The state Legislature took the weekend off from their critical talks over how to close a $3.2 billion budget gap. When they return to session this week, their work will take on greater urgency after warnings from the state comptroller and Moody's Investors Service over the consequences of inaction.
Legislators took a break after failing to reach agreement with Gov. David A. Paterson, who has proposed cutting school aid and health care spending.
Moody's warned that a failure to cut spending over the next three months could hurt the state's credit rating and increase costs for borrowing money.
Comptroller Thomas P. DiNapoli, who has projected the current fiscal year deficit at $4 billion, said Friday that the state will fall $1.4 billion short of cash needed to make December payments as planned now. They include a school property tax relief (STAR) payment of $2.5 billion, $1.6 billion in school aid and $461 million in aid to municipalities.
Among measures taken already, the comptroller noted the state will not make an advance $1 billion pension payment this year to keep the funds available. It will be deferred to the required March 2010 payment date, but it will cost the state another $30 million in interest.
Mr. DiNapoli said that hoped-for revenue has not materialized. He called on the governor and Legislature to "close the deficit and put our fiscal house back in order" without using "short-term fixes" such as more borrowing or one-time revenues. Both ideas are part of a Senate legislative proposal that would refinance the tobacco settlement bonds and raid other funds for surplus revenue.
"A patch today is a problem tomorrow," Mr. DiNapoli said.
Short-term borrowing, he said, would be a "particularly harmful option" that sends the "message that the state is unwilling to address its financial issues" and risks investor loss of confidence along with increased borrowing costs. It would also add to the state's debt burden, which is "already among the highest in the nation."
New Yorkers, Mr. DiNapoli said, "can no longer afford delays or inadequate solutions."
The Legislature has had enough warnings; it's time to take responsible action.