NY state stumbles along with no budget

Though the New York state budget should have been prepared and voted on by April 1, millions of agencies and businesses are scrambling to function without a plan as the state delves deeper into crisis.

"Our cash flow problems are unprecedented," Robert Megna, head of the state Division of the Budget, told The Albany Business Review on Monday.

An initial set of emergency spending bills was passed when the fiscal year first began without a budget two weeks ago; it expired Monday, requiring a second set of emergency legislation to be passed. This latest package of bills will fund $2.6 billion of state expenses through April 18.

No state legislators have received paychecks this month as a result of the situation. Additionally, no unionized state workers have received scheduled salary increases and the state has not paid contractors for any work on about 500 projects, many involving roads. Some construction companies are reporting layoffs because of the halt on these payments.

"Really it's a decision made out of ignorance," said Chris Larsen, owner of construction company Halmar International. He told Gannett Albany Bureau that the state halted the $400 million reconstruction of the Alexander Hamilton Bridge in New York City and that 250 workers have been let go as a direct result. School groups have estimated that more than 14,000 layoffs could occur in public schools, and Gov. David Paterson's budget calls for the closure of 55 parks and historical sites.

The state is currently saddled with a $9.2 billion deficit, but it is required by its constitution to balance its budget. So far, Paterson has worked with the state Senate and Assembly to reduce the deficit by $6 billion through new revenues, tax increases and spending cuts, but over $3 billion remains unaccounted for.

Public sectors such as education and the public parks system are bracing for potentially huge cuts, and it is still unclear whether a new tax on sugary drinks or a tax hike for cigarettes will be part of the final plan.

"Delaying payments will not be the easy answer that it was in December," Megna said. "We cannot do 'business as usual' while we are in this situation."

Last year, the state of California had to pay some bills with IOUs when its legislators could not agree on a budget. Megna vowed that New York will not have to resort to such measures, but borrowing money may become necessary in June when the state has to make $8 billion to $10 billion of payments, much of that money going to school districts throughout the state.