Trumps tariff tumult could blow up NYs budget but Hochul wont face facts

New York state has reaped a bumper crop of tax revenue over the past five years — thanks largely to a historic surge in capital gains and Wall Street bonuses ginned up by a doubling of stock prices since the market bottomed out in late March of 2020.But the stock market’s rollercoaster ride in the wake of President Trump’s tariff shakeup could reverse that trend — and should make Gov.Hochul take a hard look at her massive $252 billion budget plan.Hochul’s executive budget for this fiscal year, released in January, projected a further 12.4% gain in the S&P this year — down by roughly half from each of the previous two years, but still not bad by historical standards.In February, as the S&P 500 hit its most recent peak, Hochul’s budget director and legislative fiscal staffers agreed that the state’s tax revenue projection could be raised — by $550 million to $800 million over their initial forecast.Then the S&P tumbled mostly downward.

By the March 31 end of the fiscal year, the index had fallen 8% from its peak.But the worst was yet to come.In the first four business days following Trump’s April 2 rollout of sweeping tariff hikes, the S&P fell another 12%.On Wednesday, after he announced a 90-day pause for most countries, the index had reversed course — but was still 11% down from its February high point.The “global tariff rout,” as The Wall Street Journal described it, has significantly worsened the outlook, at least on a short- to near-term basis, for New York-based financial markets — and, by extension, for New York state’s revenue base.Fortuitously, the overdue state budget for the fiscal year that started April 1 allows time for adjustment, on both sides of the ledger.It should be obvious that New York’s optimistic late-February revenue projection needs to be taken down a few notches. At the very least, Hochul should cancel her proposed $3 billion “inflation refund” cash giveaway, a profoundly dubious ide...