Perhaps the state should start adopting some more conservative budget projections.
A little more than two weeks after the governor unveiled his 2010-2011 budget, he’s already announced a big revision: the deficit is actually $8.2 billion, or $750 million larger than he initially thought.
The main reason for the adjustment, according to the Paterson administration: Wall Street bonuses proved not to be the geyser of tax revenue that many anticipated. Income tax revenue is projected to be $550 million lower than expected, and Medicaid costs are up $400 million from the fist budget–due to higher caseload levels–while other revenues are expected to be up by $200 million.
Assembly Speaker Sheldon Silver, suggested in a statement that the governor’s projections may still be short:
These two-week revisions strongly suggest that the Governor’s initial budget submission did not present an accurate picture of the state’s finances. Furthermore, the revenue projections still do not accurately reflect the real shortfall in January receipts, or realistic expectations regarding revenues in February and March.
To meet the Governor’s new estimates, revenues in February and March would need to grow by 37 percent over last year. This level of increase appears to be highly unlikely, as revenue growth in the first ten months of the 2009-2010 fiscal year has been flat or declined slightly in comparison to the previous year.
I urge the Governor to provide the people of New York State with realistic revenue estimates in his 21-day budget amendments.
The $750 million shortfall will hit both the current year’s budget and next year’s budget, according to a spokesman for the Division of the Budget, meaning the state plans to push the gap to next year as opposed to filling it this year. (They’ve already done this to the tune of $500 million, as the Legislature approved a mid-year deficit reduction plan in January that was half a billion dollars short of the gap seen by the Paterson administration). Throughout the past year, there has been a familiar pattern of revenue falling short of projections; the projections are revised, and then, again, revenue falls further.
As he’s been wont to do lately, the governor took the opportunity to criticize the Legislature for its desire to fight cuts, not propose them.
From the governor’s statement:
“The money simply isn’t there. Financial sector bonuses aren’t going to bail us out this time. We are going to have to make real cuts … I want to start hearing about how we are going to reduce spending, not increase it. We need to be talking about how we are going to close the deficit – not add to it. My partners in the Legislature are going to have to face reality and work with me to make the tough choices to save our State.”