The New York state Legislature met in special session yesterday to find spending cuts at the request of Gov. David Paterson.
At press time, an announcement of cuts was expected last evening.
Paterson, a Democrat, had called for the Legislature to cut $600 million from the state budget in anticipation of a further deterioration of state revenues following $630 million of cuts to state agencies he had made since the budget was adopted in April.
"The revenues are still coming in [but] they're about to fall off the table," Paterson said in a radio interview on TALK 1300 AM Radio with Fred Dicker yesterday. The state has estimated that Wall Street bonuses in the current fiscal year will fall by 20% compared to last year and that capital gains will fall by 24%. Paterson said he expects it to get worse.
"If you talk to people in the market they think ... the fall-off in bonuses will be 30% to 40% and the fall-off in capital gains will be as much as 35%. That would put us back in the hole this year," Paterson said.
The state depends on Wall Street for 20% of its tax revenue. The downturn in the financial sector has already caused projections for next year's budget deficit to grow to $6.4 billion from $5 billion since the current budget was adopted.
Earlier this month, Paterson proposed a menu of possible cuts for the Legislature to consider including a cut to local assistance spending by 6%, a $506 million cut from Medicaid spending. Both proposals drew criticism from special interest groups and politicians alike.
A school property tax cap championed by the governor appeared dead yesterday after the Democratic-led Assembly did not act on a bill passed by the Republican-led Senate earlier this month.
The Assembly instead passed a "circuit breaker" bill which would give a tax credit to property taxpayers based on household income. Assembly Majority Leader Ron Canestrari, D-Cohoes, said the bill would primarily benefit households with incomes of less than $90,000 a year. However, the Senate did not have a similar bill.
