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February 22, 2010

 

DiNapoli Warns Current Year Deficit Could Reach $2 Billion

Releases Reports on New York’s Revenue Picture and State’s Cash Position

New York State Comptroller Thomas P. DiNapoli today warned that unlikely revenues included in the Deficit Reduction Plan and lower tax collections could increase the current year state deficit to more than $2 billion. In an analysis of the Governor’s amendments to the proposed 2010-11 state budget, DiNapoli found that for the state to meet current revenue projections, total General Fund tax revenues would need to grow by more than 46 percent in March.

“The Executive’s 21-day budget amendments made the state’s structural imbalance worse,” DiNapoli said. “There’s an increased reliance on temporary, non-recurring and risky revenues that essentially push the state’s fiscal problems to another day. Families all across New York are dealing with a new economic reality. It’s time for the state to do the same.

“Last year’s buy-time budget exacerbated the state’s long-term structural imbalance. We have to make sure we don’t make the same mistakes again.”

The risks identified by DiNapoli include:

  • $300 million in revenue from the franchise fee associated with video lottery terminals (VLTs) at Aqueduct Racetrack. State Financial Plans dating as far back as SFY 2005-06 have counted on Aqueduct VLT revenue that has never materialized. The controversy associated with the Governor’s recommended franchisee could further delay the receipt of this revenue.
  • $200 million in revenue from the Battery Park City Authority. The release of these funds has yet to be approved by New York City.
  • $250 million in revenue from a tax amnesty plan. In prior years, significantly lower amounts were anticipated from similar proposals. Through January 31, the state has collected $2.1 million in taxes under this program.
  • Lower tax revenues. The Financial Plan consistently overestimated revenues in SFY 2009-10. Estimated General Fund tax collections for SFY 2009-10 have been reduced by more than $2 billion from earlier projections. Through 10 months of the fiscal year, the state is down 9.3 percent compared to last year.

DiNapoli also released the January 2010 Cash Report. The report found the General Fund ended the month with a balance of $3.2 billion, which was $28.6 million lower than projected. General Fund revenue collections, including transfers from other funds, through January 31 of $41.5 billion were $10.8 million below projections updated in the 21-day amendments released February 9 and $4 billion or 8.7 percent lower than collections for the same period in SFY 2008-09. General Fund spending of $40.2 billion was $18.3 million higher than projections updated in the 21-day amendments or $2.3 billion or 5.5 percent lower than the same period last year.

The state’s finances are generally broken down by two main categories: General Fund and All Governmental Funds. The General Fund is the major operating fund of the state and accounts for all receipts that are not required by law to be deposited into another fund. All Governmental Funds includes general, special revenue, debt service and capital projects funds, as well as funds from the federal government. DiNapoli’s monthly cash report compares state finances against the same time period last year and the state’s current year Financial Plan.

 

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