Governor Cuomo’s budget office is released some bad news Monday. The state’s budget gap is even bigger than expected, with a $350 million dollar shortfall for the current year and a $3.5 billion dollar gap next year.
Fourteen days after it was due, Governor Cuomo’s budget office released it’s mid year budget report Monday, and the news is grim.
The current state budget is out of balance by $350 million dollars, and next year’s structural gap could be as high as three and half billion dollars.
The mid year report cites “weak and unsettled economic conditions around the world “, including the Euro-zone debt crisis, persistent unemployment, and eroding consumer confidence. In addition, Wall Street bonuses, which are heavily taxed in New York, are expected to be as much as 20% lower than last year.
Tammy Gamerman, with the watchdog group Citizens Budget Commission, says the bad news about the budget is hardly unexpected.
“We’ve seen in the monthly cash reports for the past few months that cash revenues have been falling short of expectations,” said Gameram. “And economic activity has been very volatile.”
Cuomo’s budget office says the governor has decided to try to close this year’s gap without calling the legislature back into session for now, but does not rule out the possibility that the Senate and Assembly could return yet again to help bail the state out.
Gamerman, with Citizens Budget Commission, says $350 million dollars is not that big, compared to a $133 billion dollar total state budget.
The mid year budget report says steps that may be taken to close the gap include more cuts to state agencies, delaying payments to local governments and schools, suspension of some construction projects, and even borrowing money to pay for operating expenses. Neither the governor nor his budget office are saying right now which of those options they will choose.
The news of the bigger budget gap concerns advocates for more state spending on schools. Billy Easton, with Alliance for Quality Education, a group affiliated with the teacher’s union, says schools were already slashed by 1.3 billion dollars in the current budget, and many districts have had to cut programs as a result.
The new state budget permits additional spending on schools by an up to 4% increase. Easton says the state would be able to afford that, if Cuomo and lawmakers agree to extend an income tax surcharge on millionaires that expires at the end of the year.
“If the state would reinstitute the millionaires and billionaire’s tax, they’d be enough money to wipe out this deficit altogether,” said Easton.
Governor Cuomo remains against the idea. Citizens Budget Commission is also opposed to extending the surcharge. The Commission’s Gamerman says it makes more sense to reexamine New York’s entire income tax structure, with perhaps an eye to increasing taxes permanently on the highest tax brackets.
But she says there’s also plenty of room to cut state spending to close the gap, as well.
Republican State Senate Majority Leader Dean Skelos says his house is willing to work with the governor to balance the budget. And Skelos, who opposes reinstating the millionaire’s tax, says he believes that, like last year, Cuomo and the legislature can once again close the multi billion dollar gap without raising any new taxes.