New York’s Fiscal Year (FY) 2027 enacted budget sets the State’s fiscal and policy direction for the year ahead, pairing large investments in core services with a broad package of affordability, infrastructure, healthcare, housing, and climate-related actions. The enacted budget totals $277 billion in All Funds spending for FY 2027, while State Operating Funds spending totals $161.1 billion.
All Funds spending rose from $258.9 billion in FY 2026 actuals to $277 billion in FY 2027, an increase of $18.1 billion (7.0 percent). State Operating Funds’ spending increases $12.3 billion (8.3 percent) to a total of $148.8 billion. Capital projects spending increased from $17.9 billion to $21.5billion.
The enacted budget is framed around four broad policy themes: affordability, investment in core public systems, targeted support for vulnerable New Yorkers, and continued use of the budget as a vehicle for major policy reforms.
On affordability, the State advances one-time rebates, child care investments, tax changes, and housing-related support. For public systems, the budget maintains major commitments to schools, Medicaid, transit, mental health, higher education, and local assistance. For vulnerable populations, it directs resources to child care, behavioral health, nutrition, supported housing, and other critical services. Lastly, there were several significant policy reforms related to the State’s climate lawimplementation, property taxation, immigration response, and economic development project delivery.
Beyond the major spending commitments included in the final budget, several policy reforms will shape the year ahead for businesses, local governments, and communities across New York. These measures reflect the state’s broader priorities around economic growth, affordability, infrastructure, housing, healthcare, and government operations. As implementation begins, the Ostroff team will be closely monitoring how these reforms are advanced through agency action, regulatory guidance, and continued engagement with the Executive and Legislature.
The budget’s largest spending commitments remain concentrated in education, healthcare, transportation and transit, social services, and capital infrastructure. Roughly 60 percent of the annual increase in State Operating Funds’ spending is attributable to the State’s two largest programs: Medicaid and School Aid.
School Aid for school year 2027 totals $39.6 billion, an increase of $1.9 billion (4.9 percent). The budget includes a $1 billion (3.9 percent) increase in Foundation Aid, continues the State’s full-funding posture, and guarantees each district at least a 2 percent year-to-year increase in Foundation Aid. It also adds support for English language learners, students experiencing homelessness or foster care, and universal four-year-old prekindergarten
Higher education spending totals $3.7 billion an increase of $136 million (3.8 percent). The budget also continues to increase operating support for CUNY senior colleges and investments in SUNY and CUNY community colleges and workforce-oriented higher education initiatives.
Healthcare remains one of the largest and fastest-growing parts of the State budget. Medicaid spending rises to $39.4 billion in FY 2027, an increase of $5.5 billion (16.1 percent). The financial plan attributes growth to medical inflation, elevated enrollment, benefit expansions, higher reimbursement rates, rising drug costs, and continued growth in aging and high-utilization populations.
The enacted budget also reflects substantial support for provider stability and behavioral health. Mental Hygiene spending rises to $9.6 billion, an increase of $1.2 billion (14.0 percent). The budget also includes $500 million in additional distressed hospital assistance and transfers $750 million in FY 2027 to the Healthcare Stability Fund to support healthcare stabilization investments.
Transportation spending in the State Operating Funds tables rises to $5.7 billion, an increase of $317 million (5.9 percent). Capital projects spending, on a State and Federal basis, rose to $21.5billion, an increase of $3.6 billion (19.9 percent).
The State also continues significant support for mass transit. The financial plan indicates total operating aid to mass transit systems of approximately $9.7 billion in FY 2027. That includes $4.5 billion in on-budget operating aid for the Metropolitan Transportation Authority (MTA), plus $4.2 billion in directly remitted dedicated taxes and fees outside the Financial Plan. On the capital side, the State is directly contributing $4.2 billion to the MTA’s 2025-2029 Capital Plan.
Social Services spending rises to $7.9 billion in FY 2027, an increase of $1.4 billion (21.7 percent). The enacted budget also includes major General Fund adds for child care expansion, aid to New York City, assistance to other municipalities, supported housing, and targeted public safety initiatives.
One of the largest affordability and family-support commitments is child care. The General Fund revisions provide $1.7 billion in FY 2027 child care expansion adds, reflecting increased subsidies, broader pre-K support, continued 3-K support in New York City, a new 2-Care NYC program, child care pilots in select counties, and related capacity-building initiatives.
On the revenue side, the enacted budget relies on taxes, federal aid, and miscellaneous receipts rather than a broad-based personal income tax increase. Total All Funds receipts are projected at $270.6 billion in FY 2027, including $131.1 billion in taxes, $41.5 billion in miscellaneous receipts, and $98.0 billion in Federal receipts.
Federal receipts account for roughly 36.2 percent of total All Funds receipts. The financial plan continues to emphasize the State’s dependence on economically sensitive tax receipts, especially personal income tax collections, while also underscoring the budget’s exposure to federal funding changes and broader economic conditions.
The enacted budget includes a broad tax and revenue package, but its overall structure is more targeted than sweeping. For households, the headline affordability action is the $1 billion POWER Check program, which provides one-time advance energy rebate payments to qualified tax filers. The budget also reforms the Child and Dependent Care Credit, makes the credit more progressive, and exempts up to $25,000 in tips from State personal income tax, subject to income caps.
For businesses, the most significant recurring action is the extension of the 7.25 percent top corporate franchise tax rate through tax year 2029. The budget also decouples State business taxes from certain federal H.R. 1 provisions, including the treatment of research and experimental expenditures and qualified production property. Additional changes include sales-tax vendor re-registration and penalty-relief provisions, targeted credit extensions, and sector-specific tax items affecting theater, agriculture, and other industries. Other targeted changes include extending the Commercial Security Tax Credit and increasing the farm donation to food pantry credit.
The budget is balanced in FY 2027, but the outyear picture remains pressured. The financial plan projects General Fund gaps of $6.4 billion in FY 2028, $10.5 billion in FY 2029, and $14.7 billion in FY 2030. Those gaps reflect the State’s continuing structural challenge: spending growth, especially in healthcare and education, is running faster than projected growth in available resources.
The fiscal outlook is cushioned by significant reserves. Principal reserves total $15.1 billion, and the State continues to preserve additional balances for timing, operations, and risk management. Even so, the financial plan highlights substantial risks tied to federal funding, Medicaid growth, inflation, capital costs, climate-related disruption, litigation, and the State’s continued dependence on high-income taxpayers and financially sensitive revenue streams.
That means the enacted budget is both strong on current-year balance and exposed on the outyears. The broad fiscal story is not immediate imbalance; it is long-term pressure.
New York’s FY 2026-27 Enacted Budget reflects another year in which the State has used the budget not just as a fiscal plan, but as a central policy vehicle. Compared to FY 2026 actuals, the State is increasing spending materially in education, Medicaid, mental health, social services, transit, and capital infrastructure, while also layering in a significant affordability narrative and a broad set of policy actions.
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