us. He is a comptroller of the State of
Speaker 1: New York warning about this thirty four billion dollars shortfall
Speaker 1: over the next three years.