Read the original op-ed here.

As we have watched the stock market drop and serious concerns about the coronavirus mount, we budget watchdogs predictably have started to worry. A potential pandemic’s threat to the economic recovery and the market slides are real reminders of the importance of fiscal emergency preparedness.

The unfortunate reality is both New York City and state are woefully underprepared for a recession. The Citizens Budget Commission’s research shows that a recession that looks like an average of those that recently occurred would cause three-year revenue shortfalls of $34 billion for the state and $15-20 billion for the city. The city and state are not ready for this — having only 6-16% of that amount in reserve.

So, what now? Even in better circumstances, without economic storm clouds hanging so low, the state and city should be preparing. However, the events of the past week or so require doubling down.

State leaders, who are in the midst of negotiating the budget right now, should close state budget gaps by restraining recurring spending — without tax increases or fiscal gimmicks. Any revenues coming in above current projections--and the state already has identified $700 million -- should be saved in its rainy day funds. Most of the heavy lift on spending restraint will be in Medicaid restructuring, but the state should finally stop increasing school aid to wealthy districts that do not need it for a sound basic education and put away those funds to protect New Yorkers in the future when rainy days increase their needs.

In New York City, where budget adoption is still a few months out, the mayor should immediately ask agencies to develop plans for productivity-based savings totaling 1% or more of city-funded expenditures to be included in the executive budget. The Mayor’s preliminary budget was restrained in its spending increases, and that should remain the standard. The Council should do its part as well, by identifying savings and not adding funds to support new or expanded programs. Both mayor and Council should commit to putting all funds above projections into reserves.

Finally, no one should ignore the fact that New York City’s situation would be entirely different if a well-structured rainy day fund were in place. Last November, New Yorkers resoundingly voted to approve the creation of a rainy day fund, but to make it a reality the State must pass legislation enabling its use. Absolutely essential to that law change is the requirement that the rainy day fund only be used during an economic recession or severe emergency, lest it become just another slush fund to be used at the whim of political leaders.

New York state and city should seize the opportunity to improve our financial emergency preparedness. It is the best way to be able to help New Yorkers in both good times and bad.