New York State Faces $315 Million Budget Deficit on Lower Tax Collections
New York state faces a $315 million budget deficit because tax revenue hasn’t increased as much as projected three months ago, when lawmakers approved the spending plan, the Division of Budget said.
Tax collections for this fiscal year are now forecast at $61.4 billion, down $343 million from August estimates, the division said in a report yesterday. The budget, including increased federal aid, is now estimated at $135.3 billion.
“The slowdown in economic growth in the second and third quarters of calendar year 2010 has been more pronounced than expected,” the report said. Slower growth reduced tax revenue and increased contributions to the Medicaid health-insurance program for the poor, it said.
For fiscal 2012, which begins April 1, the state faces a deficit of $9 billion, up from $8.2 billion previously estimated, according to the report.
To close this year’s gap and shrink future deficits, Governor David Paterson will ask lawmakers to approve across- the-board spending cuts, according to the updated budget. Reductions of 1.5 percent to 2 percent over the remainder of the fiscal year would save about $375 million, the division said.
Paterson said Oct. 26 he will recall lawmakers to Albany on Nov. 15 to vote on appropriations and legislation to reorganize the bankrupt New York City Off-Track Betting Corp. He said other items may be on the agenda.
In a separate report last month, Comptroller Thomas DiNapoli said state tax collections through Sept. 30 were $528.8 million less than expected. Business taxes were $243.3 million below plan, according to the comptroller’s report.
The division said business taxes will be recovered in coming months, while personal-income-tax collections will be $300 million less than projected for this fiscal year.
Paterson last week announced plans to fire 898 workers by Dec. 31 to help achieve $250 million of savings assumed in this year’s budget. Existing contracts for the state’s 130,000 unionized workers expire on March 30, and the state’s financial plan for future years “does not include any costs for potential wage increases beyond that point,” the report said.
Lawmakers left the state capital in August, four months past the start of the fiscal year, after completing a $133.8 billion budget to close a $9.2 billion deficit.
To contact the editor responsible for this story: Mark Tannenbaum at firstname.lastname@example.org
Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.