Despite deepening economic uncertainty and looming federal cutbacks, New York lawmakers approved the largest budget in state history—a staggering $254 billion—drawing sharp criticism from state Comptroller Tom DiNapoli, fiscal watchdogs, and legislators who call it a bloated, ideologically driven plan that lacks transparency and fiscal restraint.
In a sobering assessment of the fiscal year 2025-26 budget, DiNapoli warned that rising expenditures paired with potential federal funding losses could seriously threaten the state’s financial position in the coming months.
“The stakes are high for New York if the cuts being discussed in Washington occur,” DiNapoli said. “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.”
Instead, the newly enacted budget increases spending by $12.5 billion over last year — a 5.2% jump—while failing to implement major cost-containment measures or long-term strategies to handle fiscal shocks, DiNapoli noted. State Operating Fund spending alone will grow by 9.3%, continuing what DiNapoli called a concerning trend of accelerated spending since 2019.
Adding to the pressure, tax revenues are expected to fall. Total All Funds revenue for 2025-26 is projected at $248.9 billion—nearly flat from the previous year—while tax collections are forecasted to dip by $474 million. Tourism declines and inflation are expected to further weaken the revenue base, with the leisure and hospitality industry already down 11,200 jobs this year.
Federal cuts are already hitting the state. According to DiNapoli, New York has lost $1.3 billion in federal support, including $325 million in resiliency funding, $79 million in SUNY research grants, and $24 million in food assistance. That’s before any further action in Washington.
“The final budget had some measures built in to help navigate this uncertainty,” DiNapoli said, “but the state needs to do what it can to prepare in a transparent manner before our options are even more limited.”
Critics say transparency was in short supply throughout the budget process. After weeks of missed deadlines and closed-door negotiations between Governor Kathy Hochul and her Democrat colleagues who control the legislature, the budget was pushed through with little public input.
Despite Comptroller DiNapoli’s warnings, the budget also expands high-cost initiatives such as Medicaid and school aid without structural reforms. Medicaid spending will rise to $109.6 billion, up 7.6%, and school aid will increase to $37.4 billion.
Meanwhile, the state is still on the hook for billions in federal unemployment debt, though lawmakers authorized up to $8 billion from the General Fund to pay it down—a move intended to reduce the unemployment insurance tax on employers and increase stagnant benefits.
The budget also allocates $4.3 billion to immigrant services and continues to funnel massive sums into green energy initiatives under the state’s Climate Leadership and Community Protection Act, even as critics question the transition's affordability and effectiveness.
“If the Democrats keep this up, New York will continue to face population decline, business flight, and a widening affordability gap,” warned Assemblyman Joe DeStefano.
With the federal government poised to cut billions more from healthcare and safety net programs, DiNapoli cautioned the state to focus on managing the current year and preparing for painful out-year adjustments.
“The impact of the House megabill on New York would be far-reaching,” DiNapoli noted, estimating that federal changes could increase the state’s uninsured population by 150%, cost New York $10.1 billion in federal funds, and saddle taxpayers with $3.3 billion in new Medicaid costs.
Unless Albany reins in spending and adopts a credible long-term fiscal strategy, the Comptroller’s warnings may soon become reality, and New Yorkers will foot the bill.