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 Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

Health Research Inc. Turns Over its Payroll Records Despite Claiming To Be Exempt from FOIL

The full payroll records of more than 2,400 de facto state employees are available to the public for the first time after being released by Health Research Inc. Read More

Emergency Billions Pose Opportunity—and Risk—for NYS Schools

New York schools are to post publicly today plans for spending a huge pile of unexpected and unbudgeted cash. Read More

New York’s Medicaid Rolls Kept Pace with a Nationwide Surge During the Pandemic

New York's Medicaid and Child Health Plus programs added three-quarters of a million enrollees during the coronavirus pandemic, roughly matching the pace of a national surge in sign-ups. Read More

New York’s Medicaid and Public Health Crises Get Short Shrift in the New State Budget

In spite of an ongoing pandemic and spiraling Medicaid costs, New York's health-care system received surprisingly little attention in the new state budget. On issue after issue, law Read More

Empire State’s new budget is a bridge to nowhere

Looking ahead to an uncertain post-pandemic recovery, New York’s newly enacted state budget for fiscal year 2022 raises spending by staggering amounts that—barring an unlikely rapid return to peak 2019 economic activity in New York City—can't possibly be sustained for more than a few years. The budget is a mid-2020s fiscal disaster in the making: an incomplete bridge over a deepening river of red ink. Read More

Schumer’s First Spending Bill as Majority Leader Tailors Money for New York Medicaid

The pandemic relief bill includes a boost in Medicaid funding that appears to be tailor-made for Senate Majority Leader Chuck Schumer. Read More

A Letter From Washington Shrinks New York’s Budget Gap by $2 Billion or More

In a letter to governors two days after President Biden's inauguration, the U.S. Department of Health and Human Services said that the pandemic-related federal public health emergency "will likely remain in place for the entirety of 2021." Read More

NY Post-Pandemic Employment Tide Stopped Rising At Year’s End

New York's post-pandemic employment recovery came to a halt and moved into reverse in December, according to the state's for the final month of COVID-wracked 2020. Private payroll employment in December was 966,000 jobs below the level of the previous 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

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@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.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!