With the state facing a cash crunch, Gov. David Paterson warned today he may have to resort to steps that other states have taken—such as layoffs, furloughs or shutting down pre-kindergarten program—if lawmakers don’t make budget cuts this month.

A report from Moody’s Investors Service this week, meanwhile, said the state could lose its stable credit rating “if there is no action taken by the state to close the gap, or if action is taken but is largely one-time in nature (therefore increasing the structural imbalance in the out years).”

Paterson is at odds with lawmakers over cutting aid to schools and health care to help close a $3.2 billion mid-year budget gap. After four days of failed negotiations in Albany, lawmakers went home Thursday and plan to return Monday.

But Paterson continued his tough talk today against legislators who don’t want to make cuts. He said spending reductions now would also help lower the deficit next fiscal year, which he estimated may be at $9 billion. The current fiscal year expires March 31.

Come late December, the state faces running out of money if cuts aren’t made, he and other state officials said. That means the state would have to borrow and possibly delay payments to local governments in schools.

Comptroller Thomas DiNapoli warned today that the state faces a $1.4 billion cash deficit next month. Paterson said that if all the state’s money was pooled together next month and all the bills were paid, the state would have about $30 million in the bank – a remarkably low amount for a state with a $132 billion budget.

“We can’t afford to fall back on the old ways of addressing a long-standing problem with short-term fixes,” DiNapoli said. “It hasn’t worked, and it won’t work. A patch today is a problem tomorrow.”
Without close the budget gap, Paterson said New York would have resort to what other states have done, such as laying off state workers, instituting unpaid weeks off or even eliminating programs, such as early childhood programs and pre-kindergarten classes.

“I’ve been telling you what happened in the other states,” Paterson told reporters this morning. “That’s what we’re going to have to do. I told you that 26 states shut down their early childhood education and pre-kindergarten programs, and that’s what we’re going to have to do.”

Paterson said he spoke to legislative leaders this morning to advise them of the dire predictions. But he said lawmakers have so far offered no cuts to schools and only about $100 million in cuts to health care. Paterson has proposed about $1.3 billion in cuts.

“I think this is a lot more serious than the interest of some of the legislators who would rather go home and be heroes saying look I didn’t cut school aid or look I didn’t cut health care,” Paterson said.Nys Go Report 1109