NY Budget Faces 'Drastic' Cuts Amid Coronavirus Outbreak: Cuomo

NEW YORK, NY — Gov. Andrew Cuomo is preparing to introduce "dramatic" cuts as Albany enters budget negotiations at a time when the state government is spending money and losing revenue due to the deadly outbreak of coronavirus in New York, the governor announced Sunday.

A loss in revenue from the shutdown of New York businesses and a lack of federal aid is leaving New York with a budget shortfall of at least $10 billion to $15 billion, Cuomo and state budget director Robert Mujica said during the question-and-answer session of Cuomo's Sunday briefing on the state's efforts to battle coronavirus in New York.

"The help we were waiting for from Washington never came, now we have to make drastic cuts to the budget like you have never seen," Cuomo said Sunday, while not specifically mentioning what state services may be cut. Cuomo did say Sunday that the state will continue to pursue cuts to the state's Medicaid system, which the governor painted as reforms to reduce waste and fraud.

When asked why the state would continue to pursue the Medicaid cuts that would shift costs from the state to local governments — which could cost the state government as much as $6 billion in federal funds for healthcare during a global pandemic — Cuomo said that the effects of his restructuring plan, savings of about $2.5 billion per year, would end up brining in more money for the state in the long term. Cuomo also stated that both the state assembly and state senate supported the administration's approach on Medicaid, saying that it wasn't a "sticking point" in budget negotiations.

State budget director Robert Mujica also downplayed the amount of money available to the state through Medicaid during the federal pandemic emergency. Mujica said Sunday the amount of aid more closely resembles $4 billion, much of it would be diverted to municipalities on a local level and funding would only be given out as long as the federal state of emergency is in order, which the state has no control over.

A spokesman for Sen. Chuck Schumer said that Federal Medical Assistance Percentages for New York State and its counties was increased to 56.2%, freeing up $6.7 billion — $5.2 billion for the state and $1.5 billion for New York City — with no procedural barrier for municipalities to accept the funds. Schumer spoke with Cuomo and House Speaker Nacy Pelosi on Sunday about the Governor's concerns with the federal stimulus.

"Speaker Pelosi, Governor Cuomo, and I just had a long and productive conversation. We agreed that there is significant money for New York in the bills we passed, but that much more is needed and we will continue to work together to make that happen, and to fix New York State’s FMAP issue as well," Schumer said in a statement.

Como continued to blast federal lawmakers, specifically New York Sen. Chuck Schumer, on Sunday for passing a $2 trillion stimulus bill that the governor has previously called "terrible" for New York. The roughly $5 billion that the bill awards the state government for healthcare costs represents about 2% of the state's total annual budget. New York's funding as a percentage of its state budget ranks near the bottom of the country while the state faces, by far, more coronavirus cases than any other state, Cuomo said Sunday.

The stimulus also does nothing to make up for New York's lost revenues as a result of forcing businesses to close, Cuomo said. The $5 billion awarded to New York in the bill can only be used to cover coronavirus-related costs, making it "ironic" that healthcare funding is the least of New York's budget concerns during the pandemic, Cuomo said.

State Budget Director Robert Mujica said Sunday that the state will be forced to borrow money in the short-term to cover immediate costs associated with lost revenues and a delay in tax revenues caused by the federal government's decision to postpone the tax filing deadline. Borrowing is not an option when it comes to filling to projected $10 billion to $15 billion budget shortfall, Mujica said.

New York State's budget negotiations generally take place between January and March. The state's fiscal year officially begins on April 1. Before the coronavirus outbreak, Cuomo stated that New York faced a budget shortfall of $6 billion, which the Medicaid cuts were expected to close.

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