Halfway into its fiscal year, New York’s projected budget deficit has grown to $4.1 billion, up from $3 billion last month, as personal income tax revenues have dropped, state Comptroller Thomas DiNapoli said yesterday.
“If we stay on the current path New York will run out of cash,” DiNapoli said in conference call with reporters. “The first six months have not been good ones for New York. ... Spending decisions made in the spring are not sustainable.”
The comments came as Gov. David Paterson prepared to release a new deficit reduction plan today. Earlier this month Paterson ordered $500 million of agency cuts to help address a deficit that last month he had pegged at $3 billion.
In July, state budget director Robert Megna said New York could face a negative cash-flow situation by November, which could prompt it to borrow from existing state education and transportation funds — known as the the short-term investment pool — to put cash into the general fund.
DiNapoli said the worsening revenue picture could force the state to borrow from the short term investment pool this month to meet cash flow needs.
Tax collections through Sept. 30 totaled $18.1 billion, $634.5 million below projections and $3.6 billion less than last year. Most of the decline in the first six months came from personal income tax receipts that were $605.7 million below projections.
DiNapoli said positive news about Wall Street bonuses and the stock market’s strong performance were not enough to return tax revenues to what they had been in recent years.
“We just can’t depend on Wall Street to generate the revenue needed to paper over the state’s structural budget gaps as it had before this downturn,” the comptroller said. “We need to align recurring spending with recurring revenue.”
The state faces a $9 billion gap in the next fiscal year, the comptroller’s office reported.
DiNapoli said the state should not undertake deficit borrowing and he did not think it would issue IOUs like California did earlier this year.
