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NYS Comptroller: Budget Built on Uncertain Foundation

Thursday, July 15, 2010

David Paterson and his budget director, Robert Megna. (http://farm5.static.flickr.com/4033/4706842988_f4ee8dd2d4_b.jpg/flickr)

New York State Comptroller Thomas DiNapoli says the state budget is based on shaky fiscal assumptions and warns of yet another midyear deficit if corrections aren’t made. The state budget, more than three months late, is also causing some political fallout, as revealed in a new poll.

DiNapoli says the new state budget is based on a questionable financial foundation: A preliminary analysis by the comptroller’s office finds $4.8 billion in revenue could be based on overly optimistic assumptions. Further complicating matters, the State Senate hasn’t finished the budget. They have yet to approve tax and revenue bills. Until then, the comptroller says he cannot declare the budget complete, and lawmakers will not be paid.

“It’s a wasted time budget,” said DiNapoli. “It’s still not done."

The governor and the legislature are counting on $440 million from collection of cigarette taxes on Indian lands, $250 million in unspecified workforce reductions, $300 million from the yet-to-be-approved gambling expansion at Aqueduct Race Track, and $500 million from a crackdown on Medicaid fraud. In addition, the state is counting on $1 billion from the federal government in health care funding, which may not materialize.

Gov. David Paterson agrees that the federal Medicaid dollars are uncertain, and has been urging the legislature to adopt a contingency plan.

The comptroller also finds that, overall, the budget grew by $9.6 billion from last year, a 7.6 percent increase, which is twice the rate of inflation.

“The issue of spending and controlling spending is still the greatest challenge facing us in New York,“ the comptroller said.

DiNapoli says lawmakers relied on $14.4 billion in federal stimulus monies to balance the budget, funds that will likely not be available next year. As a result, he says, New York could face a $7 billion budget gap in the next fiscal year.

Meanwhile, a Siena College poll finds that the budget mess could cause political problems for lawmakers. The survey shows more New Yorkers blame the legislature for the late state budget and the state’s dismal finances than they do the governor. Siena’s Steve Greenberg says when respondents were asked to give the legislature a grade, half flunked them, and a quarter said they were barely passing.

“Three quarters of the voters say the legislature deserves a D or an F for their work on the budget,” said Greenberg.

Paterson’s average is closer to a C-minus, says Greenberg.

Paterson has gained the upper hand in the budget fight in recent weeks, forcing the legislature to implement most of his budget through weekly emergency spending measures. He also recently vetoed more than 6,700 budget items approved by the legislature, cutting $525 million from the budget. Paterson has won praise in newspaper editorials, but the public has not warmed to the governor.

Paterson is not seeking election, but most state legislators are, and Greenberg says they should be worried. When asked whether they would re-elect their current senator or assembly member this fall, 52 percent said they would prefer to vote for someone else.

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