Paterson, On Wall Street, Defends Financial Sector
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- December
- 9
Gov. David Paterson today continued to sound the alarm about the state’s fiscal problems, warning that the state has exhausted its ability to close budget gaps with one-shot revenues and gimmicks.
Speaking at the Museum of American Finance on Wall Street, Paterson also offered a sympathetic voice to the much-maligned financial sector, saying the state relies on Wall Street revenue to pay for services across New York.
“Our issues in New York are tied to the progress and the ability of Wall Street to create revenues. The health of our financial sector directly affects the economic security of people in all corners of New York state,” Paterson said.
While he said the public has a right to be angry about the abuses on Wall Street, he defended the record bonuses set to be paid this year and suggested that the bonuses may simply offset the salaries that many financial-sector employees receive. Paterson said New York should embrace Wall Street like other states do with their trademark industries.
The state Legislature last week agreed to close $2.7 billion of an estimated $3.2 billion mid-year budget gap. But Paterson, Lt. Gov. Richard Ravitch and budget director Robert Megna said the reductions didn’t go far enough.
As a result, Paterson is expected to announce as soon as this week the specifics of plans to delay payments for state services in order to keep the state solvent. At the end of December, the state faces a negative cash flow balance of at least $1 billion.
“We are in a very deep quagmire. New York is now at the breaking point. We are about to cross the financial Rubicon into fiscal disaster,” Paterson said.
Paterson reiterated that he expects to be sued over delaying payments, but is willing to accept that possibility. Lawmakers and special-interest groups has indicated they would likely sue if Paterson delays payments agreed to in the 2009-10 budget, which was approved in April.
“I will continue to withhold payments until this economy is leveled off,” Paterson said. “I will probably be sued for this, but I will not let New York state run out of money on my watch.”
Ravitch, appointed by Paterson last summer, painted a gloomy picture of the state’s long-term finances, saying the state faces a $9 billion deficit next year that would grow when federal stimulus money runs out.
According to Paterson’s budget office, the deficit is expected to soar to $19 billion in the 2012-13 fiscal year.
Ravitch said the state’s ethics problems have received more attention recently than its financial woes. On Monday, former Senate Republican Leader Joseph Bruno was convicted in a federal corruption trial.
“The ratio of coverage of those ethics issues to the fiscal crisis is disproportionate in our judgment,” Ravitch said.
This entry was posted
on Wednesday, December 9th, 2009 at 1:56 pm by Joseph Spector.
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