A look at the impact on state finances due to coronavirus

Coronavirus

ALBANY, N.Y. (NEWS10) — With the spread of the coronavirus in New York State, some are worried what impact it might have on the state’s budget and finances.

A reporter asked Gov. Andrew Cuomo if the state’s revenue picture might need to be adjusted in the short-term due to the coronavirus.

“Nobody knows, right?” he responded. “I mean, if we knew what the financial impact was going to be two weeks down the road, two months down the road, we’d all be in a different job.”

Dave Friedfel with the Citizens Budget Commission said, when it comes to the state spending and revenue side of the issue, the bigger concern right now is revenue.

“Anytime there’s a significant economic or financial issue worldwide, it has a disproportionate impact on New York State’s finances because we get so much of our income from personal income taxes paid from Wall Street, really,” he said.

The state’s budget deadline for the upcoming fiscal year is now about three weeks away.

An updated Executive Budget Financial Plan report from the New York State Division of the Budget notes:

“The coronavirus and weakening global growth are likely to contribute to volatility and to restrain equity market growth over the near term.”

“We’ve seen a lot of volatility there over the last few weeks, and when there’s volatility frequently, you end up with lower revenue projections than you would have expected otherwise,” Friedfel said.

Currently, Friedfel said the state has about $4 billion set aside in rainy day funds. And in the event of a recession:

“We would expect a recession to decrease revenues by about $34 billion over three years, so it’s a touch more than 10 percent of what the state is actually going to need,” he said.

Earlier this week, the state approved legislation for $40 million towards fighting the coronavirus.

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