October 11, 2007
Report: State spending to increase more than revenue over next four years
New York State spending will outpace revenues significantly over the next four years, leading to an estimated $8.7 billion spending gap by fiscal year 2010-11, according to state Comptroller Thomas DiNapoli's annual report on state finances.
“Spending from State resources is forecast in the fiscal year 2007-08 Enacted Budget Financial Plan to increase 31 percent over the next four years, outpacing the forecast of 21 percent revenue growth and creating a roughly $8.7 billion spending gap by the end of SFY 2010-11,” the report said. At the same time, the state's outstanding debt will increase to nearly $64 billion by the end of the 2012 fiscal year, raising state-funded debt service costs to an estimated $7.1 billion.
“While debt can be an effective and appropriate funding mechanism to finance capital assets, New York has also issued debt to finance operating deficits, with approximately $8.8 billion outstanding for this purpose,” the report said. “This is troubling because New York is the second most heavily indebted state behind California.”
“There's a structural imbalance in New York's state budget, and it won't just go away,” Comptroller DiNapoli said. “There were some important reforms enacted this past legislative session, but more needs to happen. New York can't wait any longer. The State has to set aside the piecemeal, random approach to reform. There has to be a comprehensive approach to government finance reform to correct the state's long-standing structural problems.”
The increased spending over the next four years is not a new trend, the report found. Spending increased 26.6 percent between the 2002-03 fiscal year and the 2006-07 fiscal year, the report said. That increase was more than double the 11.9 rate of inflation during the same period.
Comptroller DiNapoli's report is available at www.osc.state.ny.us/press/releases/oct07/100907.htm.