January 15, 2009
CONTACT: Jeffrey Gordon


Says Significant Spending Additions Not Possible Given Severity of the State’s Fiscal Crisis

Governor David A. Paterson today released his 30-day amendments to the Executive Budget. The proposed amendments are primarily technical in nature and do not include significant policy changes or spending additions.

“When I released the Executive Budget, I put forward a comprehensive series of reductions across all areas of State spending needed to address a dramatic decline in revenues, and since that time, economic conditions have only become worse,” said Governor Paterson.  “During the 30-day amendment process, many individuals and groups requested that I restore funding for programs that had been reduced in my original proposal. But the bottom line is that, for too long, our State government has spent more than we can afford.  Given the current fiscal crisis, we have no choice but to make the tough choices necessary to address our record budget deficits.” 

Governor Paterson’s amendments authorize only $1.35 million in additional spending for two programs in a $121.1 billion overall budget.

The amendments include $350,000 in financial resources for the Say Yes to Education Scholarship Program, which was proposed in Governor Paterson’s State of the State address. As part of a joint public/private partnership with Say Yes to Education Inc., a pilot initiative will be created to provide full scholarships that cover all college tuition and fee costs for eligible Syracuse City School District high school graduates who enroll in associate and baccalaureate programs at SUNY and CUNY institutions.

The amendments also include $1 million in funding for civil legal services for indigent plaintiffs.

Revisions to the State Financial Plan

The 2008-09 current-year budget deficit closed in the Executive Budget has been revised downward by $115 million from $1.7 billion to $1.6 billion. This is primarily the result of previously unanticipated miscellaneous revenues from settlements by the Attorney General with UBS ($75 million) and Citigroup ($50 million) related to the sale of auction rate securities. These resources were offset by $10 million in spending reestimates. 

The projected 2009-10 deficit closed by the Executive Budget has been revised upward by $128 million from $13.7 billion to $13.8 billion. This primarily reflects the loss of $200 million in personal income tax revenue related to the continued deterioration of the economy, which was offset by additional projected resources available from settlements by the Manhattan District Attorney ($50 million) and a net total of $22 million in Executive Budget savings reestimates.

Revisions to the Economic Forecast

The $200 million downward revision in 2009-10 tax receipts included in the 30-day amendments is the result of continued economic deterioration. The projected unemployment rate for New York State has been revised upward for 2009 from 7.1 percent to 7.5 percent. The 2010 state unemployment rate has also been revised upward from 7.0 percent to 7.8 percent.

Since the release of the Executive Budget, national job loss figures have continued to worsen. The nation lost 524,000 jobs in December. Additionally, previous November and October job loss figures were revised upward from 533,000 to 584,000 and 320,000 to 423,000, respectively.  Overall, the nation has lost 2.6 million jobs in 2008, the highest total since World War II.

National real GDP is now projected to decline by 1.4 percent in 2009, compared to the 0.9 percent decline forecast in the Executive Budget. Additionally, New York State wages are expected to decline by 4.1 percent, down from the 3.0 percent decline previously projected.

Governor Paterson’s Response

To address the potential new $128 million imbalance in the 2009-10 fiscal year, Governor Paterson has proposed several financial management actions.

First, $100 million in savings included as part of the Executive Budget’s 2008-09 Deficit Reduction Proposal will be applied to the 2009-10 fiscal year. These include the transfer of excess funds from the Office of Temporary and Disability Assistance federal administration account to the General Fund ($50 million) and the recapture of surplus workers compensation assessments from insurers ($50 million).

Second, $28 million in additional savings will be achieved through continued declines in the prison population, previously announced prison consolidations, as well as further implementation of administrative spending controls at the Department of Correctional Services.