I am pleased to present the State of New York’s Financial Condition Report for the fiscal year ended March 31, 2017.
New York State’s short-term financial condition has improved in recent years, but concerns are on the horizon. As the United States enters its ninth year of economic expansion, New York faces increasing fiscal challenges. The State’s latest financial projections contain projected budget gaps in the next three fiscal years that average more than $5.9 billion annually before potential gap-closing actions.
As of March 31, 2017, the General Fund cash balance was $7.7 billion. Largely reflecting monetary settlements received since 2014, this amount is substantially higher than the balances in the years during and after the Great Recession. However, the State’s budgetary cushion is shrinking; the Enacted Budget Financial Plan projects that the General Fund balance will be one-third lower at the end of the current fiscal year than its recent peak two years ago.
As of the end of State Fiscal Year (SFY) 2016-17, the State had spent nearly $1.6 billion of its recent settlement resources on various forms of budget relief. Non-recurring resources, such as these monetary settlements, are most appropriately used for essential capital investments or other one-time purposes, rather than to fund recurring budget needs.
The State reported a General Fund operating deficit of $2.8 billion in its March 31, 2017 GAAP Basis Financial Statements, reducing the fund balance to $2.3 billion. New York State’s overall net position, a broader measure of financial condition, declined to $28.9 billion—$3.9 billion less than the previous year. The State’s net position continues to be negatively impacted by operating deficits, past borrowing for non-capital purposes, and growing unfunded liabilities for other postemployment benefits (OPEB).
The State’s primary revenue sources continue to be federal grants and the personal income tax, both of which are subject to uncertainty. Currently, leaders in Washington are considering substantial cuts to federal aid for health care and other services. Given that the State relies on this aid for over one-third of its revenues, the unpredictable nature of federal budget and policy discussions presents an elevated concern.
The State had $56.2 billion in debt outstanding reported in accordance with GAAP on March 31, 2017, billions of which was issued without creating a corresponding State capital asset. Debt capacity under the State’s statutory cap is projected to decline to only $88 million in SFY 2020-21. At a time when New York’s needs for capital investment are increasing, effective management of debt and capital resources is especially vital.
We produce this report to help residents learn more about the fiscal, economic and social challenges facing New York. It is my hope that an informed discussion will help our great State build on its tremendous assets, and make sound decisions to promote a healthy financial condition that benefits all New Yorkers.
Thomas P. DiNapoli