Governor counting on $1 billion from Washington to balance state budget
Wednesday, February 10th, 2010 at 3:05 pm by Robert Lowry
Yesterday, Governor Paterson released his “21-day” amendments to the state budget he proposed three weeks ago.
As we reported previously, the Governor had already announced that the budget’s projected deficit had grown by 10 percent — from $7.4 billion to $8.2 billion. Accordingly, it had been anticipated the the 21-day amendments could present another round of spending cuts.
Instead the Governor is counting on $1.06 billion in increased federal funds from President Obama’s proposed budget to avoid major new cuts.
A news release from the Governor’s office cautions, “While there is strong evidence indicating that this aid will be approved, if federal action is not taken, deeper spending reductions would be required across a range of policy areas, including, potentially, education, health care, social services, and others.”
The Governor is also proposing a change in the “mobility tax” adopted to aid the Metropolitan Transportation Authority last year. The Governor’s news release says, “The amended proposal increases the tax rate for New York City businesses to 0.54 percent of payroll, up from 0.34 percent. It also cuts the tax rate in half for businesses outside of New York City to 0.17 percent.”
There are also more technical changes in the 21-day amendments.
Counting on federal funds is a mixed blessing — there are already huge worries about what happens to the state and the schools when federal stimulus funding enacted a year ago runs out in 2011.
But the prospect of further federal aid was one glimmer of hope for reducing or averting the School Aid cuts in Governor Paterson’s proposed state budget. Now that money — if it ever materializes — may be off the table, swept up by the Governor to fix the imbalance in the budget he proposed just three weeks ago.
The threat that additional education cuts may be needed if the federal aid does not come further complicates school district budgeting. Should schools assume the level of aid proposed by the Governor, or something less. in case federal aid does not materialize, or count on some restoration by the Legislature?
The threat of further School Aid cuts is one more reason why it is valuable for schools to have reserves to call upon.
This entry was posted on Wednesday, February 10th, 2010 at 3:05 pm and is filed under Finance, State Budget. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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