Gov. Andrew Cuomo said Monday that failure by the congressional supercommittee to control the federal debt will end up costing the state $5 billion over the next 10 years.
The loss of federal aid, further declines on Wall Street and the worsening economy "have dramatically changed the fiscal course of the state," Cuomo said after an extensive meeting with advisers.
Last week, Cuomo said the state was already running up a $350 million deficit this fiscal year and as much as a $3.5 billion deficit in the 2012-13 fiscal year. In April, Cuomo and the Legislature cut spending in a $132.5 billion budget, which addressed a $10 billion deficit.
Inaction in Washington by the supercommittee to cut the federal debt rattled Wall Street, which accounts for 20 percent of the state's revenue.
The dire economic news could be fodder for the Assembly's Democratic majority and the Senate's Democratic minority, which seek a higher tax for New York residents making more than $1 million a year. The tax would raise billions of dollars to avoid further school and social services cuts. Cuomo, a Democrat, has blocked the millionaire tax, saying it would drive employers out of the state.
On Monday, Cuomo said his administration will create an "expedited job creation and fiscal stabilization plan."
"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," Cuomo said in a prepared statement.
The special deficit-reduction supercommittee was directed to find $1.2 trillion in cuts over the coming decade in action forced by the uncontrolled federal debt. But the 12-member panel is sputtering to a close after two months. The panel has until Wednesday to approve a deficit-slashing plan, but under its rules any plan would have to be released 48 hours in advance, and congressional members said no agreement was in sight.
New York depends on the federal government for nearly $40 billion a year, or about 30 percent of the total state budget. Wall Street revenues including income taxes on lucrative bonuses issued at the end of each year account for about 20 percent of state revenue.
Federal aid is a major component of funding for schools, Medicaid health care programs for the poor and working poor and construction on public projects and funds more than 670,000 jobs statewide representing $32 billion in wages, Cuomo said in a letter Friday to New York's congressional delegation.