By Joseph Spector
Albany Bureau Chief
ALBANY New York could face rising budget gaps if the economy doesn't improve and the state lets some taxes expire as planned, Comptroller Thomas DiNapoli said in a report Tuesday.
The state's five-year fiscal outlook expects budget gaps of $2 billion next fiscal year and $2.9 billion in the two subsequent years. DiNapoli warned that the budget gaps could be as high as $6 billion if the state's revenue and spending projections aren't met.
"The use of non-recurring or temporary resources to meet recurring expenses exacerbates the structural deficit, making future budgeting more difficult," the report said.
Gov. Andrew Cuomo and state lawmakers in March approved a $135 billion budget for the 2013-14 fiscal year, which started April 1. The budget closed a $1.3 billion budget gap and increased spending for schools by more than $1 billion, to roughly $21 billion.
The plan extends higher income taxes on millionaires, and $350 checks will go to families with children younger than 17 in 2012 with incomes between $40,000 and $300,000. It also extended an energy tax on businesses.
DiNapoli said that while the state's finances are better than in recent years, it still faces challenges, partly if some taxes expire in the coming years as planned. The state had a $17 billion deficit in 2009 and a $10 billion deficit in 2011.
"There's no doubt New York is in a better budget position now than it was a short time ago," DiNapoli said in a statement. "Still, without doing more to align recurring spending with recurring revenue, out-year gaps will likely continue. For years, the state has used one-shots and temporary fixes to pay the bills."
Cuomo has touted a Start-Up NY plan that will offer no taxes to businesses that locate near college campuses. Cuomo said the program will come at no cost to taxpayers, but DiNapoli warned that the program could mean the state is forsaking future revenue from new businesses.
"Growth in future revenue could be affected as new companies take advantage of this program," the report said.
Cuomo's budget office said it would release an updated financial plan later this week and had no comment on DiNapoli's report.
DiNapoli said that the state's financial plan relies on $4.9 billion in temporary revenue, including at least $1.5 billion in transfers from the State Insurance Fund.
DiNapoli noted some positive signs in the state's fiscal outlook. Tax collections through the first quarter of the fiscal year were $321 million higher than projected and $2.6 billion higher than the same period last year, an increase of 15 percent.
For more information on the report, visit: http://www.osc.state.ny.us/reports/budget/2013/financial_plan0713.pdf