ALBANY — New York will end the fiscal year on March 31 with at least $2 billion less in cash on hand than originally projected, the state’s comptroller said Wednesday, burdening lawmakers with another headache and making the prospect of achieving a budget agreement before the next fiscal year begins even more dim.
The estimate by the state comptroller, Thomas P. DiNapoli, adds half a billion dollars to Gov. David A. Paterson’s own projection for the current shortfall, issued a little over a month ago. Mr. DiNapoli said the state could no longer count on two large infusions of cash that were expected by the end of the month: a $300 million fee from the winning bidder on the Aqueduct video-lottery franchise and $200 million from the coffers of the Battery Park City Authority.
The Aqueduct franchise was delayed last week when Mr. Paterson announced he was withdrawing support for the winning bidder, Aqueduct Entertainment Group, because the state’s Lottery Division determined that it could not license some of the company’s investors. Money from the Battery Park authority, which is controlled by the city and the state, have been held up by a dispute over the share of revenue each government is entitled to.
Moreover, a tax amnesty program that was projected to take in $250 million by the end of the year has fallen far behind, bringing in just $2.1 million through the end of January.
“This year’s budget was seriously flawed,” Mr. DiNapoli said in a statement. “It was based on overly optimistic revenue assumptions and temporary revenue sources that pushed the problem into the future.”
Mr. DiNapoli’s announcement came as Mr. Paterson and members of the Legislature conceded that there was almost no chance they would complete negotiations for a new budget by April 1, when the new fiscal year begins.
To maintain New York’s cash flow and prevent the state from ending the month in the red, Mr. Paterson is delaying by a few weeks income tax rebates for hundreds of thousands of taxpayers, a move that will save about $500 million in the short term. In the coming days, the administration will also have to identify an additional $1.5 billion in payments that will be delayed into the new year.
“I apologize that we had to do this,” Mr. Paterson said Wednesday, speaking to reporters at the St. Patrick’s Day Parade in Manhattan. “I hope it serves notice on the public of how serious our financial situation is.”
It is the second time in recent months that the governor has been forced, in effect, to delay paying the state’s bills. In December, when the state also faced a cash crunch, he delayed about $750 million in state school aid, prompting a lawsuit from local school officials and unions. That money was paid in January.
The latest batch of unpaid bills will essentially be rolled into next year’s budget, forcing the state to begin the fiscal year in arrears.
Equally serious is the state of budget negotiations with lawmakers, who in the coming weeks must close a total budget gap of at least $9 billion — the $2 billion in unpaid bills from this year, plus a projected $7 billion gap for the new fiscal year.
Mr. Paterson met with the leaders of the Senate and Assembly on Tuesday but emerged with little movement toward a budget deal. His own budget proposal calls for steep cuts to education and health care spending, as well as new or increased taxes on cigarettes and sugared beverages.
Many lawmakers have attacked that proposal. They have also criticized Mr. Paterson for withholding the income tax refunds and for not including in his budget any plan for property tax relief.
One idea being discussed in the Legislature is to refinance proceeds from the state’s share of the nationwide tobacco settlement to take advantage of lower interest rates, generating a one-time infusion of cash. The Senate estimates that such a move could bring in about $500 million; the Assembly puts the figure at $1.5 billion, according to two people familiar with the discussions.
It is not clear, though, whether that refinancing could take place quickly enough for the state to get any money in time to help with the current budget problems.
And so far, neither the Assembly nor the Senate has yet made any formal budget proposals of its own, reflecting the near-impossibility of closing the budget gap without large and politically painful spending cuts.
“They’re working round the clock,” Mr. Paterson said. “And they are gradually coming to the realization that we’re going to have to make some drastic decisions. And that’s a good sign that we’ll have an effective result.”
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