It’s Official: NY State is in a Recession

Kudos to Governor Patterson today for taking a realistic stand on NY’s economic woes before they become completely unmanageable. The Empire State faces tough economic times having suffered serious revenue losses due to the financial crisis on Wall Street. Funny how over the last 2 days, the Dow has increased 451 points. Is there a disconnect here?

I agree with Governor Paterson that we should face facts sooner than later and take the painful steps now to get the state’s financial house in order. Below are excerpts from Governor Patterson’s speech reprinted in the online version of Long Island Business News July 30, 2008.

“When I took office (on March 17, 2008), I was apprised that the New York State budget deficit for next year was $5 billion. I immediately ordered cuts to state spending, but the situation has gotten worse. Tomorrow I will submit a budget plan that places our deficit for next year at $6.4 billion - that is $1.4 billion higher than it was just a few short months ago.

In the beginning of May, our budget director projected our New York State deficit over the next three years at $21.5 billion - that was a record. But things have changed. That number has now erupted to $26.2 billion - a staggering 22 percent increase in less than 90 days.

In June of 2007, the 16 banks that pay the most on taxes to their profits remitted $173 million to our New York State Treasury. This June, just a month ago, they sent us $5 million - a 97 percent decrease. Our economic woes are so severe that I wanted to talk to you personally this evening about where we stand. The fact is: we confront harsh times. Let me be honest: this situation will get worse before it gets better.

But the time to act is now. We cannot waste any further opportunities. We can’t wait and hope that this problem will resolve itself. If we do, we will lose our opportunity to turn this situation around. These times call for action and today I promise you there will be action. Today I am calling the legislature back for an emergency economic session on Tuesday, August [19th]. “

The Governor has requested that the Legislature work with him to trim another $600 million from this year’s budget in addition to the $630 million in cuts that he has already proposed. He stated that no element of the budget is immune from cuts; a reduction in state workers and a hiring freeze have already been proposed including cuts to school aid. Senator Dean Skelos, the Republican Senator from Long Island and recently appointed Senate Majority Leader, has pledged to protect state education aid. He knows that a decrease in school aid will be a devastating blow to Long Island, where school taxes are among the highest in the nation despite what the state currently distributes to local districts.

Governor Paterson said yesterday “My concern is that people sitting in their homes already know what the pain is…I want to make sure that people in Albany understand as well.” I hope that the Legislators heed to the gravity of the situation and respond in-kind. They must resist the political grandstanding and partisanship that usually impedes their progress and work with the Governor to find efficient and effective long-term solutions or else we will all have to pay more taxes and we know none of us can afford that.