ALBANY—The economy is still bad, and New York is still running out of money, and David Paterson said he will tell budget officials to withhold payments to local governments and schools.
“We are in a very deep quagmire. New York is now at the breaking point. We are about to cross the financial Rubicon and pass into disaster,” David Paterson just said in a speech on Wall Street. “You can’t spend money you don’t have.”
Bob Megna, the budget director, said that the state’s general fund could, on its current course, end December with a $1 billion negative balance. (This has never happened before.) This could be covered by other funds, but just barely, Megna said.
“We will end the month–the general fund will end the month–in a negative position,” Megna said. “We can borrow from other state funds to close that position, but even if we use all our funds, all our rainy day funds, we’re still on the knife’s edge.”
Rather than do that in an “unorganized, chaotic fashion,” Megna said officials will opt for delay. “We’re in the process of developing that plan as we speak and we should be coming out with something this week.”
Paterson has bashed legislators for their half loaf and cited their inaction in a political fund-raising appeal. Paterson threatened to delay the local assistance payments while acquiescing to the deficit reduction deal; some have questioned Paterson’s legal authority to do so. He said he doesn’t care.
“I will continue to withhold payments until this economy is leveled off. I will probably be sued for this, but I will not let New York State run out of money on my watch,” Paterson declared.
The speech was made in the heart of the Financial District at 26 Broadway, the old headquarters of the Standard Oil Company, 48 Wall Street, the old headquarters of the Bank of New York, before an audience composed of business executives as well as labor and civic leaders. Paterson tipped his hat to Wall Street, drawing an ovation.
“Now Wall Street has come under great attack–Americans are mad at Wall Street,” Paterson said. “We can remind them of the inextricable progress between New York’s economy and Wall Street’s benefits.”
“You don’t hear anybody in New England complaining about clam chowder,” he said. “If you say anything about oil in Texas, they’ll string you up from the nearest tree. We need to stand by the engine of our economy in New York State, and that engine is Wall Street.”
Also during the speech, Richard Ravitch previewed some stark numbers: over four years, New York has projected deficits of $44 billion. For the next fiscal year–a new budget is due by April 1–Ravitch said the deficit will be “over $9 billion.”