[NYAPRS Enews] NYT, NYP: State Revenues Expected to Drop Another $3.5 Billion

[Matt Canuteson]

State Revenues Expected to Shrink Another $3.5 Billion

By Nicholas Confessore   New York Times   September 29, 2008

 

State Comptroller Thomas P. DiNapoli said on Monday that the turmoil on
Wall Street could strip New York State of up to $3.5 billion in tax
revenue over the next 18 months, worsening the state's already tight
fiscal picture and forcing further painful cuts to the state budget.

 

"The preliminary September numbers show the fallout from the Wall Street
crisis is starting to hit the state hard," Mr. DiNapoli said in a
statement. "The volatility in the markets is creating difficulty in
predicting budget revenues, and today's vote in Washington will only
increase that volatility. But this is a warning bell. The state has to
watch its spending. Every dime counts in a crisis." 

 

The comptroller's full report is here:
http://www.osc.state.ny.us/reports/budget/2008/impactonbudget092908.pdf 

 

Gov. David A. Paterson has already led lawmakers through a difficult yet
relatively modest round of budget cuts and expects to call the State
Legislature into a new special session, perhaps in advance of the
November elections, for further cuts.

 

Mr. DiNapoli said that the comptroller's office was now seeing a
substantial drop in business and sales taxes, indicating a "turning
point" in the state's finances. The unemployment rate in August
increased by more than 1 percent over the previous August, he said, and
is expected to grow the rest of the year. 

 

Recent events on Wall Street could push job losses in the finance sector
as high as the losses following the September 11 attacks, Mr. DiNapoli
said. Roughly one-fifth of the state's tax revenue comes from the
financial sector.

 

"The implications go far beyond the securities industry itself since
each job lost on Wall Street could result in as many as three jobs lost
elsewhere within the state, from lawyers to restaurant owners, with the
highest concentrated job loss in New York City," he noted. 

 

The Senate majority leader, Dean G. Skelos, issued this statement in
response to Mr. DiNapoli's report: 

 

I spoke with Comptroller DiNapoli today regarding the state's revenue
outlook over the next 18 months. The Senate has been monitoring this
situation very closely, particularly in light of the failure of Congress
to approve a financial rescue plan.

 

The health of the nation's financial sector has a greater impact on New
York than any other state. Our revenues are closely tied to the actions
of Wall Street, which saw stocks fall dramatically and immediately after
today's vote defeating the proposed bailout bill. That's why is it
critically important that Congress approve a plan to stabilize the
financial industry, restore consumer confidence, provide protections for
taxpayers and help New York and the nation recover from a difficult
situation.

 

I will be meeting with Governor Paterson and Speaker Silver on Friday to
discuss state revenues, our budget situation and other fiscal matters.
It is imperative that we work together in a bipartisan manner to address
these concerns in the best interests of the taxpayers of New York.

 

http://cityroom.blogs.nytimes.com/2008/09/29/state-revenues-expected-to-
shrink-another-35-billion/ 

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NY GOES FROM BAD TO WOR$E 

By FREDRIC U. DICKER   New York Post   September 29, 2008

 

GOV. PATERSON'S original estimate that the Wall Street meltdown will add
$1 billion to New York's projected deficit has just grown by 30 percent,
The Post has learned. 

 

Paterson's budget experts, in grim projections prepared last week,
concluded that the earlier calculations on which the governor based his
projection two weeks ago were off by as much as $300 million. 

 

That means that the total projected deficit for the fiscal year
beginning April 1 is approaching a massive $7 billion - comprising an
August forecast of $5.4 billion in the red, plus the $1.3 billion
additional revenue losses attributed to the Wall Street collapse. 

 

"While state revenues have held up pretty well until now, you have to
remember that the Wall Street bonuses don't come in until the fiscal
quarter beginning in January, running through late March and early
April," said a Paterson administration source. 

 

"And we recognized that there aren't going to be any Wall Street bonuses
this year, and when you examine the [tax] impact of that, you come up
with an even larger loss than expected to the state. 

 

"That's the reality that we're facing." 

 

Besides facing an even larger loss from a collapse in Wall Street
bonuses, the state faces a greater-than-expected shortfall in corporate
business taxes, the source said. 

 

"It's not just Wall Street bonuses. It's business taxes, too. 

 

"We've been forced, because of the worsening economy, to revise downward
again the estimate of the taxes the state will get from the corporate
franchise tax," the source continued. 

 

Paterson will outline his even-more-dismal deficit forecast Friday to
the leaders of the Legislature, who have strongly resisted the
governor's suggestion that a special pre-election legislative session be
held to reduce state spending.

------------------

The ferocious battle for control of the state Senate has taken some
unexpected turns, with one supposedly vulnerable incumbent Republican
appearing surprisingly strong - and at least one "safe" Democrats
unexpectedly weak, insider polls suggest. Political operatives say
longtime Queens GOP Sen. Serphin Maltese, who was almost defeated two
years ago, has gained surprising ground on Democratic City Councilman
Joseph Addabbo Jr., while veteran Democratic Sen. William Stachowski of
Buffalo has lost ground to Dennis Delano, a hero Buffalo police officer
celebrated for efforts to exonerate two wrongly imprisoned individuals.

 

http://www.nypost.com/php/pfriendly/print.php?url=http://www.nypost.com/
seven/09292008/news/columnists/ny_goes_from_bad_to_wore_131276.htm 

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