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.
Among other reasons, I left NY because of high taxes.
Now NY gets no taxes from me.
Funny how that works.
N.Y. tax revenues drop 36%?
Soo go spend more money ya govt. fools.
40%
All the beady eyed individual must do is tax the rich more and revise the rich to be anyone who has a job as Democrats “progressed” to do in the past! What’s the problem here?! The State is so lovely and good, no cost is too much!/s/
“The question I have never heard addressed: Why is it a government’s function to maximize tax revenues anyway? “
because you don’t want the govt go into debt
“We need healthcare now. sarc”
That is the only SMART decision of progress! We need more “free” stuff now more than ever./s/
Yeah, but they didn’t need the rich such as Rush Limbaugh, there spending money and paying taxes, right? LMAO
Without spending discipline, no amount of revenue will ever be enough.
The focus should be on limiting spending to a few, well-definied and legitimate purpoases, then raising only the revenue necessary to cover that.
Pardon the rogue letter ‘a’...
Likewise, I’m glad I don’t give NYS any more taxes. Too bad upstate is the unlucky siamese twin to downstate.
New York needs to quit taking silly half measures, instead of small tax increases, immediately raise taxes to pay for the whole 36% falloff.
With any luck, they'll drive more evil rich conservatives out of New York, just as they drove out Rush Limbaugh. Once the evil rich are driven out New York will be a Shangri-La.
/S
well of course you have to have spending discipline. What you don’t want is the philosophy of cutting taxes while ignoring the deficit.
Jeez, NYC teachers already make over $70k a year.
fyi
Not to mention Madoff.
Gov, take my advice, 75% tax on all citizens making more than $100,000, you coffers will flood, public works will increase and you’ll be a hero! (for about a month!)
I am heavily invested in such businesses.
Gee whiz, did Paterson see this coming ?
We will have fifty “next Californias” by the time the leftys get through installing the Obama Utopia system.
After the collapse, Obama and his minions will offer the American people "change they can believe in", also called fascism/socialism. The American people will gladly accept it.
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