Posted on 10/05/2009 11:14:55 AM PDT by FromLori
New York State is quickly becoming the next California, as tax revenues drop 36% from 2008 levels, and a dejected governor expressing his frustration with policy measures that continue to not bear fruit. As a reminder the state most reliant on the financial sector, is struggling with a $2.1 billion budget deficit that is still looming despite tax increases, federal aid and spending cuts.
New York State’s income tax revenue has dropped 36 percent from the same period in 2008, Governor David Paterson said, “frustrating” his attempt to close a projected $2.1 billion budget deficit.
“We added personal income tax, which we thought would make the falloff 10 percent to 15 percent,” Paterson, a Democrat, said on CNBC today, referring to $5.2 billion in new or increased taxes. “This is what is so frustrating. It’s still 36 percent, meaning our revenues fell more in 2009 than they did in 2008.”
The budget will still be $2.1 billion in deficit because spending plans exceed revenue projections, the state Division of Budget said July 30. The report predicted deficits of $4.62 billion in 2011, $13.3 billion in 2012 and $18.2 billion in 2013. The Governor, who has recently had a major falling out with President Obama, may be in even more hot water as hopes for major tax windfalls from corporate taxes vanish due to generous NOLs established during last year's financial collapse:
“We are Ground Zero for the economic recession,” said Paterson. “What we’re recognizing now is what everybody recognizes in their own portfolio: you can’t overinvest in one area because, if it fails, you’ll have a debacle.”
New York is depleting its options for balancing the budget, Paterson said.
“What we want to do is bring the legislature back as soon as possible and make the tough decisions,” Paterson said. Alas expenses tend to be much "stickier" than revenues, meaning that even much more drastic cost cutting will likely still leave the state at the mercy of Federal handouts. And if California's IOU experiment is any indication, Paterson may want to promptly get on the President's good side before he is forced to ask for much needed assistance.
Also, another issue that is not receiving much airtime is the continued dire straits that New York's MTA finds itself in. From the most recent status update: "the program has a funding gap of $9.9 billion despite a large increase in State aid and a 56 percent increase in anticipated federal funding, which may not materialize. In the absence of additional aid, the MTA plans to fill the gap with debt, but debt service would then rise rapidly and increase pressure in the future to raise fares and tolls." Yet another aspect of the state economy that is intimately linked with well-bid debt markets, which in turn track the equity market tick for tick, explaining once again how much the administration has staked on a stock market that, miraculously, is not allowed to leg lower by any material amount. However, as long as analyst actions, such as today's by Goldman in which it effectively upgraded itself, continue to drive markets, the plan to keep equities at untenable and fundamentally unjustified levels, will be viable to keep the economy running. Even if it is based on smoke and mirrors.
"Yes, we have plenty of room. C'mon down!"
There is only one solution. Raise taxes again! Yea, that ought to do it!
THE FEW
THE PISSED
THE TAXPAYERS!
Perhaps Gov. Paterson should be trying to invite Rush back. :)
NEW YORK DESERVES IT!
Actually, they should just tax ALL public workers 100% and then just keep recycling the money!
More encouraging signs of economic recovery. We need healthcare now. sarc
When will thse morons learn that government cannot continue to grow at the expense of the private sector?
“mmm”, “mmm”, “mmm”
NY State, with its Downstate control, big unions and a few special interests, are taxing citizens and businesses out of the State. Wall Street therefore accounts for an ever larger percentage of NY State revenue. As goes Wall St, so goes the State Budget.
Unless you somehow need to be in NY State to serve NY City, it makes NO SENSE to have a business in NY State.
Actually, all those people who have lost their jobs and their savings probably find it even more “frustrating” than Governor Patterson.
Across the board, 10 percent staff reduction, ten percent pay cut for the remaining workers - no exceptions.
Budget in balance?
No. Repeat as above.
All these blue states are collapsing yet the libs are demanding more of this to fix it.
Budget cuts NOW! WTF do these cretins still have “pensions,” especially at 85% of last salary?
Like CUTTING SPENDING???? Nah - raise some more taxes!
Yep. They reap what they sow. You want a socialist utopia based on the backs of wage earners and business owners? Then, don’t be surprised if they leave for fairer pastures. Its time to realize that the demented thinking of the Democratic party and Eastern European dreams of social utopia are the wrong path. They turn productive economies into train wrecks...
It’s the inevitable end result of chronic liberal leech leadeship. Eventually any government cannot stand when it is being eroded, rotted, it’s pillars eaten away by the lies, crookery, ans hollowing bribery of the Leftists.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.