Republicans in Washington, at the behest of President Donald Trump, are crafting a bill to cut spending and use the savings to pay for tax cuts that could reduce aid to New York by tens of billions of dollars, blowing huge holes in both the state and city budgets.
The result could confront both the state and the city with difficult choices, forcing both to find billions of dollars in additional revenue in what is already the state with the nation’s highest taxes. If they’re unable or unwilling to do that, millions of New Yorkers could be left without health care, money to put food on the table or get housing help.
And while final decisions in Washington about the Republican plan emerging in Congress are months away, state legislators, the governor, the mayor and the City Council will have to decide soon on whether they should prepare for a fiscal crisis when they adopt their next budgets — in March for the state and June for the city.
Already, both state comptroller Tom DiNapoli and city comptroller Brad Lander have called for the city to divert as much as $1 billion to its financial reserves.
And the city’s Independent Budget Office warned last week: “The recently announced spending cut targets for the federal budget could have profound effects on New York City’s ability to provide key social services and more.”
Health care cuts are the biggest risk for the state, whose Medicaid and program exceeds $110 billion, with almost 60% of that coming from the federal government. It covers more than 9 million people statewide and more than 5 million — 60% — of all city residents. Also vulnerable is the state’s Essential Plan, which was created from the Affordable Care Act and covers 1.5 million people making slightly more than allowed for Medicaid, with almost its entire $10 billion cost paid for by the federal government.
“The number of people and institutions you are talking about have a vast impact on public health,” said Maria Doulis, deputy state comptroller of budget and policy. “It’s a budgetary risk but it is also a public health risk.”
Food stamps, another key Republican target, provide help to 1.8 million city residents, one third of whom are children and another third seniors. Cuts in the food benefits, called SNAP, could cost the city $900 million a year if it filled the gap, said city social services commissioner Molly Wasow Park last week.
“We are literally talking about taking food out of kids’ and older adults’ mouths to pay for tax cuts for the wealthiest,” she said.
A market in Sunset Park, Brooklyn, advertises accepting food assistance, Feb. 8, 2025. Credit: Ben Fractenberg/THE CITY
With the city in the midst of an unprecedented housing crisis, Republicans have also targeted programs that New York relies on in both the resolution and in the axe that Elon Musk’s Department of Government Efficiency is taking to the U.S. Department of Housing and Urban Development.
“DOGE is trying to kneecap HUD with massive staff cuts and Congress is ready to slash discretionary spending to pay for tax breaks,” said Rachel Fee, executive director of the New York Housing Conference. “At risk are key programs that fund housing vouchers, public housing and community development and affordable housing finance.”
Under Pressure
The potential for large reductions in aid to the state and city came into focus last week when House Republicans pushed through a resolution outlining their plans for budget and tax cuts on a party-line 217-215 vote. The resolution begins a process known as reconciliation, which allows a comprehensive spending and tax bill passed by the House to get through the Senate with only 50 votes rather than the 60 votes needed if Democrats were to filibuster the bill.
The 2017 Trump tax cuts as well as Biden tax and spending bills were passed under the reconciliation procedure and it is the only way Republicans in Congress can deliver “the one beautiful bill” Trump has demanded for his agenda.
But the path from the resolution to final enactment remains treacherous. All Democrats in the House are expected to oppose any reconciliation bill as they did with the budget resolution, and with only a five-seat majority House Speaker Mike Johnson will have to keep both hard right conservatives who want more spending cuts and moderates, especially in New York, who are worried about the impact on their states.
House Speaker Mike Johnson (R-La.) speaks at the Republican National Convention, July 15, 2024. Credit: Maxim Elramsisy/Shutterstock
Republicans in the Senate have also indicated they are reluctant to tackle all the issues in one bill and may want smaller cuts in programs.
Nevertheless the House resolution instructs the Energy and Commerce Committee overseeing Medicaid to reduce spending by $880 billion over the next decade and the Agriculture Committee, which has jurisdiction over SNAP, by $230 billion.
Mayor Eric Adams, who told his top aides not to criticize Trump, did sign on to a letter from mayors around the country opposing cuts to food programs but has been much quieter than Gov. Kathy Hochul.
Hochul has been very vocal about the damage Republican cuts could do to New York and has put spotlight onto New York Republicans in the House who had said they were reluctant to vote for the resolution but fell in line.
“Every New York congressmember who backed this should be ashamed,” she said at one point, adding later, “So I’m saying, call your members of Congress who claim they represent the people of this state and stand up to this assault on New Yorkers.”
But she added there is too little information to take any specific action.
Meanwhile, many groups continue to lobby the legislature to add spending to the governor’s $252 billion proposal for the fiscal year that begins April 1, which is about $8 billion more than the current budget, including a 17% increase in Medicaid spending.
For example, the group New York Can End Child Poverty (NYCAN) wants the state to expand its child tax credit, invest $7.5 billion in child care over the next four years, and add $300 million in summer food aid among other measures.
“The threat of cuts to federally funded programs such as Medicaid, SNAP, Head Start, and more, make it imperative for New York to shore up resources that protect New York’s low-income children and families, as these are among the vulnerable populations likely to be hurt the most by those cuts,” said Kate Breslin, President & CEO of the Schuyler Center for Analysis and Advocacy, which leads NYCAN.
Given the threat, Doulis of the state comptroller’s office suggests the state could pass a budget that has a provision that would allow the spending plan to be revisited later in the fiscal year. She also wonders who would spearhead the effort to adjust the budget for federal aid reductions.
“We have always done a lot in New York,” she said. “But even the reserves we have accumulated [$21 billion] are not enough to compensate for even cuts in one program like Medicaid.”
In the city, the Republican plan and the mayor’s silence are bound to become issues in the mayoral campaign.
“New Yorkers simultaneously don’t trust that their hard-earned tax dollars are being spent effectively by our current city administration — or that they won’t be illegally retracted by the federal government run by a man who calls himself ‘king,’” said Lander, who is challenging Adams in the Democratic primary for mayor.
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