Thursday, March 18, 2010

That NY Ticking Fiscal Time Bomb Grows Louder By $750 Million

State Comptroller Tom DiNapoli announced that the state is going to be even deeper in red ink than just a few days ago because more than $750 million in revenues that the state was expecting simply haven't materialized.
Mr. DiNapoli said the state could no longer count on two large infusions of cash that were expected by the end of the month: a $300 million fee from the winning bidder on the Aqueduct video-lottery franchise and $200 million from the coffers of the Battery Park City Authority.

The Aqueduct franchise was delayed last week when Mr. Paterson announced he was withdrawing support for the winning bidder, Aqueduct Entertainment Group, because the state’s Lottery Division determined that it could not license some of the company’s investors. Money from the Battery Park authority, which is controlled by the city and the state, have been held up by a dispute over the share of revenue each government is entitled to.

Moreover, a tax amnesty program that was projected to take in $250 million by the end of the year has fallen far behind, bringing in just $2.1 million through the end of January.

“This year’s budget was seriously flawed,” Mr. DiNapoli said in a statement. “It was based on overly optimistic revenue assumptions and temporary revenue sources that pushed the problem into the future.”
The Times actually downplays the shortfall amount, but we're looking at nearly $750 million in money that the state simply doesn't have.

The amnesty failed to bring in expected revenues that the state counted on.

The Aqueduct deal fell through and wont bring in expected revenues.

A deal on revenue from a Battery Park City transaction hasn't been completed so that money is being held up.

So, with that as a backdrop, the state is looking to delay taxpayer refund checks to have enough money on hand to pay its own bills to the tune of $500 million. Taxpayers who were counting on their own money back in refund checks are left to their own devices to balance their own books because the state is screwing them over.

At the same time, the state is preparing to delay another $1.5 billion in expenditures that it lacks the money to pay for.

Every time the state delays payment, it simply shifts when the bill comes due - and it will come due. The state has to deal with a $9 billion deficit, including the $2 billion that is being shifted into the new fiscal year.

The only way to solve this mess is to start seriously cutting the spending and getting expenditures in line with revenues. It means that the unions will cry poverty and will claim that the poor, hospitals, medical care, and education will all suffer.

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