New York state tax collections fall short

First two months of 2002 are $500 million below recent projection

March 10, 2002|By Matthew Cox | Matthew Cox,BLOOMBERG NEWS SERVICE

ALBANY, N.Y. - New York state tax collections in the first two months of 2002 are falling 6.6 percent short, or $500 million below projections made just six weeks ago in Gov. George E. Pataki's proposed budget, state officials said.

The January tax collection was $179 million lower than anticipated, state officials said. The February take was $321 million below the target.

The decline surprised state officials because Pataki's budget proposal was based on post-Sept. 11 assessments, and its revenue estimates were supposed to reflect the lost jobs, relocations and business interruptions caused by the terrorist attack on the World Trade Center.

"I think we have to operate on the assumption that these are among the most difficult economic times we've seen in a long time," the Republican governor said.

"When and if the recession comes to an end, I think we have to understand that the growth will be starting from a lower base as a result of Sept. 11, because we took an enormous economic hit and an enormous financial hit," Pataki said.

Budget talks

In January, Pataki said 377,000 jobs were disrupted or displaced by the attack.

Assembly Speaker Sheldon Silver, Democrat of Manhattan, predicted that the economy is about to grow stronger.

"I'm optimistic," Silver said. "Our financial report is going to show that the revenues of the state have been hit, but we look forward to more robust times as we go forward."

The third partner in three-way state budget talks, Senate Majority Leader Joseph Bruno, a Republican from Brunswick, said, "The governor has indicated January and February revenues are off substantially and that is extremely troublesome for all of us here in the state."

He said this year's budget will be difficult "because we have limited resources. We have huge demands. The needs out there are great, and all of us recognize the huge needs. We're going to try to make do with limited resources - do more with less."

Shortfalls

New York's fiscal year starts April 1. Governors and state lawmakers haven't adopted a budget by that deadline since 1984.

Last year, they didn't begin passing budget bills until Aug. 3, after one-third of the fiscal year had gone by.

Pataki on Jan. 22 proposed spending $88.6 billion in the next fiscal year, 4.9 percent more than this year. In February, he submitted amendments that raised his proposal to $88.9 billion.

Pataki has said business losses caused by the Sept. 11 terrorist attack and the U.S. recession would produce a $1.1 billion gap between expenses and revenue in the fiscal year that ends this month, and a $5.7 billion shortfall during the new fiscal year.

His budget proposed closing those gaps with $3.1 billion in increased U.S. government aid, by drawing on the state's fiscal reserves, by raising the state cigarette tax, by cutting state agency expenses through attrition, by freezing nonessential travel and by restructuring state debt.

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