ALBANY, N.Y. (NEXSTAR) — According to New York State Comptroller Thomas DiNapoli, spending outpaces revenue in the state’s $254 billion budget for the 2025 to 2026 fiscal year. A report released earlier this month and available to read at the bottom of this story evaluates future economic stability—or potential lack thereof—and how the budget came together.
The enacted budget sees a state spending increase of 5.2% overall. Meanwhile, state operating funds, covering daily government activities, grow by 9.3%. Increases include almost $40 billion for schools and over $100 billion for Medicaid. The budget also repays up to $8 billion of the state’s outstanding federal unemployment debt left over from COVID.
And the report predicts that tax collections for the 2025 to 2026 fiscal year should drop—by $474 million, or under 1%—to $117 billion. That dip follows a previous report on tax revenues are growing faster than expected .
Still, New York has a record high of over $8 billion in rainy day funds earmarked for unexpected financial issues. But with roughly a third of the state’s budget—over $90 billion—coming from federal money, New York’s emergency reserves can’t fill the gap.
Spending more money than it makes over time represents a “structural imbalance” for the state, DiNapoli said. He expressed concern over tariffs, federal funding, and changes in financial markets. Declining tourism could also hurt the state through lower sales taxes on hotels and restaurants, with those industries having lost over 11,000 jobs since the beginning of 2025.
Beyond the numbers, DiNapoli also offered criticism of the budget process generally, noting that it was over a month late while still being rushed, with lawmakers getting less than a day to read and vote on several long, complicated bills. The comptroller called for better tactics from leadership saying in a statement, “The state needs to do what it can to stabilize finances, build reserve funds, focus on efficient service delivery, and develop a strategy for how to contend with federal changes.”
The budget funds local schools through changes in the Foundation Aid formula, cameras and other prison reforms , and a new Office of Gun Violence Prevention Supporters of the budget, including the governor’s office, argue that it softens the blow of inflation with rebates for taxpayers. But critics, particularly Republicans, have long groaned about the process, calling out a lack of transparency, expanding bottom line , and what they consider corruption .
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Take a look at the budget report below:
- Political analysis of Governor Hochul’s congressional testimony
- Comptroller raises concerns in New York State $250 billion budget
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