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