Fiscal Policy Institute urges against tax cuts amid looming federal funding risks

Concerns over potential fiscal challenges for New York's school districts and counties dominated discussions at the 2025 Joint Legislative Budget Hearing on Taxes. Officials expressed caution regarding proposals that would delay tax collection, warning of cascading impacts on local finances. One commissioner highlighted the delicate balance between school districts and counties, emphasizing that any changes must consider the existing tensions in their relationships.

The hearing also featured strong opposition to proposed income tax cuts amid looming federal funding risks. Nathan Gustorff, executive director of the Fiscal Policy Institute, argued against a permanent billion-dollar revenue loss, noting that most benefits would disproportionately favor higher-income households. He stressed the need for careful financial planning, especially with the expiration of corporate tax rates set for 2026, which could lead to a combined revenue loss of $2 billion.

As the discussion shifted to the potential impact of federal budget cuts, speakers warned that New York could face significant losses in Medicaid and other essential services. With millions of New Yorkers relying on these programs, the urgency for state action was clear. Ron Deutsch from New Yorkers for Fiscal Fairness proposed increasing tax rates on the wealthiest residents to generate additional revenue, arguing that the super-rich are not contributing their fair share.

The hearing underscored the critical need for strategic fiscal planning as New York navigates potential federal cuts and local financial challenges. Lawmakers are urged to consider the implications of tax policy changes carefully, ensuring that essential services remain funded and accessible to all New Yorkers.