New York State revenues are down about 20 percent. Unless the state can cut $3.2 billion from the its operating budget by the end of the fiscal year (5 more months), next year’s deficit could reach $10 billion.
NYS Governor Patterson is proposing an 11 percent cut to state agencies for the remainder of the fiscal year, and a five percent cut to education. Budget cuts are not popular with the legislature.
Patterson's approval ratings are extremely low, and he is unlikely to get his party's nomination for reelection. Without severe budget cuts, NY faces the risk of running out of cash. If that happens it may need to pay bills with iou's and face a lower credit rating.
Unlike the federal government, states and municipalities cannot run operating budget deficits and must find ways to balance each year's budget. They have limited choices. They can cut budgets for agencies, education and state subsidized and funded programs. They can also raise fees and taxes. Neither choice is popular.
Even The New York Times is running an editorial about Albany's budget problems.
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