The Post’s Fred Dicker reports today that Paterson administration budget officials now believe New York State’s 2008-09 budget gap will be in the neighborhood of $7 billion, up from a projected $5.5 billion in the wake of the Legislature’s August special session.

It will be surprising if the figure stays as low as $7 billion, though.  As of early July, the state’s financial plan was still forecasting that net personal income tax receipts would increase, from $38.17 billion in 2008-09 to $39.76 billion in fiscal 2009-10.   In the wake of the ongoing turmoil on Wall Street, probably the best-case scenario over the next two years would be a repeat of the trend in state revenues between 2001-01 and 2002-03, when personal income tax receipts dropped 16 percent.   Applied to the current revenue base, that would be a loss of $6 billion over the next two years — a period when baseline expenditures are headed rapidly in the opposite direction.

That drop in New York state and city tax revenues earlier in this decade — brought on by a combination of the bursting of the Wall Street bubble, the 9/11 attacks and a relatively mild and brief national recession — was concentrated almost entirely among top-bracket taxpayers, investors and Wall Street types.  A broader and deeper recession would make the revenue hit much, much larger.

The message for Gov. Paterson and the legislative leaders with whom he’ll be meeting Friday: don’t wait.  Get to work on deep and permanent budget reductions now, before it’s too late.

About the Author

E.J. McMahon

Edmund J. McMahon is a senior fellow at the Empire Center.

Read more by E.J. McMahon

You may also like

With Hopes Dashed for “Blue Wave” Bailout, Cuomo Needs to Deal With Budget Shortfall

With the national election results still unclear, Governor Cuomo can no longer put off tough decisions on how to balance New York's pandemic-ravaged state budget. Read More

For State Lawmakers, Secrecy May Pay

New York state legislators may get a raise on January 1, 2021—but the people who elect them may not get to find out before voting ends next week. Read More

Fewer Workers, Not More Jobs, Explains NY’s September Unemployment Rate Drop

New York State's unemployment rate has fallen sharply since the economically devastating pandemic lockdown last spring. But as state Comptroller Thomas DiNapoli points out in  his latest economic report, the jobless rate doesn't tell the whole story. Read More

It’s Official: New York State’s Second Quarter Economic Crash Was the Worst on Record

Further evidence of the massive damage done to New York’s economy by the coronavirus pandemic shutdown has emerged in the latest gross domestic product (GDP) data from the federal Commerce Department's Bureau of Economic Affairs. Read More

A Federal Emergency Rule Is Inflating New York’s Medicaid Enrollment

Strings attached to federal coronavirus relief funding appear to be inflating New York's Medicaid enrollment – and costs – at a time when the state faces unprecedented deficits. Read More

Sluggish Reopening: NY’s Private Job Count Down 1.1 Million From Pre-Pandemic Level

Six months into the novel coronavirus pandemic, New York State's private-sector employment recovery was the slowest in the 48 contiguous states—and getting slower. Read More

New York State Has Dug Itself Into Its Deepest Hole On Record

"State's Financial Hole Deepens" is the headline on Comptroller Thomas DiNapoli's press release accompanying the August cash flow report. Read More

State’s Per-Recipient Medicaid Spending Rises to 3rd Highest in the U.S.

New York's per-recipient Medicaid spending has soared to the nation's third highest rate, a sign of fiscal trouble for one of the state's most important programs. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100
Fax: 518-434-3130
E-Mail: info@empirecenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.