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After months of plunging revenues and weeks of budget battles, New York had a negative balance of $174 million in its general fund on Wednesday, with nearly $1 billion in bills owed by day’s end. Every sign pointed to the account’s still being in the hole when 2010 begins. To fill the gap, New York will be forced to rely on its own version of overdraft protection by raiding its short-term investment pool — a kind of statewide checking account. But that account itself is dangerously low, with only about $800 million on hand, compared with a balance in more flush years of as much as $16 billion.
And the lower the short-term balance falls, the harder it is for the state to cover its day-to-day bills and the closer New York moves toward a previously unimaginable eventuality: A government check that bounces.
“You basically start depleting your last cushion,“ said Edmund J. McMahon, director of the Empire Center for New York State Policy, a research group that favors reduced government spending. “And the less cushion you have, the riskier and scarier it gets if there is an unanticipated further downturn. You are cutting away what’s left of your safety net.”
http://www.nytimes.com/2009/12/31/ny...deficit&st=cse
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