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Paterson to New York: ‘We’re Broke’

Amsterdam News, News Report, Glenn Townes Posted: Oct 31, 2008

At a packed news conference in the city on Tuesday, New York Gov. David Paterson delivered a somber message to New Yorkers that the financial uncertainty on Wall Street and the unstable economy will lapse the state into the largest budget deficit in history. “New York is at the epicenter of an extraordinary financial crisis,” Paterson said. “We will have no choice but to take bold and aggressive action to reduce state spending.”

According to Paterson and other reports, New York State will face a $1.5 billion shortfall for the current fiscal year. Predictions are that the Empire State will experience an overall budget shortfall of about $47 billion through 2013—the largest budget deficit in history.

Paterson and members of the legislature will meet for a special session on November 18,two weeks after the presidential election, in order to draft a measure that will ask lawmakers to immediately slash more than $2 billion from the budget. Paterson places the blame for the state’s financial woes squarely on the shoulders of the economic tenuousness of Wall Street coupled with a September unemployment rate of nearly 6 percent, as well as the continued lingering aftereffects of 9/11.Paterson warned, “These are going to be very hard cuts and we are really going to feel the pain.”

Shortly after Paterson’s gloomy economic forecast, New York City Comptroller William Thompson issued a statement in reaction to the governor’s announcement. “As I have stressed in recent weeks, New York is the unfortunate center of a worldwide economic crisis,” Thompson said. “Our city alone is expected to witness the loss of 165,000 jobs over the next two years.”

New York is not the only state in dire financial straits. More than two dozen states across the country are facing mid-year deficits in excess of about $12 billion, including New Jersey and California.

In a related matter, Thompson said the value of the credit crunch has slammed the New York City Pension Funds. The value of the mammoth money fund decreased by nearly 9 percent since September 30, dipping below the $100 billion mark. However, when compared to dozens of other public pension funds, which have seen their value drop by as much as 20 percent, Thompson said the New York City fund is better positioned. “Due to the long-term nature of its liabilities, the pension funds’ assets are invested with a long-term investment horizon,” he said. “I worked with trustees of the funds to diversify the funds to minimize losses in down markets.”

The New York City Pension Funds include the New York City Employees Retirement System, Teacher’s Retirement System, New York City Police Pension Funds, New York City Fire Department Pension Funds and the Board of Education Retirement System.

Related Articles:

NY Working Class to be Hit Hard by Financial Crisis

NY Gov. on the Hot Seat over Budget Cuts

An Amazing 100 Days for NY Guv Patterson

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