NYS Budget Already In Red

It's just about a month since New York passed its state budget, and the news is grim. There's already a significant shortfall, and it can be traced to one thing - increased spending on education.

DiNapoli said state revenues in April were down by $239.1 million, or nearly 5 percent, from the $5 billion projected by Gov. Paterson and state lawmakers when they prepared the budget at the end of March.

"This was a poor start to the fiscal year," said DiNapoli.

"It's been less than a month since the state's financial plan was released and General Fund revenues are already off nearly a quarter of a billion dollars," added DiNapoli, who last week blasted the new fiscal plan as a "buy time budget" that "postponed tough decisions on spending."

DiNapoli blamed the revenue drop on a shaky economy caused by the national recession and he warned that things could get worse.

"We've already tapped nearly all of our unreserved funds so there is very little cushion if revenues continue to fall," he said.

"We need to watch revenues and spending very closely, because the state may be forced to readjust priorities," he continued.

While state revenues were declining, state spending was up considerably from last year.

DiNapoli said the huge increase in overall state spending for April resulted from jumps in education (up 24.4 percent from last year) and Medicaid (up 18 percent).

Total state spending is up $885.8 million, or 12.1 percent more than during the same period last year, according to DiNapoli.

Tax receipts are down (and the one area in which they're up is because of new additional taxes imposed). Spending is up. Deficits occur in such situations, and it gives lie to the notion that the state budget was ever going to be in order.

The state budget was a disaster from the start and it denies reality. The state increased its spending over last year, despite the recession and called on additional taxes to carry the day.

They aren't.

The deficits are only going to get worse. Taxing their way out of the problem is not going to fix things either.

Cutting spending is. New spending on education is simply unwarranted when you can't even afford existing levels of spending.

UPDATE:
This doesn't make the situation any better. If you keep taxing people at ever higher rates, they're going to flee. Tom Golisano makes that point quite explicit. Golisano previously ran for Governor and has run a successful payroll business in New York, but decided to move to Florida where he can save millions in taxes. That's revenue the state will never get back. He's not alone as others ponder move to lower tax-burdened states, leaving an ever higher burden on those who remain. The budget is unsupportable, and yet the politicians keep pushing the spending higher.