Governor David Paterson is right on the money in calling for “bold and aggressive action to reduce state spending” to deal with the severe and worsening fiscal crisis detailed in today’s Mid-Year Budget Update. At this point, after months of dire warnings, there’s hardly anything the governor can say that would make the problem sound worse than it is. But touting a “$47 billion budget deficit over the next four years,” as is done in the headline of the governor’s accompanying press release, doesn’t really do much to illuminate the issue.
That $47 billion figure represents the cumulative totals of projected budget gaps from now through fiscal 2011-12 — i.e., adding $1.5 billion, plus $12.5 billion, plus $15.8 billion, plus $17.3 billion. But the state can’t simply roll over its budget gaps from one year to the next. To the extent it closes next year’s projected gap with recurring savings, those future gaps will be reduced as well. So that “$47 billion deficit” boils down to nothing more or less than a really scary number — the kind of number that jumps out and screams “Boo” at anyone who isn’t already paying attention.
As the fiscal crisis unfolds, the most important numbers to track are these:
- $1.5 billion, which is the amount by which Paterson says receipts will fall short of disbursements in the current fiscal year, which ends March 31.
- $2 billion, which is the governor’s savings target for the Nov. 16 special session. Real, permanent spending reductions with a value of $2 billion during the last quarter of this fiscal year would represent a big head start in dealing with the much larger problem ahead.
- $12.5 billion, which is the size of the gap between projected receipts and expenditures in the 2009-10 budget, before subtracting the full-year value of any budget reductions enacted in November.
Next year’s budget shortfall stems in almost equal measures from (a) a further drop in receipts and (b) a projected 12 percent increase in baseline spending, including a “current law” hike of $2.2 billion (10 percent) in school aid.
Obviously, none of that baseline spending increase can or should be allowed to go forward. What’s left to cut — really cut — amounts to roughly 11 percent of the state’s current general fund budget. Which is plenty.