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January 5, 2010

DiNapoli Releases State Cash Watch
Numbers for December 31

New York State Comptroller Thomas P. DiNapoli said the state’s General Fund ended December with a negative cash balance of $577 million. This is the first time in recent history the state’s General Fund carried a negative balance into the next month. On December 31, DiNapoli’s office projected the General Fund’s cash balance at the end of December would be a negative $600 million.

The state’s cash-on-hand, or the balance in the state’s Short Term Investment Pool, was $1.2 billion ― a historically low level when compared with data from the last 15 years. This was $358.9 million more than DiNapoli’s office projected, primarily because of $129.8 million from a settlement secured by the Manhattan District Attorney’s Office with Credit Suisse and other late day deposits.

“New York State pinched pennies and squeaked through December,” DiNapoli said. “The severe cash shortage in December should be a stark warning. If revenue collections are lower than expected for January and February, the state will have an even bigger problem to deal with in March. There’s an alarm bell ringing, and the state had better hear it.”

DiNapoli will release a cash report in Mid-January that will report the final numbers after the final accounting adjustments are made. The Cash Watch update is part of DiNapoli’s on-going effort to increase fiscal transparency for the state’s taxpayers.

Final December 31, 2009
State Funds Available Start of Business (Cash-on-Hand) $506.4 million*
Total Payments Made on December 31 $640.5 million**
Total State Funds Collected on December 31 $1.4 billion***
Final State Funds Available End of Business on December 31 (Closing Balance) $1.2 Billion****
*Amount of cash-on-hand to pay bills morning of December 31
**Vouchers paid on December 31
***Tax, federal and misc. receipts from agencies received on December 31
****Amount of cash on hand after paying bills and receiving revenue on December 31

Actions Taken by State to Get through December:

  • $624.4 million in delayed payments for school aid, local aid and STAR (actions taken by the Governor);
  • $16 million transferred from Dormitory Authority State of New York (part of Deficit Reduction Plan);
  • $90 million from New York State Energy Research and Development Authority for the Regional Greenhouse Gas Initiative (part of DRP); and
  • $10 million transferred from the Environmental Protection Fund (part of DRP).

A Negative General Fund Balance
When the state’s General Fund has a negative cash balance, it puts the state in the position of borrowing from other state funds to pay its bills. Because the state’s General Fund ended December with negative $577 million balance, the state will need to make up the difference in January, February or March or take some other actions or it will end the year in the negative.

The General Fund is the major operating fund of the state. It is comprised of all non-dedicated revenues and includes the state’s major reserve funds. Money from the General Fund is used to pay for state operations and local assistance. The General Fund is a component of the state’s Short Term Investment Pool (STIP) or cash-on-hand. STIP is made up of All Governmental Funds (including the General Fund, state and federal special revenue funds, state and federal capital projects funds and debt service funds) and enterprise and internal service funds. These funds are invested temporarily until needed.

Last April when the state budget was adopted, it was anticipated that the state would face cash flow problems in the coming year. Therefore, a provision was included in the budget that allows the General Fund to borrow from other funds in STIP for a period not to exceed four months or until the end of the fiscal year, whichever is shorter, to meet its obligations in the event of a cash shortfall. Previously, temporary loans from other funds in STIP were allowed, but had to be paid back within the same month, preventing the General Fund from ending the month in the negative.

The State Comptroller’s office processes approximately 130,000 state payments daily. In State Fiscal Year 2008-09, it processed more than 34 million payments totaling approximately $103 billion.


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