New York lawmakers are at odds over the state’s budget for fiscal year 2025. The $233 billion budget is already late as the legislature continues to disagree over non-spending issues, such as housing, and whether or not to spend more – a motion many experts oppose. Here’s what you need to know about New York’s budget problem.
State Budget Was Due April 1
The state budget was initially due on April 1, one day after Easter Sunday, but the legislature couldn’t come to an agreement by that deadline. Negotiations are ongoing between the Democratic leaders of the Senate and Assembly and Hochul.
The deadline was extended to April 4 before being extended a second time until April 8. They might not have anything to show for it yet, but lawmakers are urging citizens that talks have been productive – housing and education are currently holding things up.
Gov. Kathy Hochul Wants To Spend More
New York Gov. Kathy Hochul has given residents conflicting messages over the past few months. While she says the state needs to avoid spending money it doesn’t have, she also has a plan to increase spending – albeit in the right areas.
“We can’t spend like there’s no tomorrow, because tomorrow always comes,” she said in January. She also wants to ‘make New York more affordable, more livable and safer,’ but some people are wondering if the state has money to spend.
New York Post Issues Stern Warning
In an article published by the New York Post on Sunday (April 7), writer Nicole Gelinas issued a stern warning to Gov. Hochul and those involved in the negotiation process. “Nobody is asking: Where does the money come from?” she wrote in response to the spending increase.
“They should because New York’s cash cow — Wall Street — has been finding greener pastures,” she wrote – highlighting just how heavily the state relies on on tax collections from Wall Street. Unfortunately, the securities industry in New York is dwindling – and here’s why.
1. Pre-Tax Profits Have Softened
In 2021, the securities industry – an umbrella term for businesses involved in trading, issuing, and regulating stocks and bonds – in New York hit a record of $58.4 billion in pre-tax profits.
The trillions of dollars the Trump and Biden Administrations poured into the economy during the pandemic played a big part in that, but those profits are dwindling – down to $25.8 billion in 2022 and $26.4 billion in 2023.
2. High-Paid NY Workers’ Bonuses Fell
In 2023, average estimated bonuses on Wall Street fell 2% from a year ago and are down more than $60,000 compared to 2021 – when bonuses hit a record $240,400. Unfortunately for New York’s high-paid workers, that number fell to $180,000 in 2022 and $176,000 in 2023.
The good news here is that the state budgeted for an even larger decline, so the blowback isn’t going to hurt the state and city as much as many people anticipate. Still, people aren’t going to want to work in New York if that bonus continues to decline.
3. Tax Revenues Are Shrinking
On March 19, state comptroller Thomas P. DiNapoli confirmed that New York earned a record $28.8 billion in tax revenues from Wall Street in fiscal year 2023 – $6.4 billion of which came from New York City.
“That haul represented a full 27.4% of state taxes — mostly paid in nosebleed personal-income taxes on bonuses and salaries, via the 10.9% state levy on top earners (and an additional 3.9% city level),” Gelinas said – adding that those tax revenues are now shrinking.
4. Securities Industry Sheds Jobs In NY
To make matters worse, Gelinas highlighted the fact that the securities industry in New York is actually shrinking. The city shed approximately 5,200 jobs in the industry in 2023, which represents nearly 3% of industry positions.
If you look at the past 10 years, the state added just 11.5% more jobs to its securities industry. An increase is always good, but it doesn’t quite fall in line with the 28.7% growth the rest of the country saw.
5. Securities Industry Experiencing Growth Elsewhere
While New York lost a little more than 5,000 jobs in the securities industry last year, their 2.7% decrease was nothing compared to the 3.4% increase the United States saw as a whole – an increase of more than 30,000 jobs.
“The national landscape of the securities industry has changed significantly over the past 10 years,” the Securities Industry and Financial Markets Association said – adding that a majority of the growth is happening outside of New York.
Lawmakers Are Focused On The Wrong Things
To conclude her opinion in the New York Post, Gelinas argued that the state budget being delayed would be fine if lawmakers were concerned about these growing trends. Unfortunately, that doesn’t seem to be the case.
“Instead, they’re obliviously preparing their next round of milking while the cow is already partway out the barn door,” she wrote – adding that New York needs to ‘provide a better quality of life for the taxes the state and city levy, to retain higher-income people.’
New York Losing Federal Aid
In a January post, Gelinas also highlighted the sudden drop in federal aid coming into New York recently – from a high of $89.3 billion this year to $84.6 billion. That drop means New York has less of a budget to work with compared to other recent years.
For context, New York is one of the states that receive the most federal aid from the government – only California and Texas can compare.
Lawmakers Pass Another State Budget Extender
On April 8, New York lawmakers agreed to a third state budget extender – this time extending the budget deadline through Thursday (April 11). They also agreed to fund pay for state employees through next Tuesday (April 16).
Lawmakers will continue to negotiate and debate over the next couple of days as they work towards approving a state budget for fiscal year 2025. They have sessions scheduled for Tuesday and Friday, and another extender is likely.
Gov. Hochul In Niagara Falls To See Solar Eclipse
New York residents shouldn’t expect any updates until Tuesday. Gov. Kathy Hochul – and hundreds of thousands of others – are gathering in Niagara Falls to watch the 2024 solar eclipse (if the weather allows for it).
“We’ll have incredible visibility here. This total eclipse will pass through some of the most beautiful backdrops our state has to offer from state parks the gorgeous Adirondack mountains, the shores of Lake Erie Lake Erie and Lake Ontario, and of course breathtaking Niagara Falls,” said Hochul, D-New York.
