New York Borrows Internally to Cover Record General Fund Gap

By Michael Quint
Dec. 31 (Bloomberg) -- New York state ended 2009 with $883.7 million of available cash, after borrowing from its short-term investment pool to absorb a record $600 million deficit in its general fund, according to a report by Comptroller Thomas DiNapoli.
The state expects in January to repay the investment pool and provide $750 million of payments to schools and local governments delayed this month by Governor David Paterson, budget director Robert Megna said.
The investment pool, which holds cash and securities for various accounts such as lottery winnings and state university tuition payments, serves as a kind of line of credit, available when the main account, the general fund, runs out of cash. Borrowing from the investment fund must be repaid by the end of New York’s fiscal year on March 31, according to the state’s annual information statement.
“Had we not delayed payments, we would have run out of money,” Paterson said at a news conference in Albany today.
A cash report by DiNapoli showed the state’s cash balance at the start of business today was $506.4 million, after payments yesterday of about $3.79 billion. The opening balance was less than the $750 million of payments Paterson temporarily withheld.
Paterson said the state’s ending balance was $283 million after subtracting the $600 million general fund deficit from the ending cash balance. In fact, the general fund is a component of the investment pool, according to the comptroller’s office. The general fund deficit is included in the ending cash balance of $883.7 million, and shouldn’t be subtracted from it, said Matt Anderson, a Division of Budget spokesman.
Biggest Revenue Month
State revenue next month exceeds spending by $5.84 billion, according to Division of Budget projections in October. January is the biggest month of the year for tax collections, estimated at $8.88 billion. Wall Street bonus payments are harder to predict this year because many banks plan to pay employees in stock rather than cash, Paterson and Megna said.
To contact the reporter on this story: Michael Quint in Albany, New York, at mquint@bloomberg.net.