To the editor:

Various news stories and columns continue to assert - wrongly - that New York State's budget outlook for next year was a hidden problem. It was not.

It has been a matter of public record since February that New York State faces a potential budget gap for 1995-96. Our first projection showed a potential budget imbalance of $1.43 billion for 1995-96, if Gov. Cuomo's budget proposal for 1994-95 was passed intact.

That did not happen. Although the governor urged the legislature to be cautious and reserve at least part of the $1 billion surplus from last year to help the state with next year, the legislature voted by overwhelming majorities in both houses to cut taxes deeper and spend more this year.

Their tax cuts will cost $635 million more in 1995-96 than the tax cuts the governor had proposed. The spending they added this year will raise spending in 1995-96 by more than $1.2 billion above the level projected in February. The programs receiving increases are worthwhile - school aid, revenue sharing, capital projects - but they carry a price tag.

After the budget was passed and before the election, both the independent Citizens Budget Commission and Fiscal Policy Institute stated publicly that the legislature's actions had added to the potential gap for 1995-96. The Fiscal Policy Institute estimated a gap of $3.5 billion in September.

Then, on Oct. 28, I announced more recent developments that added to the gap. Even though we can still expect to end the current fiscal year with a balanced budget, the broad weakness in the financial services sector and the generally weaker outlook for national economic growth indicate that receipts in 1995-96 will be about $75 million lower than we thought.

The pressures from rising prison populations will continue next year. In October, we raised our estimate of prison spending by $50 million because of this growth; the cost next year is projected at $75 million. Other factors are at work as well; for example, interest rates are higher now than in February, so debt service costs are higher.

All this was public knowledge. "Anyone who was surprised by the latest gloom-and-doom bulletin ... just hasn't been paying attention," said the New York Post in a recent editorial Likewise, the Buffalo News noted that the gap "should have been no secret to people even mildly attentive to state finances."

We should all keep in mind that each of the past five years, a gap has existed between projected revenues and expenditures - some much larger than the current gap - before Gov. Cuomo presented his budget proposal for the new year. But he proposed a balanced budget every time, cutting spending and preserving revenue to close the gap. Gov. Pataki will propose a balanced budget for 1995-96, as Gov. Cuomo has for the last 12 years.

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