Comptroller Sees Big Hole

New York was expected to end calendar 2009 with a negative general fund balance that could be as high as $600 million, state Comptroller Thomas DiNapoli said on New Year’s Eve.

“New York State is ringing in the new year in a tenuous financial position,” DiNapoli said in a press release. “For the first time in recent history, the state’s general fund is estimated to end the calendar year in the negative.”

The state will have to borrow from other state funds to pay its bills, according to DiNapoli.

This was not exactly unexpected.

The fiscal 2010 budget extended the length of time the state could borrow from its Short Term Investment Pool.

Previously New York could borrow from various funds in the STIP, including those for state and federal capital projects and debt service. However, they had to be paid back within the month so the state would not end a month with a negative balance.

The enacted budget extended the period to the lesser of four months or the end of the fiscal year. The state invests the funds until they are needed.

Last month the Legislature approved a $2.7 billion deficit-reduction program that fell short of the projected $3.2 billion current fiscal-year deficit. According to the state Division of Budget, borrowing from the STIP would not be sufficient to close the state’s gap.

Gov. David Paterson then ordered the withholding of $750 million of aid, primarily to school districts and municipalities. Unions and education advocacy groups last month sued the governor to prevent him from delaying the payments.

“This cash crunch and the deficit that still has not been fully addressed could have been avoided if New York had adopted a more realistic budget last April,” DiNapoli said. “Now we see the results. New York dropped the ball. The state’s New Year’s resolution must be to make better budget decisions.”

Paterson will present his executive budget proposal later this month. The budget will have to close a gap of at least $6.8 billion.

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