State Ends Year With Operating Deficit and Little In the Bank
New York state government ended the calendar year with about a $600 million shortfall in its main operating fund for the first time in recent history, requiring the state to use most of its reserves to pay December’s bills.
The deficit in the general fund illustrates the difficult financial situation New York continues to face, Gov. David Paterson said Thursday.
While he stressed the state can meet its obligations, Paterson said, “Our state is spending beyond its means. Our state is running out of money.”
Paterson indicated that revenues are expected to pick up in January, allowing him to restore $750 million in aid to schools and local governments that he withheld in December due to the cash crunch.
School groups have sued Paterson over the delayed payments, but have postponed the court proceedings in hopes that Paterson will restore the money.
Comptroller Thomas DiNapoli said the state ended the year with about $883 million cash on hand, a little more than half of one percent of the total $132 billion state budget.
But Paterson said most of that will have cover the $600 million general-fund deficit, leaving a paltry $283 million left in the state’s coffers. Budget officials, however, said it’s unclear just how much money the state will have in the bank after all the bills are paid.
Paterson said that if revenues pick up, the state could face a $7 billion to $8 billion budget deficit when the 2010-11 fiscal year starts April 1. Paterson had been predicting a $9 billion gap.
DiNapoli warned that the state must cut back on spending, knocking the current budget adopted last April as fiscally unsound. He said the state is starting the new year in a “tenuous financial position.”
“New York dropped the ball,” DiNapoli said. “The state’s New Year’s resolution must be to make better budget decisions.”
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