By Karen Dewitt
Albany, NY –
The topic likely to dominate New York State in 2010 is the same one that took center stage in 2009- the state's ongoing fiscal crisis. In December, the state came perilously close to running out of cash, and Governor David Paterson withheld some scheduled payments to schools, local governments, and others.
As a result, the year will begin with court action in early January.
School districts have filed a lawsuit, claiming the governor acted
illegally. The governor spoke shortly after the lawsuit was filed.
"I am being sued for trying to keep New York State's finances
solvent," said Paterson, who called the court action "a desperate
attempt by special interests".
Relations between the governor and recipients of state money, like
education and health care groups, are likely to get even worse, as
the date approaches for the release of Paterson's 2010-11 spending
plan. The budget deficit is estimated to be between $6 and $9
billion dollars, depending on how much new revenues come in after tax
collections in mid January.
Paterson and the legislature already used up many of the easier
budget closing options in 2009. They relied on billions of dollars in
new taxes and fees, including a temporary tax on New York's
wealthiest. They were also able to use federal stimulus monies to
pay for education and other programs. When they acted to close the
latest budget shortfall in early December, they borrowed from some of
the federal stimulus monies meant for schools next year. That means
they will need to find some way to replace those funds in the new
budget.
The governor has said repeatedly that he does not want to resort to
"quick fixes of gimmicks" again in 2010.
"Because we are, frankly, out of them," said Paterson.
Many predict that the budget battle could be lengthy and intense,
perhaps one of the longest ever.
"It could be a nightmare for all of us in an election year," said
former Assembly Republican Minority Leader Jim Tedisco.
All statewide offices are up for election in 2010, as well as the 212
seats in the legislature. Governor Paterson could face a challenge
from popular Attorney General Andrew Cuomo. A fierce battle is
expected for control of the State Senate, on which Democrats now
maintain a tenuous hold. The democrats' first year in control of the
chamber in over four decades was tumultuous, and included a month
long stand off after a coup attempt by a Republican led coalition. It
took Senators weeks of special sessions in the fall to come up with
even a partial budget balancing plan.
And while Governor Paterson may have stopped the state from running
out of money in December, the early months of 2010 could be just as
perilous, says the State's Comptroller, Tom DiNapoli, who has been
keeping a close watch on New York's finances.
"Getting through December is not the only challenge," said DiNapoli.
"January has it's own set of challenges as well."
Quarterly tax collections are due January 15th, and could potentially
bring in more money to the state's coffers. But DiNapoli warns that
even though Wall Street has bounced back more quickly than expected,
the highly taxed annual bonuses will be smaller. He says many firms
will be giving bonuses in the forms of stock or other deferred
payments, which will not immediately generate revenue for New York.