New York State is facing a projected $22 billion deficit. Predictably, politicians are pointing fingers everywhere but the mirror. Governor Hochul blames Washington for scaling back emergency COVID funds. But the truth is simpler and less politically convenient: this crisis was not imposed by external forces. It was manufactured right here in Albany.
The numbers speak for themselves. New York’s $254 billion budget increased by over $12 billion in a single year, despite clear signs of slowing revenue and expiring federal aid. That is not fiscal misfortune — that is fiscal irresponsibility.
A significant driver of this deficit is the expansion of the state’s Essential Plan to cover undocumented immigrants — a population explicitly excluded from federal benefit programs under longstanding federal law. This includes the 1996 Personal Responsibility and Work Opportunity Reconciliation Act, the Affordable Care Act of 2010, and Title XIX of the Social Security Act, which governs Medicaid. These laws exist for a reason: to ensure that federal funds are used for legal residents and citizens. New York knowingly bypassed this by funding the coverage with state taxpayer dollars.
Read The Truth About Medicaid: From the ACA to the Big Beautiful Tax Bil
No one in Washington told New York to do this. In fact, federal law made it clear it could not. So when Governor Hochul now complains about a lack of federal support, the complaint rings hollow. You cannot expect reimbursement for expenses you were never authorized to incur.
But let’s not pretend this is the only problem. The state’s Medicaid program — now topping $109 billion — is bloated and mismanaged. Education aid increased again, with little regard for performance outcomes.
The first thing people will do is point to state employees, as if their salaries are the source of New York’s fiscal problems. But they are not the problem. The real issue is Albany’s addiction to uncontrolled spending across the board — not just in payroll, but in entitlement expansions, subsidies, and programs that grow faster than the tax base. Public workers, many of whom are underpaid compared to those in the private sector, are an easy political target. But they don’t drive the crisis — it’s driven by a government that refuses to live within its means. Unlike private businesses that must operate under market discipline, the state makes long-term financial commitments with other people’s money and no accountability when the bills come due. This isn’t a question of wages — it’s a question of willpower. And Albany has shown very little of it.
Instead of aligning spending with fiscal reality, Albany relied on one-time tricks: using leftover COVID funds, shifting costs between years, and raiding reserves. These are not solutions. They are illusions. And illusions eventually fade.
Education Spending Without Accountability
New York leads the nation in per-pupil spending — over $29,000 per student — yet continues to produce mediocre academic outcomes, particularly in urban and high-poverty districts. In many Black districts, schools have failed to properly educate our children in trades, AI, and give them the actual skills to make a living even if they dont go on to higher education. Despite years of increased funding, there’s no serious effort to tie spending to student performance. School aid is distributed more by political influence than educational need, rewarding well-connected districts. Meanwhile, enrollment is declining across the state, especially in New York City. But rather than adjust spending to reflect these realities, Albany doubles down on a failed formula: more money, fewer students, no results. In a rational system, funding would follow success. In New York, it follows politics.
Failing Infrastructure and a Broken Transit System
While education spending inflates without outcomes, New York’s infrastructure deteriorates in plain sight. Subways are delayed, highways are crumbling, and major capital projects routinely go over budget and past deadline. The MTA alone operates on a multi-billion-dollar deficit while delivering unreliable service and demanding endless bailouts. Statewide, road and bridge maintenance is deferred while funds are diverted to politically favored projects. The result is not just inconvenience, but economic inefficiency, as goods, workers, and services slow down under the weight of a transit system in decline. Instead of tightening oversight or introducing cost discipline, Albany treats every infrastructure failure as an excuse to spend more, without ever asking why past spending didn’t solve the problem.
What’s missing from this entire debate is any mention of trade-offs. Resources are finite. Money spent in one area is money unavailable elsewhere. By choosing to subsidize individuals who are ineligible under federal law, the state diverts funds from services that benefit citizens — services like mental health programs, public safety, or tax relief for working families.
Compassion, if not guided by discipline, becomes recklessness. The moral high ground is meaningless if it collapses under financial mismanagement.
The problem is not that New York lacks options. The problem is that it refuses to make choices. Politicians in Albany have adopted the modern progressive habit of treating government as a bottomless purse and voters as children who must be shielded from hard truths. The truth is that every benefit has a cost — and someone eventually pays.
If there’s any lesson here, it’s this: good intentions are not a substitute for sound policy. A state that cannot prioritize, cannot govern. And one that refuses to face economic reality will be forced to face economic consequences.
New York’s fiscal crisis is not a failure of federal policy. It is a failure of leadership, accountability, and basic arithmetic.
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