Ouch!
Posted on 10/05/2009 11:14:55 AM PDT by FromLori
New York State is quickly becoming the next California, as tax revenues drop 36% from 2008 levels, and a dejected governor expressing his frustration with policy measures that continue to not bear fruit. As a reminder the state most reliant on the financial sector, is struggling with a $2.1 billion budget deficit that is still looming despite tax increases, federal aid and spending cuts.
New York State’s income tax revenue has dropped 36 percent from the same period in 2008, Governor David Paterson said, “frustrating” his attempt to close a projected $2.1 billion budget deficit.
“We added personal income tax, which we thought would make the falloff 10 percent to 15 percent,” Paterson, a Democrat, said on CNBC today, referring to $5.2 billion in new or increased taxes. “This is what is so frustrating. It’s still 36 percent, meaning our revenues fell more in 2009 than they did in 2008.”
The budget will still be $2.1 billion in deficit because spending plans exceed revenue projections, the state Division of Budget said July 30. The report predicted deficits of $4.62 billion in 2011, $13.3 billion in 2012 and $18.2 billion in 2013. The Governor, who has recently had a major falling out with President Obama, may be in even more hot water as hopes for major tax windfalls from corporate taxes vanish due to generous NOLs established during last year's financial collapse:
“We are Ground Zero for the economic recession,” said Paterson. “What we’re recognizing now is what everybody recognizes in their own portfolio: you can’t overinvest in one area because, if it fails, you’ll have a debacle.”
New York is depleting its options for balancing the budget, Paterson said.
“What we want to do is bring the legislature back as soon as possible and make the tough decisions,” Paterson said. Alas expenses tend to be much "stickier" than revenues, meaning that even much more drastic cost cutting will likely still leave the state at the mercy of Federal handouts. And if California's IOU experiment is any indication, Paterson may want to promptly get on the President's good side before he is forced to ask for much needed assistance.
Also, another issue that is not receiving much airtime is the continued dire straits that New York's MTA finds itself in. From the most recent status update: "the program has a funding gap of $9.9 billion despite a large increase in State aid and a 56 percent increase in anticipated federal funding, which may not materialize. In the absence of additional aid, the MTA plans to fill the gap with debt, but debt service would then rise rapidly and increase pressure in the future to raise fares and tolls." Yet another aspect of the state economy that is intimately linked with well-bid debt markets, which in turn track the equity market tick for tick, explaining once again how much the administration has staked on a stock market that, miraculously, is not allowed to leg lower by any material amount. However, as long as analyst actions, such as today's by Goldman in which it effectively upgraded itself, continue to drive markets, the plan to keep equities at untenable and fundamentally unjustified levels, will be viable to keep the economy running. Even if it is based on smoke and mirrors.
Just damn. Nobody can be this stupid.
CUT SPENDING IDIOTS........
Yep, the bigger trainwreck is gaining speed. Hope all are prepared for extended survival. It ain’t going to be pretty.
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It’s all adding up to one ugly mess, for sure.
With NY’s tax rates, especially the extra taxes in NYC, the wealthy have been leaving at an alarming rate.
Lotsa luck, NY, raising money for all the ne-er do wells and ‘green’ projects and other BS you want.
Why do they fail to mention that self employed and employers will now be paying a new separate extra tax to maintain the MTA?
What is killing us in New Jersey are the teacher salaries, but more importantly the retired teacher pensions (along with other NJ state workers, but teachers take the biggest chunk).
Gov Corzine knows this, but he failed to do anything because the lobby is his bread and butter, and when you do cross them they spend zillions to try and hurt you. That is what California public employees union did to Arnold.
We have a NJ radio station (FM dial) that constantly tries to expose the corruption. They have had on lots of experts talking about the problem.
The only real solution is to burn down the entire state jobs and pension system. I mean a complete, utter, 100% destruction, and start over.
The problem with that is corrupt Democrat appointed judges won't let you do that, even if Republicans controlled the governorships, state houses, and state senates.
I guess the only solution is for the states to go completely bankrupt with no "bailouts" and let the states go into chaos for awhile.
I am totally serious.
If any politician had a brain, they’d say that next year’s budget can spend 95% of what we actually take in this year. The remaining 5% goes to pay down our debt. No tax increases.
Then you’d have them focused on doing whatever they could to help each taxpayer make as much as they could and to have as many taxpayers as possible living in their jurisdictions. So each state would try to cut their state income tax rates to lower than the surrounding states to encourage those at the borders to move in and save some of their money. This would be the Walmart approach to tax policy.
Ouch!
What aera will be known as New Californa?
It’s a joke that Northern Florida is New Michigan, while it seems North Carolina is New New York.
mmmmm...mmmmm.....mmmmmmm OK, hammer... OK...
bump
and the medical.....
zero voter for sure....
Boy are they killing CA. Everyone is leaving. Businesses are going under. What will the illegals do when there is no one to support their fannies?
This wasn’t the deal? They were suppose to be supported by the poor American taxpayer through some fantasy. They were suppose to have free healthcare and free this and that. Instead it’s turning into the Mexico landscape.
Maybe they should make an appointment with the Messiah in the WH?
There won’t be a pension soon to take any money from.
A liberal, San Francisco commie, Democrat organizer in-law once tried to tell me over a Thanksgiving dinner that the US military "babied" them because they got 30 days vacation a year. Of course, she was deeply entrenched in the teacher's union.
When I got her to admit all the perks and bennies they got, her retort was that teacher's deserved them because the classroom was a "battlefield."
She never noticed the irony, and let her hang herself with her own rope. Even the Democrats at the table winced while eating their cornbread stuffing.
We’re ‘eating our seed corn’ — taxing incomes of future skilled young people to pay for our borrowed SS money to pay for longer retirements. Not a healthy, sustainable, FAIR solution.
Thanks, D’rats!
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