ALBANY — From New Jersey to California, many states are contemplating a raft of painful budget cuts as they wrestle with evaporating tax revenue and ballooning deficits.
But in New York, which faces the same economic uncertainties, no such severe cutbacks are on the table. In fact, Gov. Eliot Spitzer has proposed adding about $6 billion to this year’s $118 billion budget and hiring some 2,000 new state workers.
Yet over the weekend, Mr. Spitzer and legislative leaders reduced by another $250 million their estimate of how much money the state will have to finance its operations. That came three weeks after a downward revision by Mr. Spitzer of $384 million.
Those adjustments, coming in quick succession, underscore just how shaky the financial outlook is as profits on Wall Street drop and the housing market slips further into decline.
And despite assurances from Mr. Spitzer and his financial advisers that the proposed budget is reasonable, a growing number of budget experts in Albany are beginning to wonder whether the state’s spending plan for the next fiscal year borders on profligate.
“We need to assume that it’s going to get worse before it’s going to get better,” said Thomas P. DiNapoli, the state comptroller, who issued a report last week that was highly skeptical of the governor’s plan. “I think we’re living in a time of tremendous volatility, and even the experts don’t have expert advice anymore.”
If there is a common theme lawmakers are hearing from economists and budget experts, it is to proceed with caution.
“There’s some uncertainty out there,” said James Orr, an economist with the Federal Reserve Bank of New York. “So they’ve got to be careful.”
Job growth in the state is slowing. Initial unemployment claims have reached their highest level in five years. And some economists have asserted that the country is already in a recession.
For its part, the Spitzer administration has said that it is prepared to make adjustments to the budget if the outlook worsens considerably. But Mr. Spitzer’s budget advisers acknowledged that there is only so much they can plan at this point.
“We’re anticipating, obviously, that we have to be cautious going forward,” said Laura L. Anglin, the governor’s budget director. “I believe we positioned ourselves very much accordingly, and hopefully we’re able to weather this storm.”
Though Mr. Spitzer has revised his revenue estimates twice because of rapidly shifting economic forces, he has still proposed increasing spending by about 5 percent, more than one and a half times the rate of inflation.
Some policy experts said they thought it was impractical — even imprudent — to move forward without proposing more cuts to the $124 billion budget.
“They’re not leaving much margin for error if the economy gets worse than they projected,” said E. J. McMahon, a senior fellow at the Manhattan Institute, a conservative research organization. “If we’re in the kind of situation we were in at the turn of the ’90s, we’re looking at a future where the only way the governor can make these commitments is with a huge tax increase. That’s where I’d worry things are drifting.”
Compared with states like New Jersey and California, New York’s projected deficit is a smaller portion of its budget. And the state also has at its disposal a sizable rainy-day fund, which now contains more than $1 billion.
New York has also held up relatively well as home prices have fallen across the country. The run-up in property values in recent years was sharper in states like California, Florida and Arizona than in New York, where increases were more moderate, leaving less of a bubble to burst.
But if there is a recession, some economists believe it will hit New York harder than many other states because New York’s fortunes are so intertwined with Wall Street’s.
“The epicenter of this crisis is financial,” said Chris Varvares, president of Macroeconomic Advisers, a national economic research group. “So you’d think it’d have a bigger disproportionate impact on New York, and it probably will.”
Twenty percent of the state’s revenue comes from Wall Street — from personal income taxes, corporate income taxes and taxes on real estate deals. And with Wall Street in a state of turmoil because of the collapse of the subprime mortgage market, the state is facing its grimmest outlook for revenue collection since after the Sept. 11 attacks.
But the Spitzer administration, confident that the economy is not going to sour much further, insisted that it had properly calculated how much money it can spend.
“We don’t believe it’s going to get much worse than it is,” Ms. Anglin said. “Obviously, if things deteriorate further than anticipated we will have to take additional actions. But we think it’s a little premature to say.”
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