New York’s projected deficit for fiscal 2011 has grown by $750 million in less than three weeks to $8.2 billion, Gov. David Paterson said yesterday. Lower-than-forecast personal income tax collections and higher-than-expected Medicaid costs are driving the widening gap, his office said.
“We need to take serious steps to address this shortfall,” Paterson said in a press release. “Financial sector bonuses aren’t going to bail us out this time. We are going to have to make real cuts.”
The governor will propose further measures to close the gaps in his $134 billion budget proposal on Feb. 9.
January personal-income tax receipts came in more than $1 billion below expectations, according to the governor’s office.
The Division of Budget projects that some of the shortfall will be recovered as bonuses in the financial services sector are paid in the coming months, but the net change will be $550 million lower than projected in the governor’s executive budget for fiscal 2011 proposed last month.
The economic downturn has also increased the state’s Medicaid case load to record levels, the governor’s office reported, driving projected expenses up by $400 million.
On the positive side, some spending in other areas is expected to fall by $200 million, more than forecast, the governor’s office said.
Comptroller Thomas DiNapoli also projected revenue could come in lower than forecast in an analysis of the executive budget released yesterday, though his estimate was lower by a more modest $500 million.
DiNapoli said the budget proposal is structurally imbalanced because it relies on $11.3 billion of resources that will disappear in fiscal 2012 — including federal stimulus funds and a personal income tax surcharge on high earners — while long-term spending is projected to grow faster than revenue.