Tuesday, January 19, 2010

Paterson Proposes New Taxes And Increased Spending in New Budget

New York Governor David Paterson has come out with proposals for his new budget, and New Yorkers will probably feel thankful that the state budget isn't going to increase that much this time around. Paterson is proposing a budget increase of less than 1% in a $134 billion budget.

For starters, why increase the budget at all over the current year figure when the budget deficit is $7 billion and change? The trick would be to cut spending significantly to bring spending in line with revenues. Instead, the Governor is proposing still more taxes and fees to close the gap and to allow for an increase in spending. This means that the structural deficits continue and rely on a hope that new revenue covers the increases in spending.

This situation has led to deficits for years, and the new budget continues this tradition.

Those tax hikes include again targeting soft drinks and yet another tobacco products hike, but also includes hiking court fees.

Expect the tax hikes to bring in less revenue than expected, particularly as the recession continues, and the state will again find itself on the brink of financial ruin because the state will be unable to find revenues to cover general fund spending.

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