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Updated 05/14/2010 06:02 AM

New York: The state budget, risk of layoffs and cash flow problems

By: Steve Ference

With legislators unable to approve a state budget, the Governor forced them to choose between furloughs for state workers or a shutdown of some state operations. While the furlough issue is now for the courts to decide, our Steve Ference reports on where the budget process is really at, by the numbers.

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ALBANY, N.Y. -- With state worker furloughs on hold, budget extenders and the actual budget and not enough money coming in to the state, what's going on at the Capitol can all be very confusing.

So here are the issues by the numbers. The $9.2 billion deficit was plugged by the Governor's proposed budget with $6 billion in spending cuts, $1 billion in new taxes and hundreds of millions in federal money and one shot deals. But again, the legislature and governor can't come to agreement on the budget. So to keep the state running, they're passing budget extenders. Governor Paterson will propose another extender on Friday while there's no clear movement on that actual budget.

Empire Center for NYS Policy Director, E.J. McMahon, said, "Think of the budget process like a tennis game. He served. In fact he served twice. The ball is in their court. They're supposed to return it. And if you picture the Senate and Assembly as a doubles team, they're batting it back and forth."

Meanwhile, regardless of whether there's a budget or not, the state is also facing a cash flow crisis, not enough money is coming in to pay the bills. According to a budget division spokesman, about $4 billion in state payments to schools around the state could be in jeopardy since projections put the state $1 billion short, as 98 percent of school districts are already planning on dipping into their reserves.

David Albert, Communications Director for the New York State School Boards Association, said, "It would create chaos in school districts. They wouldn't be able to make payroll without borrowing money."

The School Boards Association already has a lawsuit demanding payments be made by the June 1st statutory deadline. The state budget office spokesman says the only real answer is passing an actual budget. In lieu of that, extenders will likely continue and some state workers still fear layoffs instead of furloughs, a process that could take months to begin as seniority and other issues get worked out.

And if layoffs are still one of the options for state workers, McMahon says the longer the legislators wait for layoffs, the worse it would be.

"To save $250 million over a full year, when you're almost half way through the fiscal year, do the math," McMahon said. "You have to lay off twice as many people."

All of this, as the state will likely be unable to pay schools by June, budget or not.

McMahon said, "It's very difficult right now to spot a light at the end of the tunnel and I get the feeling that some lawmakers don't know which end of the tunnel to look at."