The mortgage crises and rising gas prices, along with depleting revenues of major companies have resulted in economic downturn hitting the New York State, with finances in a precarious condition and top officials predicting huge budget deficits in the coming years.
Governor David A Patterson and Mayor Michael Bloomberg admitted at a meeting of the State Financial Control Board that finances are in a unenviable condition, even as officials said they expect city's budget deficit to be around $ 68 million next year increasing to $ 5 billion by 2011.
The mortgage crisis along with rising gas prices have led to a sharp decline in the State's revenues especially as financial firms are laying off employees who paid taxes. Besides, revenues of major companies are also going down which were a major source of income for the State.
The Metropolitan Transit Authority, which runs the public transportation system, has already given notice to increase fares and Peterson said he would give a rare live television address to emphasize the precariousness of State's resources.
Bloomberg asserted that the city was well prepared to meet the recession, a sentiment that Peterson did not seem to share. "There will be no confusion about the gravity of the situation," said Paterson.
Meanwhile Paterson's spokeswoman Risa B Heller, said the governor would do more than merely warn of worse times ahead in his upcoming address.
"The governor will put forth proposals to both get the state's fiscal house in order and ease the burden on New Yorkers," Heller said.
The state budget office's last official estimates, issued in May, projected a $ 5 billion budget gap next year, increasing to $ 7.7 billion for 2010 and $ 8.8 billion for 2011, the New York Times reported.