New York has embarked on a new era of state and local fiscal policy. At the state level, the Governor and the Legislature have agreed on major policy changes that establish budget balance as the State’s top fiscal goal, and reduce projected gaps in the coming years. This is important progress, because it diminishes the likelihood of unexpected, dramatic budget changes that can harm essential services and add needlessly to the burden on taxpayers.
At the same time, we face lingering challenges. These include New York’s shrinking debt capacity—which is already limiting our long-term capital investments—and our constrained ability to provide resources for education and other current service needs. Meanwhile, more than three years after the Great Recession finally ended, many local governments and school districts in the state face increasingly critical budget challenges. Economic factors including Upstate’s long-term loss of population and manufacturing jobs, declining property values in some regions, stagnant or declining state aid, a new property tax cap, and—in some cases—poor fiscal planning have produced widespread fiscal stress. Tough choices are confronting local officials and the people they serve, as tight budgets require difficult and often unpopular decisions regarding reductions in services, increased taxes and fees, or both.