By Staff Reporter
ALBANY — Halfway through New York’s fiscal year, the state is sitting on more cash than its own budget office planned for. A lot more.
The state’s General Fund ended September with a balance of $63.9 billion, $9.7 billion, or 17.9 percent, above what the Division of the Budget projected, according to the monthly cash report State Comptroller Thomas P. DiNapoli released Oct. 16. Tax receipts through the first six months of State Fiscal Year 2027 totaled $68.5 billion, $7.3 billion more than the budget office expected and $8.6 billion more than at the same point last year.
That is a windfall by any measure. It is also, by the state’s own books, a poor guide to what comes next. The same budget office that underestimated this year’s revenue is projecting cumulative budget gaps of $31.7 billion over the following three years, and the federal government is shifting health care and food aid costs onto Albany. Within days, Gov. Kathy Hochul’s budget office is due to publish its Mid-Year Update, the first full revision of the state’s financial plan since the budget passed in late May. What that update does with the extra money will shape what Western New York’s counties, cities and hospitals can count on in 2027 and beyond.
Where the money came from
Mr. DiNapoli’s office says much of the surge traces to Wall Street. Personal income tax receipts reached $36.4 billion through September, $2.5 billion above the budget office’s projections. Business taxes, including the pass-through entity tax, came in at $17.6 billion, $4.1 billion above projections and $4.6 billion more than a year earlier. Sales and use taxes, the levy Western New Yorkers feel at the register, brought in $12.7 billion, up 7.2 percent.
“Higher state tax collections, particularly personal income and business tax receipts, are partially a result of financial market growth,” Mr. DiNapoli said in releasing the report. “As noted in my recent report, Wall Street profits have increased significantly in the first half of the year. However, consumer costs keep rising and many families are still struggling. While strong financial market growth bodes well for some, we must ensure the economy works for all New Yorkers.”
That earlier report, released Oct. 6, found that pretax profits at the broker-dealer operations of New York Stock Exchange member firms reached $45.9 billion in the first half of 2026, up 51.3 percent from a year earlier. That already exceeds the $45.3 billion New York City had forecast for the entire year. If the pace holds, the comptroller said, profits could top $90 billion.
“Wall Street is having an exceptionally strong year, fueled by a boom in artificial intelligence spending, increased merger and acquisition activity, and elevated trading volumes amid market volatility,” Mr. DiNapoli said then. “Barring a recession or major market disruption, strong profits should continue to provide an important boost to state and city revenue.”
Spending is running below plan, too. All Funds spending through September was $130.1 billion, up $10.2 billion, or 8.5 percent, from a year earlier, mainly because of higher Medicaid costs, but still $927.4 million under what the budget office projected. State Operating Funds spending was $2.3 billion below projections.
The gap the windfall doesn’t close
Strong collections in one year do not change the shape of the state’s longer-term problem, which is laid out in the comptroller’s July report on the enacted budget.
The enacted budget’s All Funds spending is $277 billion, up $18.1 billion, or 7 percent, from the prior year, and $9 billion higher than the roughly $268 billion figure announced when leaders reached agreement on May 7. Revenues are projected to grow just 1.1 percent. In the General Fund, the budget office projects spending will grow 17.7 percent between this fiscal year and SFY 2030, while receipts grow 4.9 percent. The resulting gaps total $31.7 billion for SFYs 2028 through 2030, up about $4.1 billion from the governor’s January proposal. By SFY 2030, the projected gap equals 9.7 percent of General Fund spending.
The enacted plan also draws down $1.3 billion in General Fund resources to balance this year’s budget, and leaves the state’s combined reserves flat at $15.1 billion even as spending grows.
“Growing outyear budget gaps combined with stagnant reserves could put essential State investments at risk in the future,” Mr. DiNapoli wrote in the report’s opening message.
The statutory rainy day funds have grown from $2.5 billion in SFY 2021 to $10.8 billion this year, the comptroller’s report says, and the budget office plans an $862 million deposit in SFY 2028 that would bring them to a record $11.6 billion. That would still equal only 8.6 percent of General Fund spending. State law allows the funds to hold up to 25 percent.
Washington’s bill comes due
The pressure building on the out-years is not only about Albany’s own spending. The federal law Congress passed last year, P.L. 119-21, is moving health and nutrition costs to the states.
According to the comptroller’s report, about 450,000 New Yorkers with incomes between 200 and 250 percent of the federal poverty level lost eligibility for the Essential Plan when the state converted it to a Basic Health Plan on July 1. Their options are now marketplace plans, employer coverage or going uninsured. Enrollment is projected to fall from 1.8 million in SFY 2026 to just over 1.4 million. The budget office estimates state-only coverage costs for affected Essential Plan enrollees at nearly $7 billion through SFY 2028, and expects about 636,000 enrollees to shift into Medicaid in SFY 2029. The state projects Medicaid will exceed its global spending cap by $430 million in SFY 2028 and by $3.2 billion in SFY 2030.
On food aid, the state’s share of SNAP administrative costs rises from 50 to 75 percent beginning in federal fiscal year 2027, and states may have to pay part of benefit costs starting in 2028, depending on their error rates. The financial plan does not put a number on those costs. One outside estimate cited by the comptroller puts New York’s added costs at almost $1.2 billion.
Mr. DiNapoli made the connection plainly in an interview this month with Spectrum News, telling reporter Jack Arpey that leaders should “make hard choices as far as spending because there are still pressures coming from Washington, the cutbacks that we saw this year as far as healthcare, we’re going to see more of that, you’re going to see more cutbacks in terms of nutrition programs and SNAP programs.”
“It might lull us into a sense that it’s going to continue forever; we just don’t know that’s the case,” he told Spectrum.
What Western New York has riding on it
The Buffalo region’s local governments have their own version of the windfall, and their own reasons not to spend it.
Erie County’s sales tax receipts through July were up 5.8 percent, or $21.3 million, over 2025, and running $19.8 million ahead of budget, according to the July budget monitoring report County Executive Mark C. Poloncarz sent to the Legislature on Sept. 15. He projected a year-end sales tax surplus of about $26.8 million.
“I continue to expect most, if not all, of this sales tax growth will be necessary to offset the increased costs the County will face as a result of this prolonged energy crisis,” Mr. Poloncarz wrote. His report shows the county’s utilities fund already $1.5 million over budget through July, a shortfall he said could top $2.3 million by year-end.
The City of Buffalo leans on Albany even more directly. The comptroller’s report lists $231.3 million in state local government assistance for Buffalo in this year’s budget: $161.3 million in Aid and Incentives for Municipalities, the formula aid that has stayed flat statewide at $715.2 million, plus $55 million in Miscellaneous Financial Assistance and $15 million in Temporary Municipal Assistance. The governor’s 30-day budget amendments added $30 million for Buffalo. Outside New York City, no city on the comptroller’s list received more.
Those aid lines are set budget by budget. When the state’s outyear gaps come due, they will compete with Medicaid, school aid and the federal cost shifts for the same dollars.
Save it or spend it
Budget watchdogs read the same numbers differently.
“The continued Wall Street run is great news for our revenues; the issue is we have to be smart and put some money away and not just build up a spending base that comes crashing down when the economy turns,” Andrew Rein, president of the Citizens Budget Commission, told Spectrum News.
The Fiscal Policy Institute, which leans left, argues that the state will need more revenue, not less, to replace lost federal support, including higher income taxes on top earners. “The state is going to be looking for ways to not only plug some of the gaps that the federal funding leaves behind but to build more resilient institutions and infrastructure; to do that we need revenue,” acting executive director Emily Eisner told Spectrum.
Mr. DiNapoli has staked out a position closer to Mr. Rein’s. In his July report, he called the record reserves built in recent years “a fiscal achievement, for which policymakers deserve credit,” then warned that holding them flat while spending grows means “their effectiveness is diminishing as the budget grows.”
Asked by The Buffalo Chronicle how much of the $9.7 billion the office considers one-time money, such as Wall Street bonus and capital gains timing, versus recurring revenue, Matt Ryan, a deputy press secretary for the comptroller, said in an email to The Buffalo Chronicle that “we do not have an estimate for this.” He gave the same answer when asked whether the office has estimated the risk to Aid and Incentives for Municipalities and other local aid to Western New York governments if the outyear gaps are not closed.
On how much of the gain the budget office should set aside in reserves in the Mid-Year Update, Mr. Ryan said, “Reserve levels should ideally keep pace with the growth in state spending and reflect the volatility of the state’s revenues. Strong Wall Street profits provide a boost to state revenues, but elevated economic uncertainty remains and necessitates caution in budget-making.”
Who decides, and when
The first decisions belong to Ms. Hochul and her budget director. In the financial plan released in June, the Division of the Budget said it did not expect to issue a quarterly update until the Mid-Year Update “on or before October 30, 2026,” according to the comptroller’s report. That document will show whether the budget office raises its revenue estimates, how much of the surplus it books as one-time money, and whether it puts any of it into reserves.
Because 2026 is an election year for governor, Ms. Hochul has until Feb. 1 to present her next executive budget instead of the usual mid-January date, Spectrum reported. The Legislature, where Buffalo’s Crystal Peoples-Stokes serves as Assembly majority leader, then negotiates the final plan. State budgets have run late in recent years. This year’s was not enacted until May 27, which the comptroller noted left school districts voting on budgets May 19 without knowing their final state aid.
What could fix it
The state’s own documents point to several options the Mid-Year Update could take up:
- Bank more of the surprise. State law already allows the statutory rainy day funds to reach 25 percent of General Fund spending, nearly three times the planned 8.6 percent. Depositing a share of above-plan receipts, instead of drawing $1.3 billion from the fund balance, would directly answer the comptroller’s concern about flat reserves.
- Name the federal costs. The financial plan does not quantify the SNAP cost shift. Putting a number on it, and on the post-2028 future of the Essential Plan, would let counties like Erie, which administer SNAP and pay a share of Medicaid, plan their own budgets.
- Tell cities what’s recurring. Buffalo’s $70 million in Miscellaneous Financial Assistance and Temporary Municipal Assistance is real money this year. Whether the state treats it as recurring support or as one-time help is a question City Hall needs answered before it writes its next budget.
- Pass the budget on time. The comptroller has repeatedly flagged late budgets as a cost in themselves for schools, nonprofits and local governments that depend on state payments.
A $9.7 billion cushion at midyear buys Albany options. What the governor’s budget office does with it by Oct. 30 will show whether the state plans for the next downturn or spends as if the current run will last.
The Buffalo Chronicle has asked the Division of the Budget how the Mid-Year Update will treat above-plan receipts and reserve deposits, and will update this story with any response.
Updated October 22, 2026: This story was updated to include comment from the Office of the State Comptroller.
Leave a Reply