New York’s Budget Gap Grows 18% to as Much as $9.65 Billion
By Michael Quint
March 2 (Bloomberg) -- New York state’s spending gap has grown 18 percent to as much as $9.65 billion as tax collections fall short of projections made last month, state officials said.
The $850 million reduction in tax revenue between now and the end of March 2011 comes as lawmakers grapple with an $8.2 billion deficit projection that the governor and comptroller said was too low because of unrealistic assumptions about other revenue sources.
New York, the third-largest U.S. state by population, faces a cash shortage as taxes fell amid the worst economic slump since the 1930s.
“What you are looking at is a deficit in the range of $8.5 billion to $9.65 billion,” said E.J. McMahon, director of the Albany-based Empire Center for New York State Policy, which assesses the state economy and finances.
“The revenue consensus would bring Division of Budget’s deficit forecast up to $9 billion,” said Matt Anderson, a budget spokesman. The forecast includes a $485 million “reserve for fiscal uncertainty,” according to the amended budget.
The state also has about $1.2 billion of other reserves. Governor David Paterson proposed a $135.2 billion budget for the year beginning April 1, or $79.3 billion excluding federal aid and capital spending.
The lower end of the range set by McMahon assumes the state collects money from sources that Paterson said yesterday were doubtful, agreeing with earlier statements by Comptroller Thomas DiNapoli.
In addition to overestimated tax revenue, DiNapoli said the state might not collect a $300 million payment expected from developers of a gambling parlor at Aqueduct Racetrack, $200 million from the Battery Park City Authority and $250 million from a tax amnesty plan.
Other doubtful aspects of Paterson’s budget plan include $250 million of still-to-be-negotiated savings in contracts with unionized state workers, McMahon said.
To contact the reporter on this story: Michael Quint in Albany, New York, at mquint@bloomberg.net. Last Updated: March 2, 2010 11:02 EST
