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Report: NY governments face 'dire' future

Michael Gormley, Associated Press

ALBANY, N.Y. (AP) -- New York's state and local governments and their taxpayers are on an unsustainable fiscal path, despite some improvements and a public perception that the outlook is far brighter, a nonpartisan task force found in a report released Tuesday.

The state continues to be plagued, as it has for decades, by "structural budget problems" and partisan politics in budgeting, the task force found. New York's long-term deficit "has been papered over with gimmicks" that continue, it stated.

"There is no assurance that the state's structural debt is sustainable," the report stated. It also warned of a "growing number of illiquid, near-insolvent cities and counties with structural budget deficits."

"New York's fiscal future sits on shaky ground," the report concluded.

The State Budget Crisis Task Force was led by former Democratic Lt. Gov. Richard Ravitch, who was critical to saving New York City from bankruptcy in the 1970s. He partnered with former Federal Reserve Chairman Paul Volker.

The report warns taxpayers of the continued use of one-shot fiscal gimmicks and spending that can't be supported.

It was released as Gov. Andrew Cuomo and his top administration held a news conference to detail their accomplishments. They included fiscal improvements they note are reflected in public opinion polls in which just over half of New Yorkers now see a rosier future.

"And you did it without raising taxes; you did it without gimmicks," said Lawrence Schwartz, Cuomo's chief of staff, at his side.

Cuomo and the Legislature 12 months ago increased income taxes to raise $1.9 billion to close the latest deficit in a millionaire's tax. Cuomo and the Senate Republicans had promised since their 2010 campaigns to stop the Assembly's push for a millionaires' tax as a job killer. Cuomo and Legislature also enacted five straight years of public college tuition increases, calling it a rational tuition policy.

The task force cites several continuing one-shots threatening fiscal stability that total $4.5 billion in the current state budget. They include the temporary millionaires' tax, deferment of business tax credits and borrowing to make public pension payments.

But Cuomo sees a fiscal turnaround.

"Gov. Cuomo has been successful in unraveling many of the budget gimmicks made by previous administrations," said his budget spokesman Morris Peters.

"Since Gov. Cuomo took office, out-year deficits have been reduced by a cumulative $77 billion, and this year New York made its first deposit to the rainy day reserves since the start of the fiscal crisis," Peter said. "Spending growth has been limited to 2 percent or less for the second year in a row, and there have been no new taxes or fees or gimmicks like borrowing to pay for operating expenses."

The task force notes improvements.

"Albany has made an effort to impose new fiscal discipline ... but it is too early to know how effective these changes will be and what their impact may be on services."

State Comptroller Thomas DiNapoli, auditor of of state and local governments, called the report "a vital document."

"The issues presented in this report touch every single one of us. How we address these challenges will define the path forward for our great state," DiNapoli said.

The report also stated:

— The state has long neglected critical infrastructure needs, a problem exacerbated by the billions of dollars of damage from Superstorm Sandy. It warns Cuomo's planned Tappan Zee Bridge replacement compounds that, and the Metropolitan Transportation Authority's revenues and rebuilding program won't meet its future needs.

— The state imposes mandated costs on local governments and schools including Medicaid, employee benefits, while capping the growth of local property taxes.

— New York City's future budgets are at risk from "the sluggish economy, weak revenues, and unrelenting mandated expenses" imposed by state and federal governments.