By Jay Dismukes

As New York City grapples with its budget deficit, one that is projected to be as much as $3.5 billion in fiscal year 2003–2004, the Big Apple shouldn’t expect Albany to provide any sudden shot of substantive relief, a state budget expert stated in January.

“The state is going to have a fiscal crisis that is far worse than the city’s fiscal crisis,” said the expert, Abraham Lackman, former secretary for the state Senate’s Finance Committee. “Right now the city is assuming the state will be a factor for the good, not for the bad.”

Lackman, now president of the Commission on Independent Colleges and Universities, joined a group of economists and business leaders on Jan. 14 during an economic forum sponsored by the New York City Comptroller’s Office. The event included two panel discussions—one on stimulating economic growth, and the other, in which Lackman participated, on balancing the city’s budget.

According to recent estimates, the city’s budget gap for fiscal year 2003–2004 stands at $3 billion while the state’s could run as high as $12 billion. In addition to cutting spending and raising taxes, the city borrowed $2 billion to cover the deficit for the current fiscal year, the comptroller, William C. Thompson Jr., told the forum audience. The state has yet to close the 2002–2003 fiscal year budget gap, which is projected at $2.5 billion, leading insiders to speculate that it will be forced to borrow.

Citing a 4 percent drop in the tax base last year and a probable 5 percent drop this year, Lackman said the state will experience two consecutive years of declining tax revenue for the first time since 1940 and 1941. The current fiscal crisis may hinder the state’s ability to contribute the traditional $200 million to $600 million in aid that it has provided to New York City in the past.

Thompson appeared to embrace Lackman’s call for caution, saying he thought the city was “overly optimistic” in its expectations for financial aid from the state. “I think we are going to be very disappointed,” The New York Times reported Thompson as saying.

State lawmakers in early February resisted Mayor Michael Bloomberg’s plea to reinstate a commuter tax that could bring in $1 billion a year to city coffers, the Associated Press reported on Feb. 3, though they were inclined to allow tolls on bridges spanning the East River in New York City, which could earn $750 million annually.

The concurrent crises at the state and city level, however, could necessitate the serious consideration of reforms that have been “percolating” over the last 20 years, Lackman said.

Two “long overdue” reforms that panel member Alair Townsend, publisher of Crain’s New York Business, said could help stave off the city’s fiscal woes are repeal of the Wick’s law (which the governor later included in his Jan. 29 proposed budget) that mandates that all public works projects over $50,000 be bid in three separate subdivisions and cannot be awarded to one contractor, and tort reform. Towsend said the city spends $400 million annually in judgments and claims as a result of thousands of lawsuits. Townsend also advocated the tolling of more of the city’s bridges to help raise revenue.

While the state’s fiscal response to New York City may be limited, several of the panel members noted that there is a federal responsibility resulting largely from Sept. 11 that needs to be upheld, despite the fact that the poor economy continues to plague the entire nation.

“New York City taxpayers cannot, and should not, stand alone in shouldering the burden of that devastating attack on our nation,” Thompson said. “The economic impact of the attack is a national issue, and demands a national response. After September 11, leaders in Washington promised they would stand by New York City. It’s time to keep that promise.”