Citing the economic downturn and the high cost of borrowing in the bond market, New York is looking to cut back on capital projects that were approved for the current fiscal year, Gov. David Paterson announced yesterday.
"The current financial crisis has restricted the access of many municipal issuers to the bond market, including those with strong credit ratings like New York State," Paterson said in a directive issued to state agency heads. "In light of the current market crisis and the potential risk to the state's finances, it is critical that we prioritize our new capital spending to focus on health and safety projects that address our state's most important infrastructure needs."
Any state capital project on which construction has not yet begun will be subject to a new review process that requires joint approval of the state Division of the Budget and the Office of State Operations. The state will approve projects considered "essential," which under the directive means that failure to complete the project would threaten public health or safety, directly violate a court order or law, or cause a substantial reduction in federal aid.
Division of Budget spokesman Matthew Anderson wouldn't speculate on how much of the $6.8 billion capital program could be cut as a result of the review. Any changes to the state's bonding program would follow from potential cuts, Anderson said.
The Legislature will meet in special session on Nov. 18 to cut the current year operating budget. The budget deficit in the current fiscal year has grown to a projected $1.5 billion, and next year's gap is projected at $12.5 billion.