(Updates with comptroller’s comments from third paragraph.)
Nov. 15 (Bloomberg) -- New York’s deficit for the current year, pegged by the Division of Budget at $315 million, may more than triple, Deputy Comptroller Tom Nitido said today.
This year’s projected gap will be followed by a $9 billion deficit in the year beginning April 1, according to budget documents. Next year’s imbalance may reach $9.3 billion if lawmakers don’t close the current deficit with spending cuts, according to Robert Megna, the state budget director.
“It’s time to take off the rose-colored glasses,” Comptroller Thomas DiNapoli said today in a statement that accompanied a report on spending and revenue for the first seven months of the state’s fiscal year.
To balance the state’s general fund, its main account, and meet budget division projections, tax revenue must increase more than 10 percent in the year’s remaining five months, or more than twice the 4.5 percent growth rate of the first seven months, DiNapoli said. His spending and revenue estimates, along with those from the Senate Finance and Assembly Ways & Means committees, were presented today at a budget hearing in Albany.
Nitido’s $1 billion projection for this year’s deficit “is not outlandish,” Megna said. As for projections for the coming fiscal year, “everyone would agree that the gap is between $9 billion and $10 billion,” he said.
Governor David Paterson said he plans to call lawmakers back to Albany, the state capital, to approve spending cuts at a date still to be determined.
New York’s reliance on taxes from high-paying financial jobs leaves it dependent on Wall Street’s annual cash bonuses, which are expected to rise 10 percent this year, Megna said.
Megna and DiNapoli said the state is vulnerable to revenue growth that may be slower than expected if taxpayers don’t accelerate their capital gains this year. That may occur if Congress decides not to raise federal taxes to 20 percent from 15 percent after Dec. 31, as many newly elected Republicans prefer.
The budget division estimates this year’s spending plan at $135.3 billion, and projects a rise to $144.3 billion next year.
The state’s basic problem is that spending for programs approved in past years is expected to grow faster than tax revenue, as the state’s economy slowly recovers from the recession, Megna said at the hearing.
New York, the third most-populous state after California and Texas, expects to lose $5.4 billion next year as federal economic-stimulus aid winds down, Megna said. That money would be replaced with state funds under current law, he said.
In the Medicaid health-care program for the poor, the end of the additional federal aid in June would increase the share paid by New York state and local governments to 50 percent from 38 percent, he said.
--Editors: Ted Bunker, Stephen Merelman.
To contact the reporter on this story: Michael Quint in Albany, New York, at email@example.com.
To contact the editor responsible for this story: Mark Tannenbaum at firstname.lastname@example.org
© Copyright 2014 Bloomberg News. All rights reserved.