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Gov. Projects $3.2B State Loss |
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New York State News
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Written by Gov. Paterson's Office
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Tuesday, 24 March 2009 13:18 |
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GOVERNOR PATERSON, MAJORITY LEADER SMITH AND SPEAKER SILVER ANNOUNCE ADDITIONAL $2.2 BILLION DECLINE IN PROJECTED STATE REVENUES
Combined with $1 Billion Loss in Tax
Collections Agreed to Through Revenue Consensus Process, Overall
Decline in Anticipated Revenues Totals $3.2 Billion since Passage of
Deficit Reduction Plan on February 3
Governor David A. Paterson, Majority
Leader Malcolm A. Smith and Speaker Sheldon Silver today announced that
projected State revenues will decline by an additional $2.2 billion
through the end of the 2009-10 fiscal year. Combined with the impact of
the $1 billion loss in tax collections agreed to through the revenue
consensus process on February 24, the overall decline in anticipated
State revenues since the passage of the 2008-09 Deficit Reduction Plan
on February 3 now totals $3.2 billion.
“From the first day I took office, I have
been sounding the alarm about the serious fiscal and economic crisis
facing our State. I will continue to fight every day to enact a fair
and responsible on-time budget that makes the difficult choices needed
to confront our new fiscal reality,” said Governor Paterson. “I will
take whatever actions are necessary to get our fiscal house in order
and eliminate this deficit. I look forward to working with my partners
in the Legislature to address this historic challenge.”
Senate Majority Leader Malcolm A. Smith
said: “These numbers emphasize the troubling fiscal outlook for New
York and should serve as a stark reminder of the economic challenges
that lay ahead as we strive to change the structure of our State’s
budget. By recognizing just how dire the economic conditions are, we
can better prepare ourselves to build a new economy, one based on the
principles of fiscal responsibility and prudent spending practices
coupled with sound economic development and job creation.”
Assembly Speaker Sheldon Silver said: “For
more than a year, the Assembly has warned that the global economic
downturn and the loss of jobs across New York State – and particularly
on Wall Street – would drastically reduce State tax revenues.
Unfortunately, economic conditions are still declining. The Assembly
will continue to work diligently with Governor Paterson and the Senate
to develop a fiscal plan for the coming year that does not ask just one
segment of New Yorkers to shoulder the burden. We will work to shape a
responsible budget that reflects the needs of working families and
supports education, economic development, public safety and other vital
services.”
The further loss in revenues announced
today is related to worsening turmoil within the financial sector and
broader economy. Over just the last several weeks, the federal
government has released a series of dire reports on the economy. In
February, national private sector job losses totaled 660,000 and the
national unemployment rate rose from 7.6 percent to 8.1 percent;
cumulative private sector job losses since the beginning of the
downturn have reached 4.6 million; and the decline in real national GDP
growth for the fourth quarter of 2008 was revised downward from -3.8
percent to -6.2 percent.
At the State level, new unemployment
claims have reached 39,000 per week in March 2009, an increase of more
than 20,000 compared to one year ago. New York’s unemployment rate has
increased from 4.4 percent in January 2007 to 7 percent in January
2009, and is expected to reach 8.4 percent by 2010.
After the passage of the 2008-09 Deficit
Reduction Plan, the State’s projected 2009-10 budget gap totaled $13
billion. Since that time, projected revenues have declined by an
additional $3.2 billion. The components of that decline include the
following:
Tax Revenues ($2.8 billion):
Due to the continued downturn in the economy, projected tax revenues
are expected to be $2.8 billion lower than previously anticipated.
Significant declines in revenue are anticipated in the following areas:
personal income taxes due to job losses and declining wages, sales
taxes due to declining consumption, and business taxes due to reduced
economic activity and profitability. In February, Governor Paterson and
legislative leaders previously agreed through the revenue consensus
process that tax collections would be $1 billion below Executive Budget
levels. Today’s announcement reflects an additional $1.8 billion
downward revision in projected tax revenues.
VLT Franchise Payment ($370 million):
In October 2008, Delaware North was selected through a competitive
process to develop and operate a video lottery terminal (VLT) facility
at Aqueduct Racetrack. As part of its agreement with the state,
Delaware North was required to provide a $370 million up-front
franchise payment. Due to the downturn in the financial markets,
however, it was unable to obtain the financing necessary to meet that
obligation.
The Governor and Legislature will accommodate these new costs as part of a fiscally responsible Enacted Budget.
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Last Updated on Tuesday, 24 March 2009 13:38 |
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