New York Gov. David Paterson late yesterday recalled the Legislature for an emergency economic session next month to address the state's deteriorating financial position. One approach the administration will consider is public-private partnerships to generate revenue from the state's assets, he said.
"The damage on Wall Street is infecting all of our communities and its effects on New York State's finances are devastating," Paterson said. "The fact is we confront harsh times. Let's be honest, this situation will get worse before it gets better, but the time to act is now."
The emergency session will convene on Aug. 29. In the meantime, Paterson's administration will also look at reducing the size of the state's workforce and making further cuts to agency spending.
Next year's projected budget deficit has grown to $6.4 billion from $5 billion since the current budget was adopted. The state's projected budget deficit over the next three years has grown to $26.2 billion, an increase of $4.7 billion since the budget was enacted in April.
In June 2007, Paterson said, New York collected $173 million in taxes from the 16 banks in the state that pay the most taxes on their profits. Last month collections from those banks fell to $5 million, he said.
The governor implied that the state would borrow less in the future but didn't offer any specifics.
"It is time for New York and other governments to cut up our credit cards," Paterson said. "The era of buy now and pay later is over."
State Comptroller Thomas DiNapoli in a statement yesterday said New York's problems stem from a history of over-borrowing and using one-shots to balance the budget.
"The governor plans to turn this around," DiNapoli said. "He's set a course toward financial stability. It's not an easy course. There will be pain and it will take time. It took us years to get here and it will take us years to get back."
Since 2004, New York's state-level issuers have sold a cumulative $74.99 billion of bonds, according to Thomson Reuters data, more than the state-level issuers of any other state. The nearest is California, with $59.44 billion since 2004; most states have issued less than $20 billion during that time.
New York City Mayor Michael Bloomberg - who on Monday warned Paterson against solving the state's fiscal problems at the expense of the city - said the governor had his support "in developing solutions that work for the people of the city and the state."
"All New Yorkers should appreciate that he is moving now - rather than waiting until next year or until after the next election - to tackle the serious problems we face," Bloomberg said. "The governor demonstrated that he is ready to stand up to the interest groups that will no doubt protest before the statehouse, just as they took to the steps of City Hall earlier this year."
On Monday Paterson praised Bloomberg's conservative budget practices. Spending in New York City's budget remained flat this year, whereas the state's budget grew to $123.67 billion in fiscal 2009 from $117.69 billion last year.
Senate Majority Leader Dean Skelos, R-Rockville Center, said the Assembly should follow the Senate's lead and pass a constitutional amendment to cap annual state spending growth to 4%. A constitutional amendment would require a voter referendum.
"It's time for him to embrace our spending cap, put it on the agenda, and urge the Assembly to follow suit," Skelos said in a statement. "However, even in the absence of a constitutional spending cap, the Legislature and the governor should voluntarily agree to comply with the spending cap in next year's budget."
Skelos also suggested New York could cut its workforce through attrition and early retirement.
Also yesterday, the state Senate announced that it would convene in special session on August 8 to enact the governor's property tax cap proposal.