With New Projections, State Budget Gap Tops $9 Billion

The budget gap is not getting any smaller.

Last night, the Assembly, the Senate and Paterson administration put out their “consensus economic and revenue forecast report” which projected an additional shortfall of $850 million for the next fiscal year.

Taken with the $750 million in additional gaps the governor noted in early February, that puts the state budget deficit through next March at just over $9 billion, which is a serious gap for a $135 billion budget.

And there’s no guarantee that this will be the end of the ever-upward march of the deficit.  

The basis for the revenue projections includes a three percent growth in real U.S. G.D.P. in 2010 and 3.3 percent in 2011. That assumption, it appears, is higher than a number of other economic forecasts, including the Congressional Budget Office (which projects 2.1 percent in 2010 and 2.4 percent for 2011), or the city’s Office of Management and Budget (2.3 percent in 2010; 2.8 percent in 2011). That office has typically proved far more conservative than the state (the result: a projected $2.8 billion in surplus revenue this fiscal year). The state’s projections do, however, fit within the Fed’s range of economic forecasts.

Should the state’s G.D.P. projections be significantly off, there will most likely be another round of mid-year budget-deficit reduction plans in a couple of months.

Yesterday, the governor also said he did not expect to get a $300 million payment for the development of a racino at the Aqueduct racetrack before the end of the month, which by now is more of an acknowledgement of the obvious, given the reluctance of Assembly Speaker Sheldon Silver to sign onto the deal with Aqueduct Entertainment Group. That money had been budgeted for the current fiscal year, which ends at the end of the month. (The state also budgeted for Aqueduct funds last year, only to see that deal collapse weeks before the fiscal year ended). 

2010-11ConsensusReport