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State budget deficit grows, Bruno ready to deal

January 18, 2008

ALBANY, N.Y. _ Officials in Gov. Eliot Spitzer’s administration said the state budget proposal on Tuesday will reveal a $4.4 billion deficit, slightly larger than predicted because of tumultuous months on Wall Street and Main Street.

Spitzer budget crafters on Thursday said the current gap between state spending and revenues had been projected at $4.3 billion, a figure that had grown through 2007. But early economic forecasts also show no recession is expected at this point. They said early predictors show New York’s economy may start to turn around, if slowly, by the end of 2008.

Until then, Wall Street layoffs and losses and a dismal holiday for retailers continues to cut New York’s projected tax revenues, said Laura L. Anglin, Spitzer’s budget director. She said revenues from Wall Street’s year-end bonuses _ which were expected to grow by 14 percent over last year _ are now expected to be 5 percent less than last year.

State Comptroller Thomas DiNapoli said Thursday that the average bonus declined by nearly 5 percent to an average of $180,420. And Wall Street bonuses account for about 20 percent of state revenues. DiNapoli warned of “dark economic clouds rolling in.”

The state budget affects New Yorkers in many ways. The amount of state school aid directly affects local tax bills and student performance. And state funding is the primary driver in highway and bridge repair as well as efforts to attract and retain employers.

While acknowledging tough times ahead, Senate Republican leader Joseph Bruno said Thursday that he’s ready to work with Spitzer, and also to take him on to make sure state spending includes all areas of the state.

“We’re going to have a challenging year,” Bruno said to his local chamber of commerce, which gave him standing ovations in his first public policy speech since his wife’s funeral on Monday. Bruno said he sees hope for cooperation with the Democratic governor after conflict and scandal between the leaders gridlocked Albany after June.

“Historically, the governor has made very bad judgments in governing because he has favored the politics over governing, and that’s what started the whole problem _ the governor wanted to be the only game in town,” Bruno said. But Spitzer and Bruno recently spoke by telephone, the first direct contact in months outside Spitzer’s condolences for Bruno’s loss.

“We have got to move forward and get things done,” Bruno said. “He says he wants to do it. I want to do it.”

He told the Albany area chamber of commerce: “I really am in a frame of mind that I just want to be nice. I really want to be nice.”

Spitzer’s 2008-09 budget proposal for the fiscal year beginning April 1 is expected to grow by about 5.3 percent. Although twice the inflation rate, 5.3 percent is the long-term personal income growth figure the administration uses as a gauge of responsible growth.

The current budget of about $120 billion, with $80 billion of state spending alone, grew by about 8 percent over the year before. That’s less than some previous budgets that grew by around 10 percent a year.

But Spitzer, who has called for billions of dollars in new spending for education, job creation and property tax relief, appears to not be leaving much room for the Legislature to add its spending priorities. Most years, the Legislature adds about $1 billion to the governor’s budget before it’s adopted.

Spitzer’s budget proposal won’t have to use any funds from the state’s $1.1 billion “rainy day fund” reserved for a true fiscal crisis and no hiring freeze is being ordered, budget director Anglin said.

Source: AP

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Written by NY Politics · Filed Under News 

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