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| Stalemate in Albany as State Nears Its Last Dollar | |
| 2009-11-28 | |
| New York State is running out of cash. Without a budget deal, New York will be left with just $36 million in the bank by the end of December, according to current projections. And the money will last that long, officials say, only if the state chooses to fully exhaust its emergency reserves by tapping several billion dollars' worth of temporary loans from its rainy-day fund and short-term investments. For weeks, Gov. David A. Paterson has invoked the shrinking amount of available cash in an effort to provoke the Legislature to deal with the state's $3.2 billion budget deficit. So far, the specter of such dire fiscal outcomes has been greeted with what amount to legislative shrugs, chiefly in the recalcitrant State Senate. The stalemate in Albany is familiar, of course, and there are many lawmakers and experts who predict that the Legislature will act at the 11th hour, as it has before, to avoid the worst damage. But with no end in sight to the negotiations, state officials are beginning to reckon with what could be an unprecedented cash crisis. And many say that even if the current deficit is closed, the state is at considerable risk going forward -- less able, for instance, to borrow money because of worsening credit ratings and ill prepared for far more severe deficits ahead. New York, which has a roughly $130 billion budget, the second-largest behind California, is certainly not suffering alone. The 50 states have faced cumulative deficits of more than $250 billion over their last two budget cycles, according to data compiled by the National Conference of State Legislatures. In New York, the weight of the recession has been coupled with the struggles of Wall Street, the state's main financial engine. But New York is by no means California, which has become the national measuring stick of statewide financial ruin. The state is not sending out i.o.u.'s to creditors, students at state schools are not holding sit-ins in dormitories, and Albany, unlike Sacramento, has not had to grapple with relocating a tent city for the homeless. Further, revenue typically picks up in January, when Wall Street bonuses, however diminished from previous levels, start coming in. But the situation in New York is not good, either. In modern times, the state's general fund has never had a negative balance, according to the state comptroller's office. If New York does in fact run out of cash, it will have to delay paying some of its biggest bills. Chief among the bills the state will face in December are $1.6 billion in aid the state is supposed to pay school districts, $2.5 billion in property tax relief to individual homeowners, and $500 million in general aid meant to go to local governments. "If you put any of that off, at some point people are not getting the money they are expecting," said the state comptroller, Thomas P. DiNapoli, a Democrat. "That could affect local governments, school districts, nonprofits, hospitals." The governor and his staff have raised the threat of layoffs and furloughs if the impasse drags on, and there is the potential for a partial shutdown of some government services. "Unless we act, New York will run out of money, even after we delay payments to schools and local governments," the governor said Tuesday in a brief address via Web cast. "This is an unprecedented fiscal emergency." The state's credit rating is below average and at some risk of a further downgrade. The Paterson administration has already squeezed the budgets of state agencies, an action it can take unilaterally. And this year's skirmish is considered a prelude to a fierce budget fight in 2010, when the deficit is far larger in what is an election year for the entire Legislature. There have already been any number of ways that the strain on the budget has been felt across the state. Billions of dollars worth of scheduled increases in school aid, enacted by Gov. Eliot Spitzer to settle a long-running lawsuit over the distribution of school aid, will be stretched out over seven years instead of four. Taxes on the wealthy have been raised, and fees of all kinds have been increased. For the first time in decades, the state Police Academy probably will not have a new class for either the fall or the spring. The state has closed three upstate minimum-security prison camps and six facilities operated by the Office of Children and Family Services. Hours have been limited and facilities closed at parks including Jones Beach, and parks across the state are mowing fewer lawns to save money. The state ice rink was closed last winter. Budget watchdogs say far steeper cuts are needed to reckon with deficits that will escalate sharply in 2011 as federal stimulus money runs out and the new wealth tax expires. But negotiations have been fundamentally stalled -- and even irrational at times. Senate Democrats, who have thus far refused to hold a vote to legalize same-sex marriage, have nonetheless floated the theory in negotiations that the state could expect to take in more than $50 million a year in new revenue from the legalization of same-sex marriage, from a combination of marriage license and tourism revenue.
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| Posted by:Fred |
| #1 Brother can you spare a dime? Tom Waits Seem appropriate for New York |
| Posted by: Solomon Omolush1187 2009-11-28 12:45 |