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Governor Cuomo’s budget office broke the bad news recently. The budget deficit for the current fiscal year had grown to $350 million dollars, and the projected gap for the new fiscal year would be a $3.5 billion dollar hole, if spending were to take place as planned.
At first, the governor said he preferred to address the budget deficits as part of larger goals, like dealing with the general economic malaise and trying to create more jobs to generate economic activity, which could bring more revenue to the state.
But, as economic trends continue to worsen, the governor admits that deficit closing steps need to be taken soon.
“The numbers are collapsing,” Cuomo said earlier this week.
Betsy Lynam, an analyst with the budget watch dog group the Citizens Budget Commission says with just one quarter of the fiscal year remaining, it’s going to be increasingly difficult to find ways to close the gap.
“Typically what you’d see in a deficit reduction plan at this point is one shots, some small revenue items perhaps,” said Lynam, who said it will be hard to “realize significant savings.”
The governor is under increasing pressure to renew the state’s income tax surcharge on millionaires, which expires at the end of the year. Lynam thinks the income tax should be allowed to end.
“Jumping to the tax card right away without seeing what the spending needs are, is premature,” said Lynam.
But Lynam says she’s encouraged by news, rumored for weeks and reported Tuesday in the Wall Street Journal, that the governor is considering a change in the state’s tax code, which could result in wealthier New Yorkers paying more taxes. She says addressing the inequalities in the current tax code is fairer then keeping a surcharge that’s directly targeted at millionaires.
“When we look at the whole tax system in New york, there are other things that need to be changed,” said Lynam, who thinks a “fuller review” is needed.
Cuomo remains opposed to simply renewing the millionaire’s tax, saying it sends the wrong message to businesses who may want to locate in New York.
The governor, when asked by reporters about what steps he planned to take to close the budget gaps, did not rule out any other options, though.
“I’ll be discussing those options with the legislative leaders,” Cuomo said.
The mid year financial report released by Cuomo’s budget office says options to close the gap include more cuts to state agencies, delaying payments to local governments and schools, suspension of some construction projects, and even borrowing money short term to pay for operating expenses. A spokesman for the budget office says there are no plans though, to delay payments due later in December to school districts and municipalities.
The governor says he’d like to see a special session of the legislature before January to address the growing financial problems, but no date has been set. He says so far there’s no agreement on what steps to take, saying they don’t have a “product” yet.
The legislature returns for the new session on January 4th, and fiscal issues are expected to dominate the agenda.