“The state Legislature and Governor agreed on a new state budget as the state is struggling to recover from the economic devastation caused by COVID-19. More than a year into the pandemic, the number of cases remains high in New York but the accelerated pace of vaccinations and job growth in many sectors indicate an improving economic outlook. We are not out of the woods, and we must remain cautious as there is still uncertainty about the epidemic and the trajectory and equity of the recovery.
“The budget includes significant new resources from federal aid and from tax increases. Higher personal income tax rates on high-income taxpayers will likely increase the volatility of personal income tax collections, and will make combined state and local rates for New York City high-income earners the highest in the nation. Effects on the recovery of New York City and on the state and city budgets must be monitored closely.
“New revenues will support investments in education and health care programs, provide benefits to the middle class, and importantly offer relief to New Yorkers and small businesses who need it, including workers who have been excluded from federal stimulus aid. Helping struggling New Yorkers is essential for an equitable recovery.
“While much of the new resources may be temporary and necessary to meet current needs, it is important that spending not grow to unsustainable levels. The state must plan for the end of emergency federal aid and use new tax resources to fund essential services, to once again begin contributing to rainy day funds and to reduce projected out-year gaps. Long-term alignment of recurring revenues with recurring spending is essential to putting New York’s fiscal house in order.
“My office’s full analysis of the enacted state budget will be released in the following weeks.”