Alliance alert: New York is staring down a perfect fiscal storm — and it’s low-income families, people with disabilities, and those living with mental health and substance use challenges who are most at risk of being caught in the downpour.
As reported in Politico, the state is grappling with a projected $10.5 billion budget gap, including a devastating $750 million cut to the Essential Plan, which provides affordable health coverage to 1.6 million low-income New Yorkers. These cuts stem from the Trump administration’s sweeping federal legislation slashing Medicaid and food assistance — moves that threaten the core of our state’s safety net.
The Alliance for Rights and Recovery is deeply concerned that without strong and immediate action, critical health and human services — including behavioral health, housing, food, and social care — could face deep cuts just when people need them most.
We are calling on Governor Hochul and state lawmakers to:
- Protect essential health and mental health programs from budget cuts;
- Refuse to balance the budget on the backs of vulnerable New Yorkers;
While the governor touts a $2 billion rebate program as short-term relief, that money won’t sustain long-term services or address the structural gaps being created by federal cuts and economic uncertainty. Recovery is built on stable, accessible, long-term support systems.
This year’s budget decisions will reveal our priorities as a state. We urge lawmakers to choose equity, stability, and access to voluntary services over short-term political fixes.
We’ll be tracking the budget process closely — and standing with the communities that depend on these essential services.
A Perfect Budget Storm
By Nick Reisman, Joe Anuta, and Jeff Coltin | Politico | July 22, 2025
Wall Street could be the state budget’s savior next year — or a major headache.
Gov. Kathy Hochul and the Democratic-led state Legislature are already contending with a $3 billion hit to the Essential Plan taking effect next fiscal year, which provides health coverage to about 1.6 million low-income New Yorkers.
The cut is being heaped on top of a pre-existing $7.5 billion budget gap.
And if the financial industry — the engine that fuels New York’s economy and tax revenue — goes south, the consequences for Albany could be massive.
“If we get hit not just with the federal restructuring, but with an economy that starts to slow down or tank — that’s where we could get that perfect storm,” Comptroller Tom DiNapoli told Playbook in an interview on Monday.
That kind of financial turbulence would come at a bad time for the governor, who’s running for a second full term next year.
She stands to be hit with political crosscurrents from lefty Democrats who’ll push for tax hikes and from wealthy New Yorkers who contribute an outsize share of taxes to the state’s coffers.
State officials are still assessing the fallout from President Donald Trump’s megabill, a sweeping federal tax-and-spend package that includes significant cuts to Medicaid and food stamps.
Hochul told reporters Monday she plans to roll out a “swat team” to find ways of saving money as the state also works to address the $750 million being slashed from the Essential Plan — cuts which will take effect Jan. 1.
She also defended her $2 billion rebate program, which was approved in the May state budget and will send New Yorkers cash this fall. Hochul insisted the money, which was pared down from the original $3 billion proposal, will help people make ends meet.
“Now more than ever families across New York will appreciate what I did for them and putting money back in their pockets,” the governor said.
DiNapoli, a Hochul ally, was not as enthusiastic about the check plan, which Hochul has framed as a way to bust inflation.
“I wouldn’t say it was a mistake, but that creates spending that has to be balanced against these other cuts,” he said. “Rebates are going to happen, hopefully that will help people.”
DiNapoli expects finding ways to offset the loss of $750 million in the current fiscal year will be relatively easy. The harder part comes next year when lawmakers and Hochul negotiate the state budget.
“My guess is everything will have to be on the table — cuts, tax increases,” DiNapoli said. New York Democrats have already trained their ire on Republicans over the federal cuts, pre-emptively blaming them even before the mega-bill became a mega-law.
There are limits, though, to the blame game. Hochul will still need to get a balanced budget on the books months before voters render their verdict on her tenure.
“It could be a tough budget,” DiNapoli said. “It’s an election year and there are more pressures in an election year.”