To those who think New York’s fiscal house needs only a few small repairs, the June cash report released by state Comptroller Thomas DiNapoli brought welcome news. All governmental funds receipts through June 30 were $30.2 billion, up 6.7 percent compared with the same period last year. And tax collections, when adjusted for non-recurring items, were 13.3 percent higher.
These increases in receipts and tax collections signal a rebound from the recession, which is the root of the state’s budgetary woes, they’d say.
To those who see clear signs of rot in New York’s fiscal foundation, however, the new report confirms their fears. For only the second time in modern history, the state general fund ended the first quarter of the fiscal year with a negative balance-a total of $87.1 million in the red. And with the next school aid payments due in two months, the state’s cash crunch could worsen considerably.
Which of these two views is closer to the truth? Common sense and close scrutiny of the numbers suggest it’s the latter one.
The problem is, the people who put together the state’s 2010-11 budget clearly embrace the optimistic view.
OK, the state does not actually have a completed 2010-11 budget yet, though it was due nearly four months ago. The Senate still has not acted on the revenue bill. But with the appropriations bills approved and the revenue measure through the Assembly, a fairly clear picture of the new budget has emerged.
From Mr. DiNapoli’s vantage point, it contains $4.8 billion in "optimistic budgetary assumptions." What’s more, he says, the budget bills "rely on approximately $14.4 billion in non-recurring or temporary resources, which virtually guarantees that the state will face significant projected gaps between spending and revenue next year and beyond."
A sizable chunk of the non-recurring money is temporary federal stimulus funding. When it’s gone, there will be two choices: make permanent state spending cuts or raise taxes.
This year’s budget-which contains more than $1 billion in new taxes-strongly suggests which option lawmakers would favor.
Yes, the 2010-11 budget is long overdue. But given what the plan contains, the fact that it’s late seems like a fairly minor matter.
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