New York Gov. Eliot Spitzer's proposed fiscal 2009 budget relies too heavily on debt, makes revenue assumptions that may be unrealistic, and could burden the state with future unsustainable spending commitments, state Comptroller Thomas DiNapoli said yesterday in a report.
"We're facing very uncertain economic times," DiNapoli said in a news release. "We should only spend within the parameters of what the state can afford. When you spend more than you take in, something has got to give."
According to the report, the state will end fiscal 2008 with $54.3 billion of state-funded debt outstanding under the Democratic governor's proposed five year capital plan, and that figure would rise to $67.27 billion by fiscal 2013, a 24% increase. Most of that debt increase, 94%, would come through so-called back door borrowing through public authorities. Debt service would rise during that period to $7.48 billion from $5.04 billion, making debt service the fastest growing component of the budget.
DiNapoli, also a Democrat, also criticized proposed new revenue streams such as a tax on illegal drugs as potentially being unrealistic.
"The governor and the Legislature should make sure this week's revenue consensus process includes only revenues that are likely to materialize," DiNapoli said. If tough times continue in the financial industry, which generates 20% of the state's revenue, it could put more pressure on the state budget, he said.
Under the "quick start" budget process enacted last year, the Senate, Assembly and governor have to come to a consensus on revenue by midnight tonight or DiNapoli would make a binding forecast. The governor's budget projected revenues of $116.9 billion in the current fiscal year and $123.11 billion in fiscal 2009.
Both the Senate and Assembly have weighed in on the executive budget with their own forecasts, which differ sharply. The Senate's combined revenue forecast for the current fiscal year and fiscal 2009 is $99 million greater than Spitzer's budget, while the Assembly's forecast comes to $615 million less than the governor's forecast. The final budget is due on April 1.
Senate Majority Leader Joseph Bruno, a Republican, criticized the governor's budget earlier this week.
"The governor's budget would raise taxes on families and cut back relief for overburdened property taxpayers," he said in a statement.
Division of Budget spokesman Jeffrey Gordon said in a statement that the comptroller's analysis echoed Spitzer's concerns.
"Recent economic developments make it critical that all sides continue to adhere to realistic and conservative revenue projections and limit spending to affordable levels," Gordon said. "Gov. Spitzer identified significant and wide-ranging spending reductions that allowed for targeted investments needed to build our economy for the future, while maintaining manageable levels of debt and use non-recurring resources."
DiNapoli did not weigh in on Spitzer's proposal to privatize the lottery in order to create a $4 billion endowment for the state's higher education system because not enough details were available. The state DOB received six responses this week to a request for proposals for financial advisers to look at leasing the lottery. The DOB plans to award the contract on or about March 17.