Governor Cuomo gave a grim forecast for New York after his emergency powwow with financial advisors to discuss the consequences of the failed Congressional supercommittee. In a statement released after the meeting, Governor Cuomo blasted “Washington’s inability to get its fiscal house in order and work in a bipartisan fashion” and said the debacle would cost New Yorkers at least $5 billion.
Earlier this evening, Congress announced that the bipartisan supercommittee failed to agree on a plan to cut $1.2 trillion from federal budgets. The supercommittee’s inability to reach a deal ahead of its Wednesday deadline will trigger a series of drastic, automatic budget cuts. Governor Cuomo said those cuts will have a huge impact on New York.
“If the committee fails to reach an agreement and Congress moves forward with its so-called ‘sequestered cuts,’ the Budget Division estimates that New York could lose approximately $5 billion in federal funding over 10 years beginning this coming fiscal year,” Governor Cuomo said.
New York currently relies on federal aid for about 30% of the total state budget. Along with decreasing federal aid, the supercommittee’s failure is expected to cause woes on Wall Street, which will further impact the state’s coffers.
“This does not account for additional revenue losses from jobs losses and Wall Street declines. These events, combined with a stagnant national economy and the expanding fiscal crisis in Europe that has led to a sudden and severe decline in revenues for the state, have dramatically changed the fiscal course of the state,” Governor Cuomo said.
Approximately 20% of the state budget comes from personal income, business and sales taxes collected from financial industry workers. Therefore, tough times on Wall Street hit the state budget hard. Anemic Wall Street returns for the first part of this year have already caused a $400 million budget shortfall and markets began diving deeper earlier today in anticipation of the supercommittee’s imminent failure.
Governor Cuomo said he’s having his Council of Economic and Fiscal Advisors “draw up an expedited job creation and fiscal stabilization plan” to prepare for the economic perfect storm set to hit the city in the wake of the supercommittee’s collapse.
“This proposal would be based on the reality that the best way to generate revenue for the state and revitalize our economy is to create jobs,” Governor Cuomo said.