Published in
The Empire

Midyear budget projects potential $3.5 billion shortfall next year

The state's budget division just released its midyear fiscal report--two weeks later than expected--and as anticipated the reports doesn't have a lot of good news. Here's how the statement from the budget office characterized the situation:

Weak and unsettled economic conditions around the world -- illustrated by the Eurozone financial crisis, volatility in the financial markets, and persistently disappointing data on employment, consumer confidence, and income -- have darkened the State's fiscal outlook. The significant positive receipts results early in the fiscal year have been largely eroded as the economy weakened in the summer months. With the prospect of a weak bonus season on Wall Street, even more negative pressure is being placed on the State's receipts outlook.

Next year's budget gap has been revised upwards from about $2 billion to possibly as high as $3.5 billion. This is still nowhere near the $10 billion gap from last year, but it's not the direction anyone would like to see the State's finances headed.

Then there's a $350 million gap that's emerged this year. Governor Andrew Cuomo, according to the release, is looking to implement a plan for closing the gap. This could require breaking the legislature back to a special session. Either way, you can anticipate the calls for continuing to tax higher income earners to piggyback on this news.

The question is whether or not this report will be the thing that changes the Governor's mind. The report is after the jump.

FY2012 Mid Year Update