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NY comptroller questions Cuomo budget proposal

Michael Gormley, Associated Press

ALBANY, N.Y. (AP) -- New York State Comptroller Thomas DiNapoli on Wednesday found some big question marks in Gov. Andrew Cuomo's $143 billion budget proposal.

DiNapoli's analysis of Cuomo's budget claims it would increase debt, would rely on one-shot revenues and includes overly optimistic projections of tax revenues. However, the state's auditor did credit the budget as continuing to move toward long-term fiscal balance.

The Cuomo administration dismissed the criticisms. Cuomo's budget director, Robert Megna, said DiNapoli's review was based on misunderstandings and misrepresentations of a balanced budget that controls spending and borrowing.

Meanwhile, the Senate Republicans who share control of the chamber slammed Cuomo's budget for extending the life of a tax on businesses that was to expire.

"The business community has said that this onerous tax costs New York's businesses and families $509 million annually and will hurt our efforts to create jobs and revitalize the state's economy," Senate Republican Leader Dean Skelos said.

The Democratic governor, who presents the budget as having no new taxes, proposes to extend the tax for another five years just as it was due to expire and as he pushes his New York is Open for Business campaign to CEOs.

DiNapoli's criticism focused on broader elements of Cuomo's budget and found serious concerns. The Legislature will soon begin negotiations with Cuomo on the budget, which is due by April 1. The proposed budget, bigger than the current $134 billion budget, includes anticipated federal aid for relief from Superstorm Sandy, which flooded neighborhoods, destroyed homes and knocked out power in late October.

DiNapoli said New York's fiscal challenges are "significant for the foreseeable future."

"In the face of a challenging economy, this budget appropriately restrains spending," he said. "However, it includes risks on both the spending and revenue sides of the ledger ... (and) pushes off some hard choices for another day."

For residents, the risk of a budget that might not cover the fiscal year's expenses is clear. In December 2011, Cuomo and the Legislature convened a special session to raise income taxes to provide $1.9 billion more to the state budget by targeting millionaires, which continues to help cover spending.

Megna, Cuomo's budget director, noted the budget keeps the increase in spending to under 2 percent while holding the line on borrowing and keeping it just under the state's borrowing limit.

But DiNapoli said Cuomo relies heavily on borrowing through state authorities, which avoids the need to get taxpayers' approval in a more transparent manner and isn't included when calculating the state's debt limit. New York's total debt is second only to California's among the states.

Megna insisted the state has borrowed through its public authorities such as the Dormitory and Thruway authorities for decades, but DiNapoli said there is usually a mix of this backdoor borrowing and more transparent borrowing that requires voter approval.

DiNapoli also said there could be a $1.1 billion hole in the budget that could bust the plan later in the fiscal year. That's the amount of funds the federal government is seeking from New York after years of excessive reimbursement to the state for its Medicaid health care program for the poor.

Megna said the budgets lists that as a possibility and negotiations with President Barack Obama's administration continue.