New York’s cumulative budget deficit has increased by $34 billion, or 25%, over the last three years, state Comptroller Thomas DiNapoli said in a report Friday.

The estimated budget gap represents the state’s largest since the financial crisis in 2009. The state’s deficit is due in part because of increased spending for Medicaid and education at the same time the Trump administration has made billions in cuts to safety-net programs and solidified in Congressional Republicans’ spending bill.

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“This is likely just the beginning; the relationship between the federal government and the states is being restructured, and state governments will be facing drastic reductions in federal aid that could force difficult decisions about state revenue and spending priorities,” DiNapoli said. “There is an urgent need to formulate a fiscal response to the federal reconciliation bill and support New York’s safety net.”

State lawmakers approved a $254 billion budget for next year. Medicaid spending rose to more than $112 billion, about 44% of the total budget. The increase comes as Gov. Kathy Hochul (D-NY) has said federal cuts to health Medicaid will cost New York’s health-care system and budget about $13 billion per year.

“Besides increasing the number of New Yorkers who are uninsured or suffering from food insecurity, the state will also contend with changes made to terminate funding for climate, clean energy and resiliency programs,” DiNapoli said.

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Spending for schools increased by $37 billion, or 4.8%.

Job growth in the Empire State has also slowed dramatically compared to last year. From January to May 2025, New York employment growth averaged 4,600 jobs per more, which is down from 19,100 a month during that same period last year.