Revenue Forecast Report Needs To Plan For The Worst, Hope For The Best

A legislative column from Assemblyman Dave McDonough (R,C,I – Merrick)

Just this week, Governor Paterson came out and said New York may miss March payments by as much as $2.1 billion due to various delays in revenue and lower than anticipated participation from taxpayers in his tax amnesty program. This announcement came only days after New Yorkers were told that the consensus budget forecast, as released by the New York State Division of the Budget, Assembly Ways and Means Committee, and Senate Finance Committee, predicted budget deficits of about $9.65 billion, or about $850 million higher than the governor expected when he released his budget.

For too long now, New York, and Governor Paterson in particular, have hoped for best case scenarios to justify budgets which spend beyond our means and promise money which we may not have in the future. For example, last year’s budget was approximately $132.8 billion, over $10 billion more than the governor had proposed in January 2009. This extra money came from President Obama’s federal stimulus plan, which gave about $24 billion to New York to fill budget gaps for last year and this current year until the economy recovers.

Yet, despite an infusion of $10 billion last year, legislators were still forced to pass a Deficit Reduction Plan totaling just over $2 billion, Governor Paterson delayed paying funds to school districts in December and he may still hold tax refund payments until he can pay the new deficit. With this new information coming to light, it is becoming harder and harder to trust this governor or his budgeting skills.

That is why I believe that the Legislature must cut spending by even more than the $850 million agreed upon earlier this week. The consensus report took estimates from all four legislative conferences and essentially averaged them out. The Assembly Majority and Assembly Minority released deficit forecasts of $1.2 billion and $1.35 billion, respectively. This rare occurrence of both parties being as close to each other in their estimates as they are shows me that the Assembly is on the right path.

Ultimately, I believe we should plan for the worst and hope for the best. If we are able to cut spending to the point where we have eliminated our deficit, and larger than anticipated revenues come into the state this year, we may begin to pay down our debt or put it away for next year. After all, we must not forget that federal stimulus money runs out at the end of this fiscal year and New York will be forced to make do with over $10 billion less than they did during this year. When the state runs out of money while being only $2.1 billion short, what chaos will be created when we are $10 billion short?