The state’s budget deficit is expected to grow by at least $2.2 billion in the upcoming fiscal year, bringing the funding gap to an unprecedented $16.2 billion, state officials announced this morning.
Gov. David Paterson and legislative leaders said the state’s weak economy is lowering the state’s revenue projections for the 2009-10 fiscal year, which starts April 1.
Lawmakers and Paterson have warned for weeks that the gap would likely grow as the state’s economy continues to struggle. But the loss of additional revenue complicates leaders’ efforts to pass a state budget by the April 1 deadline.
“I will take whatever actions are necessary to get our fiscal house in order and eliminate this deficit,” Paterson said in a statement. “I look forward to working with my partners in the Legislature to address this historic challenge.”
State officials attribute the problem largely to declining tax revenues of about $2.8 billion. The state is receiving less personal income taxes due to job losses and declining wages, less sales tax due to declining consumption, and less business taxes “due to reduced economic activity and profitability.”
Another factor is a loss of $370 million in revenue after a deal fell apart to install video-lottery terminals at Aqueduct Racetrack in Queens.
In New York, new unemployment claims have reached 39,000 per week this month, an increase of more than 20,000 a month compared to one year ago. The state’s unemployment rate has increased from 4.4 percent in January 2007 to 7 percent in January this year, and is expected to reach 8.4 percent by 2010.
State officials have several times sought to close budget gaps, only to have the deficits grow again. Last month, the state estimated a $13 billion deficit for the 2009-10 fiscal year. But that grew by $1 billion last month and now by another $2.2 billion.