U.S. News

New York state faces $315 mln budget deficit

NEW YORK (Reuters) - New York state faces a budget gap of $315 million in the current fiscal year due to lower-than-expected tax collections and high Medicaid costs, the state budget division said in a report.

Tax collections through September 30 -- the mid-year point for the fiscal year that began April 1 -- are now projected to be $61.4 billion, or $343 million below August estimates, according to the state’s mid-year financial update released late on Monday.

“The slowdown in economic growth in the second and third quarters of calendar year 2010 has been more pronounced than expected,” the report said.

New York’s general fund tax revenue was $510 million below estimates in the first six months of the fiscal year, while Medicaid spending was $110 million more than projected.

The report, which revises budget projections through fiscal 2014, said the state will face a $9 billion deficit in fiscal 2012, or $850 million more than the previous estimate.

New York Governor David Paterson, who is not a candidate in the election on Tuesday, has said he will push for more spending cuts before leaving office at the end of the year.

Paterson has said he will order lawmakers to Albany on November 15 for an extraordinary session to vote on spending cuts and other matters.

Democrat Andrew Cuomo is heavily favored to beat Republican Carl Paladino at the polls on Tuesday.

Reporting by Edith Honan; Editing by James Dalgleish