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State calls proposed spending cuts 'devastating' as it presses Washington for help

New York State could be forced to cut spending by more than $10 billion this fiscal year to address the projected shortfall in revenue due to the Covid-19 pandemic.

Th0se cuts would be broad and deep, hitting everything from local governments to school districts, from health care to higher education, from public transit systems to nonprofits.

That warning was issued over the weekend in a report released by the New York State Division of the Budget, as Gov. Andrew Cuomo continued to ramp up the pressure on Washington for more emergency relief funding for states.

"In the absence of federal aid, we will have no choice but to move forward with these devastating and unprecedented reductions,” State Budget Director Robert Mujica Jr. wrote in the report.

The report broadly outlines how the state would handle the $13.3 billion shortfall in revenue that New York faces this fiscal year. The plan calls for $10.1 billion in cuts to close the gap.

Operations at state agencies would be reduced by $1.6 billion, while another $293 million could be saved, primarily through a reduction in debt service costs.

But most of the cuts – $8.2 billion – would come from a reduction in "aid to localities" – a category that includes funding for health care, hospitals, K-12 schools and higher education, as well as support for local governments, first responders, public transit systems and nonprofit agencies, according to the plan.

In fact, the governor last week foreshadowed the cuts, including the the potential for a 20% reduction in aid to education, one of the biggest pieces of the state budget.

Mujica reiterated during the governor's press briefing on Sunday that school districts around the state could see reductions of "up to 20%" if there is no additional help from the federal government.

School districts are concerned, particularly poorer districts that rely heavily on state aid, because reductions that large would likely force layoffs and cuts to instruction.

“On May 1, we'll know exactly what the revenues are, know exactly where we are with Washington and whether we have more money," Mujica said during Sunday's briefing.

More specifics from the state will be released by the middle of May, he said.

"That still gives time for school districts to make their budgets," Mujica said.

"So between now and May 15, we'll have more clarity and more specificity in the financial plan," he said. "Right now, we're letting you know this is where we stand, this is the revenue picture, those are the facts and by the time they put their school budget votes together they will have those numbers."

The state hired an outside firm to assess the impact of Covid-19 and projected New York's economy will lose $243 billion over the course of its recovery, which will be longer and deeper than both the Great Recession in 2008 and the one that followed the terrorist attacks of Sept. 11, 2001.

It has local municipalities worried, too, said John Tobia, town supervisor in North Collins and president of the Association of Erie County Governments.

“I know a lot of the supervisors and mayors were upset, because they weren’t included in the last federal stimulus package,” Tobia said. "There's a lot of uneasiness, a lot of concern because of the money it costs to run our towns and villages."

In Orchard Park, for example, the town doesn't receive a lot of money each year in state aid – about $119,000, said Supervisor Patrick Keem.

But like the state and other local municipalities, the pandemic has dried up revenues, said Keem, former president of the local association of governments.

Courts are closed, for instance, so there's no money coming in from fines and fees. Doors to Orchard Park's new community activity center are shut, so the town is not taking in any rental income that was being counted on to help pay the mortgage.

And the town is projected to lose at least $400,000 in county sales tax revenue, but maybe as much as $1.16 million through June, Keem said.

"It helps fund us," Keem said. "So, as you can see, we're going to have real budget issues. We need federal funding."

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