Given recent revenue trends, it should come as no surprise that the state’s first-quarter financial plan update is forecasting a $2.1 billion deficit for the current fiscal year. But some of the financial details released by the Division of the Budget (DOB) today are getting even more worrisome.
For example, DOB expects to be scraping the bottom of its cash drawer before the end of the year. From page 12 of the plan:
DOB projects that the General Fund will end the months of November and December 2009 with negative cash balances of $1.2 billion to $1.4 billion, absent the implementation of potential cash management actions, and will return to a positive month-end balance in January 2010. The Enacted Budget authorizes the General Fund to borrow resources temporarily from other funds for a period not to exceed four months. The current forecast projects that the General Fund will continue to have periodic negative cash balances during the year. The amount of resources that can be borrowed by the General Fund is limited to the available balances in the State’s Short-Term Investment Pool. DOB will continue to closely monitor and manage the General Fund cash flow during the fiscal year.
The state last dipped into reserves to cover cash shortfalls in 2002, but on a much smaller scale. The projected cash flow problems for 2009-10 appear to be the largest, in relative terms, since the severe fiscal crisis of the early 1990s.
However, on a more positive note, DOB is also saying that the state will end the year with a cash balance of $1.378 billion, including the $1 billion Tax Stabilization Reserve Fund, unchanged from the Enacted Budget Plan. Governor Paterson is promising to deliver a Program to Eliminate the Gap (PEG) in early fall, including “substantial reductions in local assistance and State Operations spending, as well as other measures to achieve a balanced budget in the current year.”
Hmm. It’s difficult to see how truly “substantial” reduction in local assistance and state operation spending could occur without a mid-year reduction in school aid or more employee headcount reductions than the governor has planned to date.
Meanwhile, as revenues continue to drop, state operating funds spending has actually grown by $106 million since the budget was enacted, as shown by the table on page 4 of the financial plan update.
Stay tuned.
About the Author
You may also like
Hochul’s ‘Straight Talk’ on Medicaid Isn’t Straight Enough
Arguably the biggest Medicaid news in Governor Hochul's budget presentation was about the current fiscal year, not the next one: The state-run health plan is running substantially over budget.
Read More
New York’s Medicaid Spending Is Running Billions Over Budget
New York's Medicaid program ran billions of dollars over budget during the first half of the fiscal year, adding to signs of a brewing fiscal crisis in Albany.
According to the fro Read More
Hospital Lobby’s TV Campaign Spreads Misinformation About Medicaid
As New York's health-care industry agitates for more money from the state budget, two of its most influential lobbying groups are airing TV ads that make alarmist and inaccurate claims about Medicaid. Read More
Hochul’s ‘Pay and Resolve’ Push for Hospitals Triggers Déjà Vu
Two years ago last week, I wrote in the Daily News about how then-Governor Andrew Cuomo was pushing a costly change to insurance law on behalf of a hospital group that had supported his campaign through a fund-rai Read More
The Looming Collapse of a Long-Term Care Insurer Raises Questions for DFS
As the Hochul administration presses for the creation of a "guaranty fund" to bail out failed health insurers, the state is quietly moving to seize a small company that could be the fund's first target. Read More
Hochul puts Medicaid spending on a steeper slope
Governor Hochul is releasing the brakes on Medicaid, allowing state spending on the safety-net health plan to increase more than twice as fast as it typically did during the Cuomo administration.
Read More
Hochul’s agenda mostly sidesteps health care
Governor Hochul gave health care surprisingly little attention in her State of the State speech on Tuesday – a sign that taking on dysfunction in one-sixth of the state's economy ranks low on her list of priorities. Read More
Federal omnibus deal has big implications for New York Medicaid
The big spending bill heading for a vote in Washington this week would scramble the outlook for Medicaid in next year's state budget, mostly for the better.
The $1.7 trillion federa Read More