Sunday night was the first I had heard of the Lehman Brothers bankruptcy and Bank of America's acquisition of Merrill Lynch. One of the first things I wondered yesterday morning was when Governor Paterson would call legislators back up to Albany for more budget cuts. While Congress may act first on a stimulus package, a crisis on Wall Street can be felt far and wide but the epicenter is still New York. So what is a Governor to do that has already slashed almost $500 million from the budget?
From The Times-Union:
"I would not be surprised if the budget deficit we just cut down may skyrocket back up, and I may have to call on the Legislature to come back and grapple with it again," Paterson said Monday during an interview on the New York City-based NY1 news channel. He repeated that contention on the regional cable TV channel Capital News 9.
Paterson's remarks came during a tumultuous day on Wall Street, as the Dow Jones industrial average plunged 500 points -- its worst drop since Sept. 11, 2001 -- on the news of Lehman Brothers' bankruptcy filing, the takeover of Merrill Lynch by Bank of America, and the state's plan to devise a lifeline for American International Group insurance company.
The upheaval will likely mean mass layoffs and a drop in state income tax revenues. Officials say the results of their midyear financial report, usually finished in late October, will dictate whether lawmakers need to impose another round of cuts.
Legislative leaders took a wait-and-see attitude toward another crisis session.
The wait-and-see won't last long and Albany could become a center of chaos as early as next month, before election day. Paterson talked about tax hikes as well as budget cuts, so that is better than this past special session where it was all about cutting services from the Republican Senate and the Governor's office.
As TU points out, this upcoming session should be even more intriguing than the last, as voters across New York will decide if control of the State Senate swings to the Democrats or not. Only two seats will make a difference, that is if you don't count the DINOs in there at the moment. Legislators definitely have big decisions as they face their constituents in a few weeks and will have to judge whether they balance the budget by raising taxes or cutting programs, because revenues are going to drop even further thanks to Wall Street.
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