New York Gov. David Paterson's proposed fiscal 2010 budget relies on new revenues and savings that may not materialize, Comptroller Thomas DiNapoli said yesterday in report on the budget.
"The governor has struggled to present a balanced budget in the face of an unprecedented financial crisis," DiNapoli said in a press release. "It's a step in the right direction. But there are risks in the governor's plan. Many of the proposed revenue raisers and spending reductions may not be enacted or realized."
The proposed budget calls for closing a $13.7 billion gap in fiscal 2010 with $9.5 billion of spending reductions, $3.1 billion of new revenue from taxes and fees, and $1.1 billion from non-recurring actions.
Balancing the state's budget on spending reductions and revenue actions that have been proposed before only to be rejected places additional strain on the state's financial plan during a recession, the report said.
"Unlike previous years, growth in the State tax revenues will not be available to cover any shortfall created by Legislative rejection of Executive spending and revenue proposals," the report said.
Some of the revenue proposals include a tax on sugary beverages, limits on itemized deductions for high-income taxpayers, eliminating a tax exemption on clothing under $110, and raising taxes on beer and wine. Proposed revenue actions and cuts to Medicaid and health care total $3.5 billion while education-related cuts and revenue actions total $3.7 billion.
Paterson said in a statement that his executive budget proposal was responsible and balanced. DiNapoli's "report highlights many of the challenges involved in developing a balanced, long-term budget plan during the greatest economic challenge facing our state since the Great Depression," Paterson said.
Even if the gap-closing measures are approved and a proposed shift toward using more pay-as-you-go financing for capital projects does materialize, the state's long-term financial plan "remains structurally out of balance," the report said. Even with an increase in pay-as-you-go financing, new debt issuances will still be larger than in previous years, and state-supported debt will increase 21% to $56.9 billion over the next five years.
"Even though the governor is pushing for more pay-as-you-go capital projects, debt levels are still too high," DiNapoli said.
The proposed budget would cut nearly $1 billion of state assistance to New York City, which "could hinder the city's efforts to balance its budget next year," the report said. It also criticized the projected growth of spending which would outpace revenue growth through fiscal 2013. General fund spending would grow at an average annual rate of 5.4% during that time, while revenue would grow by an average of 3.8%.