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State's deficit is expected to exceed forecast National fiscal crisis cited by budget director

Remember the state's recently projected budget deficit of $1.2 billion?

It's growing worse.

Laura Anglin, who is Gov. David Paterson's budget director, said Friday that the $1.2 billion deficit her office projected just three weeks ago is likely to see "some deterioration" when officials in a week release more definitive mid-year numbers.

The state's precarious financial shape became increasingly gloomy over the past month or so since a national economic crisis that has spread from banks to Wall Street to declining sales of everything from gasoline to automobiles. The state relies on Wall Street activities for 20 percent of its tax revenues.

"Obviously, it's a very uncertain time for New York and the country," Anglin told reporters. She cautioned that the $1.2 billion deficit her office projected on Oct. 3 was never meant to be "an exact number" but was released to "show the magnitude of what we are facing."

State Comptroller Thomas DiNapoli is putting the finishing touches on his assessment of the state's finances at the midway point of the fiscal year. When that is released next week, then the governor's Budget Division will make public its fiscal report card -- a document that will drive much of the discussions between Paterson and lawmakers for the upcoming Nov. 18 emergency session called to deal with the budget meltdown.

After his budget director released the $1.2 billion number three weeks ago, Paterson then told legislative leaders he wanted them to slash $2 billion in spending at the upcoming special session. He based that on his feeling that the fiscal times are only going to worsen before the end of the fiscal year on March 31 and that it would be easier to cut spending now than several months from now.

The situation will require some politically painful choices, which helps explain why Paterson set the session for after the November elections when the 212-member Legislature goes before voters.

And there are two issues: one is dealing with the current fiscal year. That will require officials to cut spending already approved -- and already being counted on -- by the many public and private entities that rely on funding from the state's $120 billion budget.

The larger problem, though, is next year. From various estimates already surfacing, officials have suggested the deficit in 2009 could approach $9 billion. At that level, cuts will be felt deep and wide, and it will be difficult for even the most politically popular programs -- notably aid to public schools -- to avoid spending reductions or at least cuts in the growth rates already promised.


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