New York Lt. Gov.Richard Ravitch has proposed a plan intended to address the state’s budget gap through massive short-term borrowing of $6 billion over the next three years, according to Reuters, a plan that would also require the state government to switch to generally accepted accounting principles (GAAP) as its basis of accounting.

However, in order for the plan to work, the state Legislature would need to put the state budget into balance over the next five years, the Buffalo News reported.

In Ravitch’s report, the lieutenant governor blamed the state’s dire fiscal situation on years of poor budgetary planning that had allowed the gap to widen, noting that Albany has relied too much on one-shot revenue sources that balance the budget in the short term but fail to provide long-term solutions to fiscal problems. Noting that there is no law that requires the state to end its fiscal year with a balanced budget, Ravitch wrote that out-year gaps have grown each year.

The plan, he wrote, should be balanced not only for the general fund but for all non-federally funded state spending, and not on a cash basis but on a “basis that gives a more rigorous and realistic account of the state’s expenses and revenues.”

Ravitch said instead, use GAAP. Because the state recognizes receipts when funds are received and disbursements when funds are paid out, he said, this allows for “considerable manipulation of timing,” adding that it is common practice to use next year’s pay for this year’s disbursement and to balance this year’s budget by rolling expenses into the next. Though he acknowledged that a move to GAAP is not a panacea, Ravitch said that he believes budgeting under GAAP rules will improve the quality of financial data and provide for a tighter and more stringent budgeting standard than the state has now.

Ravitch noted that there will need to be adjustments to certain GAAP rules to account for the state’s specific circumstances, saying that, for example, appropriations language will probably need to be changed. Further, he acknowledged that it will probably take time for the relevant government agencies to make the adjustment from the current cash budgeting system. However, the lieutenant governor said that he feels there is every reason to expect New York State to be able to do so, noting that GAAP is not an unknown quantity to the Division of the Budget. “New York already reports its financial statements on a GAAP basis and the Division of the Budget provides an accounting ‘cross-walk’ from the cash budget to the GAAP financial statements at year’s end,” he said in the report.

And further, he noted, when New York City had to switch over to GAAP it was able to do so a year before being required to do so under state law.

In addition to changes in accounting, the Ravitch plan would also establish an advisory board with the power to declare whether a budget in balance or not, as well as give the governor the ability to impound money in emergencies, said the Buffalo News. This last element will likely be one of the more controversial proposals, as it potentially gives the governor far greater leverage in making budget cuts, according to the Albany Times-Union.

Ravitch, who formally unveiled his five-year financial plan on Wednesday, told the New York Daily News that this multi-year approach is the only way for lawmakers to balance the budget, as cutting $9.5 billion from the state’s 2010-11 budget—due April 1—is impossible without what he called “unacceptably hurtful dislocations” in his report.

Should this plan come to fruition, it would increase the amount the state borrows to cover deficits to $16 billion. Ravitch warned of a fiscal "cataclysm" if steps are not taken now to drive down the state's worsening deficit, according to the Buffalo News.

Many of Ravitch's solutions mirror measures he helped devise to steer New York City through its fiscal crisis decades ago, according to Reuters, though Ravitch said that New York's constitution would not allow the state to adopt the kind of financial control board that oversaw city budgets. Likening his short-term borrowing plan to the debt New York City issued after the September 11, 2001, attacks, Ravitch said the U.S. government had failed to make a "serious response" to safeguard essential services that states provide, continued Reuters. In addition, New York could change its fiscal year to a July 1 start from April 1, bringing it in line with other states, and could use stricter generally accepted accounting principles, another remedy imposed on New York City during the 1970s, according to Reuters.

Even though Ravitch's plan buys time for lawmakers facing the unlikely prospect of balancing the budget by April 1, it would require cuts to a variety of programs and services funded by the state, reported the Albany Times-Union. Further, governors and lawmakers would have to relinquish budgetary methodologies, such as rolling current expenses into future years or using one-shot measures to pay for recurring expenses, said the New York Times. Ravitch said that without such calculations, the actual budget deficit for the coming year was more than $13 billion, representing all spending not supported by recurring revenues, continued the Times.

The borrowing proposal drew a quick rebuke from fiscal watchdogs, said Ganette’s Albany bureau. The problem, some officials warned, is that the state's debt load has already become onerous to taxpayers, with a $3,089-per-person tab that's the fourth highest in the country. Comptroller Thomas P. DiNapoli told Ganette that the state's debt has soared nearly 25 percent since 2005, up to a whopping $60 billion.

Though lawmakers emerged from a series of closed-door briefings with a broad range of reactions, most said they would give Ravitch’s idea serious consideration as they deliberated over how to close the budget gap $9 billion gap in the budget for the state’s fiscal year, said the New York Times. Some lawmakers cited concerns over the plan’s borrowing provisions while others said they were concerned that the proposed review board would trample on the constitutional prerogatives of the Legislature, continued the Times. But underlying those worries was a sense of resignation that some version of Ravitch’s plan would have to accompany the passage of the budget for the coming fiscal year, which must be approved by March 31, the Times said.

New York City Mayor Michael Bloomberg, meanwhile, ripped Ravitch's plan to have the governor, state comptroller and legislative leaders appoint a new five-member Financial Review Board and charged that it was putting the fox in charge of the hen house, said the New York Post. Embattled Governor David A. Paterson, meanwhile, said new borrowing as proposed by Ravitch "will not be considered" unless the Legislature agrees to "significant recurring spending reductions and real structural fiscal reforms,” continued the Post.

Ravitch, who has said he would not run for the top office, was appointed by U.S. President Lyndon Johnson in the 1960s to the U.S. Commission on Urban Problems, said Reuters. He later became chairman of New York's Urban Development Corporation and helped guide New York City through its near-bankruptcy in the 1970s.