Earlier this week, Gov. Kathy Hochul recalled experiencing a mix of confusion and dread after seeing President Trump discuss his plans to close the Department of Education.
She wondered: Would that endanger her expansion of free school lunches in New York? What would it mean for the state’s Pell Grant allocations?
“We don’t have a crystal ball that tells us the scale of the cuts,” Ms. Hochul said.
As Congress works out the particulars of how it might roll back trillions of dollars in federal spending, New York and other states have been left to play a guessing game about how they might be affected.
New York’s budget, which is due April 1 but is likely to be passed late, anticipates tens of billions of dollars in federal aid. It also includes tax revenue forecasts that predate much of the turbulence in the stock market that followed Mr. Trump’s tariff proposals.
The uncertainty over the looming federal cuts means that whatever budget deal is approved by the governor and legislative leaders may need to be altered substantially, and quickly.
It’s just hard to know where the cuts might come and how they could affect the state’s finances.
“If and when we lose federal dollars in various categories, we are going to have to completely re-evaluate sections of the budget or perhaps the whole budget,” said State Senator Liz Krueger, a Democrat who leads the Finance Committee.
“We think it’s better to move forward and know that we will have to come back and do our work again, and differently if required,” she added.
Ms. Hochul appeared resigned to that fate, telling reporters on Monday that “nothing prohibits us from coming back in a special session to deal with anything that comes our way from the federal government.”
“We’re having conversations about what cuts in education would do, what cuts in Medicaid would do,” she said, adding that voters should focus their frustration on the seven Republicans in the state’s congressional delegation.
“We also have a responsibility to put them on the spot and say, ‘What are you doing to make sure that your home state of New York is not hurt?’” she added. “But we always can come back and have another session.”
At the moment, Ms. Hochul’s negotiations with the Senate majority leader, Andrea Stewart-Cousins, and the Assembly speaker, Carl Heastie, do not account for the federal cuts.
The three leaders, all Democrats, have said that the cuts being discussed are far too vast for the state to cover. In the fiscal year ending this month, New York received an estimated $96 billion from the federal government, with roughly $57 billion going to the state’s Medicaid program. About $10 billion went to schools, about $4 billion to law enforcement and public safety and $2.5 billion to transportation programs.
Ms. Hochul had based her initial $252 billion state budget proposal for the coming year on the assumption that almost $91 billion would flow from Washington.
On Tuesday, Mr. Heastie echoed Ms. Hochul’s critique of congressional Republicans. “Why would I build a budget on something that I’m not even sure that they could follow through on?” he said.
“We’ll put forward what we think is a normal, responsible budget,” he said, “and if we have to come back, I would hope that y’all ask these questions to the Republicans:why would you pass a federal budget that gives gazillionaires another tax break but also cuts Medicaid.”
This week, the Department of Health and Human Services abruptly canceled more than $12 billion in federal grants to states. Two New York State agencies working on addiction services and mental health care told nonprofit providers that two federally funded state grant programs, which totaled about $330 million and were supposed to run through the end of September, had been halted.
Jihoon Kim, president of the InUnity Alliance, a coalition of nonprofits in New York, said that the cuts have imperiled existing programs and raised the prospect of layoffs.
“While the governor and Legislature have indicated that they do not see the need to address future federal cuts in the current budget negotiations, what’s clear is that this action by the federal government means that the future cuts are happening now,” Mr. Kim said in an email.
Jared Walczak, vice president of state projects at the Tax Foundation, a nonprofit tax policy group, said most states did not appear to be doing enough to prepare for what may come from Mr. Trump and a Republican-led Congress. New York relies heavily on income tax, he said, and dips in the stock market could affect how much money the state takes in and hurt its budget planning abilities.
“While lawmakers across the country are certainly keeping a wary eye on what’s happening in Washington, few of them seem to be fully preparing for it,” Mr. Walczak said, acknowledging that it was difficult to plan ahead without knowing what will be cut.
“Most states are going to have to react if something changes, rather than preparing for it,” he continued. “But states can be better prepared if they don’t overcommit, and if they leave some reserves and if they prioritize their rainy-day funds.”
For now, New York leaders are trying to find a middle ground on some policies Ms. Hochul has focused on, such as changes to laws around evidence in criminal trials, involuntary commitment of mentally ill people and a ban on cellphones in schools.
Those three issues, along with increasing penalties for people who commit crimes while wearing masks, are Ms. Hochul’s top policy priorities, and she hopes to include them in the budget.
On Wednesday, Ms. Stewart-Cousins said that much of conference appeared ready to accept Ms. Hochul’s proposal that the cellphone ban cover the entire school day.
Ms. Stewart-Cousins added that the cuts this week to certain mental health programs were an ominous sign of what is to come.
“It is financially impossible for us to be able to backfill every cut that our Republican colleagues allow to happen on the federal level,” she said. “So I’m hoping that they will stop it.”
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