July 10, 2025

ALBANY – (07/10/2025, 2:00 p.m., LCA Press Room)

New York State Budget Director Blake Washington fielded questions from members of the Legislative Correspondents Association (LCA) regarding impacts of the federal budget – “The Big Beautiful Bill” (BBB) – on New York State’s financial outlook.

Washington said the Division of the Budget (DOB) provided “preliminary estimates” of the BBB’s impact on state programs, particularly relating to healthcare and food access. He noted a number of provisions would not take effect until after the end of the current fiscal year, March 31 of 2026; these would not have any impact on the currently enacted State Budget. The BBB’s changes to Medicaid, however, are set to become effective New Years Day 2026, and this alone will amount to a state shortfall of around $750 million in the current FY 2025-2026. DOB’s preliminary analysis, Washington went on, estimates the BBB’s total impact on the State Financial Plan to be a loss of $3 billion for FY 2026-2027. He emphasized this number does not represent the totality of the federal budget’s impact on the state and its residents, emphasizing “people will lose health insurance coverage” in addition to lost funding sources across practically the entire health sector. Washington used the word “destabilization” to describe the BBB’s effect on the health sector, stressing it represented “a system-wide impact to the provider network,” as well as to persons seeking care who may now be limited in options if not outright removed from their insurance. Asked if he had any solid estimate on the number of people who will lose coverage come January 1, Washington said DOB, along with the Department of Health (DOH), are still working to figure out the exact number. “The impact will be vast,” Washington emphasized.

Asked if the state would be able to cover the $750 million gap through March without the need for a Special Legislative Session, Washington responded “It remains to be seen.” Washington maintained the state possesses some flexibility within the current Financial Plan to potentially move forward without a special session but left the door open as matters continue to be examined.

Asked what he’d advised be cut first, Washington stressed those conversations are ongoing and will involve a number of parties. Speaking for himself, Washington said you have to start with the “nice-to-haves” and not the “must haves” so as to lessen the impact on individual New Yorkers.

Asked if Governor Hochul was at all open to raising taxes in order to cover the shortfall produced by the BBB, Washington was noncommittal but questioned the desire of the Legislature to increase taxes “to obfuscate for the sins of our colleagues in Congress.” Washington continued by saying “this is going to require some really challenging discussions,” further stressed “there’s no taxing our way out of this.” Zach Williams of Bloomberg asked why the Governor would be unwilling to raise the funds necessary to fill the funding gap, saying “it sounds like she [Governor Hochul] just wants to blame the Republicans and campaign on this.” Washington stressed “the reality of the situation” is the measure, which he noted amounts to a $3 trillion cut to public services nationwide, was enacted by the Republican Party currently in power at the federal level. “That’s just a fact,” said Washington. Washington continued to receive pushback from reporters over the state’s ability to backfill the $3 billion gap but the Director repeatedly reiterated that attempting to compensate for decisions made at the federal level in such a way would only exacerbate the problem long term.

“Why is it a good idea to cut someone who is losing their health insurance a $200 check,” asked Alex Gault of Johnson Newspapers. Washington said state law, enacted through the current State Budget, requires the inflationary rebate checks be distributed to New Yorkers. Gault repeated the question “Why is it a good idea?” twice more before Washington said “It’s a good idea for me to follow state law.” Asked if, given the benefit of hindsight, the inflation rebate checks might be viewed as a bad idea Washington said that was not the case and the checks still served their purpose for a large number of New Yorkers regardless of the decisions at the federal level.

Matthew Mirro / New York StateWatch