DiNapoli: NY Barely Scraping By

January 4, 2010

New York state’s cash resources will drop to an all-time low on Wednesday after the state makes $3.5 billion in payments.

The state began today with $3.2 billion in available cash. But $3.5 billion of bills scheduled to be paid today will wipe out that balance.

"New York state is barely scraping by," said state Comptroller Thomas DiNapoli. "The state is literally down to petty cash."

The payments include $1.8 billion to schools to compensate them for property tax rebates offered to homeowners. The payment is $436 million, or 19 percent, smaller than the full amount due to schools-a cost-cutting move Gov. David Paterson announced earlier this month to help keep the state solvent.

The state will also pay $384.5 million of general school aid, representing all of the payment that is due. Another $1.8 billion in Medicaid reimbursements will be paid to health care providers -an amount DiNapoli said was one of the highest Medicaid payments ever.

The payments are due by Jan. 4. DiNapoli said he expects the state to make all payments today.

DiNapoli’s office is charged with approving and authorizing payments made by the state. The office processes 130,000 state payments daily.

The reduced school aid payments prompted education groups-including the powerful New York State United Teachers union-to sue Paterson earlier this month in state Supreme Court in Albany County.

The lawsuit accuses Paterson of willfully ignoring state law and violating the state constitution by withholding full payments of school aid. The education groups warned teachers would have to be laid off for school districts to be able to adjust to the mid-year cut in aid.

In response, Paterson attacked NYSUT and education groups for putting their interests above what he believes is best for the entire state. Paterson said a provision in the state budget gives him the power to withhold portions of payments, if he deems it necessary.

Paterson has also said 95 percent of school districts in the state have reserve funds large enough to cover for the smaller-than-scheduled payments. He has said he intends to pay schools in full once more revenue flows to the state early next year.

A hearing on the lawsuit is scheduled for Jan. 5.