By Hinman Straub
While focus has remained on the federal government shutdown and the New York City mayoral race over the last few weeks, the State budget process has officially begun. The Division of the Budget call letter issued on October 9, coupled with the Comptroller’s mid-year fiscal update released October 15, start to frame the fiscal context in which the Executive budget will be developed.
DOB’s call letter marks the formal start of the budget process, directing all State agencies to submit their budget requests for State Fiscal Year (SFY) 2026-27 by October 24. These submissions will inform the Executive Budget which must be introduced by January 20, 2026. The call letter provides valuable insight into the Governor’s fiscal priorities.
This year’s letter highlights the fiscal pressures from the loss of federal funding caused by H.R.1, which DOB expects will exacerbate the State’s projected budget deficit. While the letter did not quantify the expected shortfall, it emphasized the need to align out-year spending growth with available revenues to minimize potential cuts to essential programs. Agencies were instructed to limit their SFY 27 budget requests so as not to exceed their SFY 26 Enacted Budget levels, excluding one-time investments. DOB also called on agencies to review existing regulations and identify regulatory burdens that could be reduced or reformed to promote efficiency and economic growth.
The Office of the State Comptroller’s mid-year report provided a fiscal update. Comptroller Thomas P. DiNapoli reported that through September, State tax collections totaled $59.9 billion, which is $702 million higher than DOB’s most recent financial plan projections. The Comptroller attributed this to higher than expected personal income tax collections; but noted that policy change in Washington could still “weigh heavily” on the State’s economy.
DOB is expected to release its own mid-year fiscal plan update later this month. This will likely provide a clearer picture of how the current fiscal dynamics will shape the Executive Budget proposal.