Amidst financial shortages, is it advisable for New York to rescind its refund payments?

New York is set to distribute rebate checks to middle-class families this autumn, with each family receiving $400 if their income is less than $150,000 in 2023. However, this policy decision has sparked a heated debate among state lawmakers and political figures.

Governor Kathy Hochul, who is involved in discussions about tax increases for the wealthy and eliminating planned refunds for middle-class New Yorkers, is facing criticism from Lt. Gov. Antonio Delgado, who is challenging Hochul in a Democratic primary next year. Delgado has called for the cancellation of the proposed rebate checks, arguing they are fiscally irresponsible given the looming deficits that could force cuts to social service programs.

The state faces a $10.5 billion deficit in next year's budget, according to the most recent projections by Hochul's budget division. This is the highest level since the 2009 Great Recession. The budget gaps over the next three years are projected to be $34.3 billion, according to an analysis by Comptroller Tom DiNapoli.

DiNapoli, however, believes that the state has the money to cover the cost of the checks. He suggests that the policy debate on the rebate checks is over and it's time to focus on the harder decisions that have to be made next year.

A half-dozen progressive state lawmakers, including several members of the Democratic Socialists of America, have called on Gov. Hochul to convene a special session of the Legislature before the end of the year regarding the rebate checks. They argue that the money would be better spent on government programs such as SNAP benefits and Medicaid.

Assemblymember Clare Valdez, a Queens Democrat, echoes this sentiment, stating that the money would be better spent on government programs. On the other hand, Republicans support the Big Beautiful Bill, which cuts Medicaid funding and changes the rules for who is eligible to receive benefits, arguing that it cuts waste, fraud, and abuse.

Hochul's office estimates 1.5 million people could lose state-backed health insurance, and hospital groups estimate they will lose $8 billion in funding as a result of the new legislation. Despite this, Hochul is opposed to increasing state income taxes.

The initial proposal for the rebate checks was $3 billion, but it was narrowed during budget negotiations this spring. The rebate checks, while a contentious issue, are expected to provide some relief for middle-class families amidst the tough financial decisions that lie ahead for New York.

Amidst financial shortages, is it advisable for New York to rescind its refund payments?