By Jimmy Vielkind 

Top New York lawmakers say they will continue to wait for a federal coronavirus relief package before making any adjustments to the state budget even as fiscal issues pile up for the state's localities and public authorities.

The wait-and-see approach has ruled the State Capitol since the spring, when members of the Democratic-controlled state Assembly and Senate enacted a budget that gave Gov. Andrew Cuomo unilateral power to hold back spending if additional federal aid didn't materialize.

So far it hasn't, although Mr. Cuomo and legislative leaders said the election of Joe Biden as president would make it more likely that a new federal package would include significant funding for state and local governments.

But until it materializes, the window for state lawmakers to revise the budget enacted in April -- possibly by increasing income taxes -- is closing. Senate Majority Leader Andrea Stewart-Cousins said Monday that she wouldn't rule out a legislative session this year but was still waiting on Washington.

"We have a huge deficit and we need a lot of answers, and most of those good answers need to come from our federal government. But everything is on the table," Ms. Stewart-Cousins, a Democrat from Yonkers, said at a press conference.

A spokesman for Assembly Speaker Carl Heastie referred to a Nov. 13 tweet in which the Bronx Democrat said he was excited about Mr. Biden's election but wasn't ruling out a special session. There are no current plans for the Legislature to reconvene before January, but Mr. Heastie will hold a virtual retreat with members next week to discuss their next steps.

Mr. Cuomo's budget director, Robert Mujica, said state spending is $6 billion less than in the previous fiscal year because the administration has held back payments to municipalities and social-service providers while also delaying scheduled salary increases for state employees. The withholdings could turn into permanent cuts if Mr. Cuomo formally proposes a budget adjustment -- which could be amended by the Legislature -- but he hasn't done so.

"We're on track to control spending, and we're talking to the Legislature," Mr. Mujica said.

The state faces a projected $8.7 billion deficit in the fiscal year that begins April 1, and the fiscal picture is looking similarly grim in other public entities that rely on state funding.

New York City Mayor Bill de Blasio said Monday that tens of thousands of layoffs are still possible next year. Other cities and counties are developing budgets for 2021 that raise taxes above the state's 2% cap, a maneuver that requires a vote of 60% of legislators.

The Metropolitan Transportation Authority is considering a 2021 budget that would reduce or suspend some weekday subway services and limit weekend train frequency to every 15 minutes. James Brennan, a former State Assembly member from Brooklyn, said the state should step in to provide funding and avoid service cuts; Mr. Mujica said it isn't in a financial position to do so.

Counties and cities are preparing budgets that take effect with the new year that reduce their workforces and, in some cases, lay off or furlough municipal staff. Tompkins County, which includes Ithaca, adopted a budget that cut expenses by 6% but saw revenue decline by 10%, according to county administrator Jason Molino. The county legislature approved a budget that increased taxes by more than the state-mandated 2% cap.

"We wouldn't have had a property tax increase if we didn't have such an unknown," Mr. Molino said of an expectation that the state would cut aid to the county. He also called on the federal government to send revenue.

Senate Minority Leader Chuck Schumer, a Democrat from New York, said last week that talks had restarted among his party-mates who control the House of Representatives and Senate Majority Leader Mitch McConnell, a Republican from Kentucky.

Mr. McConnell has taken over from Treasury Secretary Steven Mnuchin as the lead Republican negotiator. Several weeks ago, as Mr. Mnuchin and House Speaker Nancy Pelosi discussed a roughly $2 trillion bill, Senate Republicans pushed for a far smaller package, instead proposing $650 billion in aid.

Some unions and progressive organizations in New York say state lawmakers should convene immediately and raise taxes, arguing that any federal aid won't be enough to fix such a large deficit.

David Friedfel, director of state studies for the Citizens Budget Commission, a nonpartisan watchdog, said New York's deficit for the coming fiscal year is closer to $17 billion because the official estimate assumes there will be $8 billion of recurring cuts in the $101 billion operating budget that have yet to be detailed.

"It's very unlikely that the federal government is going to provide aid in the amount or duration where it will be sufficient," he said

Write to Jimmy Vielkind at Jimmy.Vielkind@wsj.com

(END) Dow Jones Newswires

November 26, 2020 07:14 ET (12:14 GMT)