From the Morning Memo:

New York’s expected budget gap is growing larger — a more than $4 billion deficit heading into the next fiscal year now poses a challenge for Governor Andrew Cuomo and state lawmakers as they prepare to run for re-election.

“I can’t say it’s looking terribly positive to be honest with you,” said Democratic Assemblyman John McDonald of the Albany area. “Personal income tax collections are lagging behind. There is a hope that eventually that will pick up once Washington makes a decision what they’re going to do.”

It gets worse in future budget years — deficits growing to $6 billion and then $8 billion. And even if spending is capped at a 2 percent increase, the budget gap shrinks to $1.7 billion next year.

The gap is one of the largest the state has had to face when Cuomo took office dealing with a $10 billion deficit.

“I think we have to be very pragmatic and realistic going into this year’s budget that as much as we’re trying to catch up from what was lost in 2008 and 2009, I don’t know if we’re going to be able to advance as much as we would like to this year,” McDonald said.

The problem stems in part from delayed tax payments, which budget officials say is due to uncertainty over tax reform on the federal level. Cuomo says if Republican tax plans are enacted, ending deductability for state and local taxes, New York’s revenue would eventually be impacted.

“Then you would have to decimate health care, education or you would have to find additional revenue,” Cuomo said last week on a conference call with reporters.

But Republican state lawmakers say more work can be done to control spending.

“It’s always a challenge and we have to take a look at what we are spending and we are spending too much in New York state,” said Assemblyman Ray Walter, a Republican from East Amherst.

Walter pointed to economic development spending and tax incentives he says don’t work.

“These are things that we need to take a hard look at and are we getting the bang for the buck,” Walter said. “If we’re not, let’s work on cutting those expenses and using that money elsewhere it’s needed.”