Governor Pataki's Executive Budget is balanced for the coming year,
but creates a budget gap of nearly $8 billion over the following
two years, state Comptroller Alan Hevesi has warned.
The Comptroller warns that Albany's debt “will continue to
skyrocket” under Governor Pataki's five-year capital plan.
State-funded debt service is projected at $6.5 billion five years
from now, an increase of 48 percent from the current year.
Comptroller Hevesi renewed his call for tight, new Constitutional
limits on state borrowing. The Business Council strongly supports
that idea as the first step toward real fiscal reform in Albany.
The Comptroller’s report said the Executive Budget “cuts
taxes while increasing spending, prolongs the rapid growth in debt,
and maintains the use of non-recurring revenues or one shots to
pay for continuing expenses.”
The report said the Executive Budget includes $4.2 billion in risks
that could swallow some or all of this year's projected surplus.
“[T]he proposed budget increases the future gap between revenues
and spending and increases the State’s already huge debt burden,”
Hevesi said. “The proposed budget makes the State’s
fiscal problems worse and leaves it to someone else to fix the growing
problem.”
The report found that spending growth in the Executive Budget outpaces
revenue growth. “The Executive Budget includes a three-year
financial plan during which General Fund spending is projected to
increase by 19.4 percent, more than two and a half times the 7.3
percent growth in revenues,” the report said.
The tax cuts included in the Executive budget have relatively minor
fiscal implications for the coming year, the report added. However,
the impact will increase to $3.4 billion in 2009-09.
“Properly designed tax cuts can spur improvements in the State’s
economy, but to be responsible, such tax cuts should be matched
by spending cuts. This budget, instead, proposes large spending
increases on top of tax cuts, paid for with one-shots,” Hevesi
said.
The combination of spending and revenue will place “enormous”
pressure on New York's finances within the next two years, the report
said. In addition, the report said high energy prices, a weakening
house market and rising interest rates have the potential to further
reduce state revenues.
“We simply cannot afford to do business as usual anymore.
Abandoning the shortsighted budgeting for a long-term vision for
the State will not only improve the State’s financial standing
and make us more competitive, but will have a favorable effect for
years to come,” Hevesi said.
16
Feb
2006