Government Affairs Albany Update
February 5, 2010
On February 1, Business Council President Kenneth Adams testified before a joint legislative budget hearing, and urged the Legislature to adopt a budget that avoids increased spending and no new taxes, citing the state’s continued economic problems. New data on the state’s financial condition came out this week that reinforces the need for significant financial restraint and budget reform:
- Governor Paterson announced on Wednesday that the projected $7.4 billion budget gap for the new fiscal year had increased by $750 million, due to reduced projections of personal income tax revenues (down by $550 million), a higher than expected Medicaid caseload (increasing costs by $400 million), somewhat offset by $200 million in lower than expected spending in other areas.
- The same day, State Comptroller Thomas DiNapoli also warned that the current year deficit will likely be larger than projected by the Governor, and that the Governor’s Executive Budget proposal “relies on unrealistic revenue projections and other questionable proposals.” The Comptroller also issued an analysis of the Executive Budget. Among its most significant findings was that the proposed budget includes $11.3 billion in “temporary funds,” and that “approximately 20 percent of permanent General Fund spending is supported by revenue that disappears over the next three years.” This includes $4.7 billion in Federal stimulus funds, $5.5 billion in temporary personal income tax surcharges, and $557 million in temporary energy assessments.
- The Paterson administration also announced that the MTA “commuter tax” adopted last April will likely bring in $350 million less in 2010 than projected.