The outlook for a timely and fiscally responsible New York State budget is as poor as it has ever been at this point in a fiscal year that ends March 31.

We like NY's proactive stance!

The lame-duck governor is thoroughly discredited and distrusted by lawmakers (Don Imus vote of confidence notwithstanding).

The deficit financing plan offered by Lt. Gov. Richard Ravitch raises novel and troubling questions, and a key lawmaker says it is unlikely to be taken up this year.

There’s little sign that anyone around the state Capitol is seriously intent on enacting a budget that will close next year’s projected $9 billion deficit, much less make a down payment on closing the longer-term gaps that overhang the future.

Somehow, however, this message has not penetrated the downtown Manhattan offices of Standard & Poors.  S&P just issued an updated report on the state’s creditworthiness — concluding that New York deserves an unchanged AA/Stable for general obligation debt and a top-notch AAA/Stable for personal income tax (PIT) bonds of the sort Ravitch wants to tap for deficit financing.

The money graf from the report:

We expect that aggressive budget administration will result in manageable out-year gaps
that will be closed each year, despite what we view as significant budget gaps to be closed in the coming year. We see New York State’s current proactive stance in identifying future budget gaps and its commitment to working through these issues in a timely manner as credit strengths. The outlook also reflects our view of the ongoing pressures that all high-service credits experience and the resulting chronic budget stress. The stable outlook anticipates that the state will enact material and timely budget-closing measures in fiscal 2011 to avoid further large fund balance drawdowns.

“Aggressive budget administration”? “Proactive stance”? “Commitment to working through these issues”? Have these guys confused us with some other state?

On the other hand, the S&P report does note that “the state’s debt levels remain above average by all measures and, although a debt-reduction program has been adopted, we expect only gradual reduction in future borrowings.”  And that doesn’t even take the Ravitch plan into account.

Meanwhile, back on what David Paterson likes to call “Planet Albany,” an unnamed member of the Senate Democratic majority reportedly said that conference’s highest priority is the imposition of property taxes on non-profit institutions.   This may not have been what S&P had in mind.  Or then again, maybe it was; after all, there are so many of those nice non-profits to tax.  Yet another thing to be glad about!

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

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