New York State Faces Potential $27.5 Billion Budget Deficit by 2030

Comptroller warns federal cuts could result in 1 million New Yorkers losing health insurance

Published on Feb. 26, 2026

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New York State Comptroller Thomas DiNapoli released a report analyzing the governor's proposed budget for the 2027 fiscal year. While the state has a $3.5 billion surplus, federal cuts could trigger a $27.5 billion budget deficit by 2030 and result in 1 million New Yorkers losing their health insurance.

Why it matters

The potential budget deficit and loss of health insurance coverage for 1 million New Yorkers would have significant impacts on the state's fiscal health and the well-being of its residents. This highlights the challenges New York faces in maintaining critical services and social safety net programs in the face of federal funding cuts.

The details

According to the state's Division of the Budget, the shortfall is because state spending is growing faster than tax collections. The financial strain is mostly from the federal One Big Beautiful Bill Act that became law in 2025, which included a 77% cut for the Essential Plan - a health insurance program for over 1.7 million low-income residents. This $10.8 billion cut, combined with incoming Medicaid work requirements, is projected to strip health insurance from 1 million New Yorkers over the next two years.

  • The state faces a potential $27.5 billion budget deficit by 2030.
  • The federal One Big Beautiful Bill Act became law in 2025, triggering the cuts to the Essential Plan.
  • The state is projected to lose $9.4 billion in federal aid next year, representing a net loss compared to this year.

The players

Thomas DiNapoli

New York State Comptroller who released a report analyzing the governor's proposed budget.

Kathy Hochul

Governor of New York who proposed the state budget.

Fiscal Policy Institute

An economic think tank that disputed the state's gloomy budget forecast and argued the state has sufficient reserves to prevent cuts to services.

Michael Kinnucan

FPI Health Policy Director who warned that due to federal cuts, the state faces the most dramatic and rapid loss of health insurance in its history.

Zohran Mamdani

Mayor of New York City who has an affordability agenda that requires $5 billion to $10 billion in funding according to FPI.

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What they’re saying

“Due to federal cuts, the state faces the most dramatic and rapid loss of health insurance in its history.”

— Michael Kinnucan, FPI Health Policy Director (mytwintiers.com)

“Millionaires are too firmly tied by business or social interests in New York to move away because of small tax increases.”

— Andrew Perry, Fiscal Research Expert at FPI (mytwintiers.com)

What’s next

The state has requested permission from the federal government to lower the Essential Plan's eligibility threshold and move people to a Basic Health Program, which could mitigate some of the losses in health insurance coverage.

The takeaway

New York's budget challenges highlight the significant impact federal funding cuts can have on state finances and critical social programs. While the state has a surplus, it must carefully manage its resources to prevent the loss of health insurance for 1 million residents and maintain essential services.