Good News and Bad Habits Make for an Uncertain Future

In the waiting period between Halloween and Thanksgiving, the Division of the Budget gives us something to look forward to: the mid-year update to the state’s Financial Plan. Released last week, the FY2027 mid-year update provides a new look at our state revenues, spending projections and anticipated budget gaps. Try to contain your excitement.

At 380 pages long, there’s certainly no shortage of numbers to dig through. But three things stand out in this updated picture of our state’s finances: stronger than expected revenues, smaller projected out-year budget gaps and replenished reserves. That all sounds great on paper, and it is. But the question is: What happens to all that extra revenue?

One thing Albany doesn’t need a 380-page report to tell us is that the problem isn’t bringing in revenue. It’s controlling how much we spend. All Funds spending went up $4.6 billion, and State Operating Funds went up $4.4 billion. Since Gov. Kathy Hochul took office, state spending has increased by approximately $73 billion.

In other words, just because the state has more money coming in doesn’t mean it needs to find more ways to spend it. Budget officials are warning the state to use the additional revenue to build up reserves and get ahead on debt payments. As we head into the 2027 legislative session, our state leaders have an opportunity to put this additional revenue to good use rather than create new spending obligations.

The four-year budget gap is still projected at $17.6 billion, even after being revised downward. That’s a substantial shortfall, and a reminder that the state’s fiscal challenges are far from behind us. While the improved numbers may be cause for excitement, I hope our state leaders keep their attention where it belongs: on getting spending under control.

If you have any questions or comments on this or any other state issue, or if you would like to be added to my mailing list or receive my newsletter, please contact my office. My office can be reached by mail at 19 Canalview Mall, Fulton, NY 13069 and by email at [email protected]. You may also find me, Assemblyman Will Barclay, on Facebook or X at @WillABarclay.