On Tuesday evening the Legislature took a difficult and painful step toward coping with the collapse of the financial services sector which has long been a key part of New York State’s economy by modifying the 2008-09 budget for the fourth and final time this year. This will mean that our budget for the fiscal year ending March 31 will be in balance.
The changes we made to Governor Paterson’s Deficit Reduction Plan, which we received in December 2008, represent the best of many painful alternatives. While we had to take dramatic steps to compensate for the equally dramatic drop in revenue over the last few months we did not cut any funding for education or health care programs, as some had feared we would have to do.
Briefly, the bill that was passed calls for the state to eliminate the $1.6 billion deficit in the 2008-2009 fiscal year by raising $300 million through insurance fees, $306 million from the New York State Power Authority and $117 million from state agencies plus a number of other incremental steps.
None of these decisions were made lightly. The length and ferocity of the debate that preceded our votes on this plan show that to be true. But the fact that we had to cut the budget for the second time since it passed 10 months ago, after the Governor acted twice on his own to reduce spending, shows the severity of the situation we were forced to address.
Though we’ve balanced the budget for 2008-09, we are in dire straights when it comes to 2009-10. This fact will be reflected in the budget which the Legislature is now beginning to discuss. The circumstances that will frame our discussions will mean that we may not be able to continue the growth in education and health care funding which we were able to achieve during the last few years.
The Congress, including our representatives Congressman Charles Rangel and Senator Charles Schumer, are now working with President Obama to negotiate a stimulus package which could reduce the pain New York State and those of us who live and work here will experience as a result of this recession. We will continue to report to you as the coming year’s budget takes shape.