THOMPSON STATEMENT ON GOVERNOR'S BUDGET ANNOUNCEMENT
New York City Comptroller William C. Thompson, Jr. today issued the following statement concerning Governor David A. Paterson's proposed budget for 2009-2010:
"I first want to compliment Governor Paterson on exhibiting fiscal leadership at a time that New York is confronting the worst economic crisis since the Great Depression. Difficult times warrant difficult decisions, and the Governor is doing what he believes is in the best interests of the State.
As a City, we unfortunately will not be able to elude the pain. We must explore measures that will minimize the impact of the State's cuts, and endeavor to avoid crippling cuts to the classroom and vital City services.
I am troubled that the package of cuts and revenue enhancements being offered to the City will result in a net regressive impact on city residents. For example, the loss of $656 million in State revenue sharing aid between this year and next will force additional City budget cuts on top of the significant reductions that already are being contemplated.
I also remain concerned that there still may be fat to cut at the Department of Education, and urge our Mayor and the Department to exact more cost-cutting measures centrally and in their use of consultants in an effort to avoid affecting our classrooms.
In the days ahead, my office will be looking more closely at the details of these proposals. I will work with our elected leaders both locally and in our State legislature to avoid cuts so deep that it will test our resiliency. We are all in this together, and I expect we will emerge stronger despite these challenging times."
The administration and legislature must close a $1.75 billion deficit in this year's $120.8 billion budget and a $13.3 billion one in next year's.
The Comptroller has closely examined the city's economic performance amid the national recession over the past year and projected the lingering impacts on the region. He estimates that 170,000 jobs will be lost in New York City from July 2008 through late 2010, and Wall Street cash bonuses will decline by at least 50% this year to the lowest level since 2002. These factors will contribute to the estimated fall of New York City tax revenues by 4.3% in fiscal year 2009.
Among his other findings in this Monday's report - available at www.comptroller.nyc.gov - analyzing the Mayor's modification to the Fiscal Year 2009 Budget and four-year Financial Plan:
· Thompson forecasts that the City's budget gap will be as much $1.9 billion in FY 2009, could drop to $1.5 billion for FY 2010 and may balloon to as much as $5 billion by FY 2011.
· The impact of the recession will result in a tax revenue risk of $935 million to the Fiscal Year 2009 budget. This includes a $525 million shortfall in real estate-related taxes, a $345 million reduction in personal income and business taxes, and $65 million less in property taxes than projected by the Mayor.
· The uncertainty of the City Council's reception to cancel the property tax rebate and rescind the 7 percent property tax reduction six months earlier than previously scheduled poses an additional risk of $832 million in FY 2009.
· The Comptroller identified expenditure risks of $86 million in FY 2009, including $139 million in higher than projected overtime costs and public assistance costs of $5 million. These risks are partly offset by judgment and claims payments that are likely to be less than the Mayor is projecting.
Complicating the assessment of risks to the FY 2009 budget is the rapid deterioration of the State's budget. Since roughly 70 percent of State spending is in the form of aid to localities, the actions taken to balance the budget most likely will result in fewer resources to municipalities. Thompson had estimated that the risk to the current year budget would be $100 million due to the State's fiscal situation.
However, Paterson's budget plan released today plans for a much more sizeable cut, a $328 million loss in revenue sharing in each of the current and subsequent years, bringing the projected loss to $656 million. This loss will widen this and next year's budget gaps. Other state spending reductions, such as reductions to education aid, will result directly in less funding for vital city services unless the city further strains its resources to make up the difference.
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