Higher spending and lower revenues than anticipated in New York have created a $315 million mid-year budget gap, the state Division of Budget said in a midyear report last week.
Despite the new deficit, the state's economy and fiscal health have stabilized compared to the past two years, the report said.
"As I have during my entire tenure in office, I will do everything in my power to protect the fiscal integrity of New York, and I am determined to ensure that the state is on sound financial footing when I leave office at the end of December," Gov. David Paterson said in a news release.
"There are sure to be great days ahead for New York, but until our state and our nation emerge from this long and difficult downturn, we must make the difficult decisions to ensure economic recovery does not leave us behind," he said.
General fund tax receipts in the first half of the fiscal year that began April 1 came in $510 million below budgeted levels, but the state projects higher second-half receipts will mitigate some of that. Officials project year-end tax receipts will be $278 million below budget.
Personal income tax receipts for the year have been revised downward to $36.6 billion, a $300 million decrease from projections but still a $1.8 billion increase from last year's actual receipts.
The weak economy has also driven up spending on public assistance as more unemployed are added to caseloads. Legal challenges to a state plan to tax tobacco sales on Indian reservations have stalled that anticipated revenue source.
Paterson has called for 898 public employee layoffs before his term ends on Dec. 31 to help close the budget gap. The fiscal 2012 deficit that Governor-elect Andrew Cuomo will have to close has grown to $9 billion from $8.2 billion, the Budget Division said.