New York State could end fiscal 1993 with a small surplus, reversing four consecutive years of budget deficits, the state has announced in its midyear financial update.
Analysts interviewed for the report said the state's projected $21 million cash surplus indicates that budget officials have, for the first time since fiscal year 1989, accurately forecast the impact of the state's soured economy on revenues and expenditures.
Analysts also said the surplus shows that state officials have managed the difficult task of projecting revenues. Unlike the spending measures, they pointed out, the state has less control over projected revenues during the course of the fiscal year.
"This is the best picture we've seen from the state in the last five years," said Cynthia Green, a senior research associate for the Citizens Budget Commission, a non-profit fiscal watchdog group. "The state has less control over what it receives. It's now critical that state leaders and officials stick close to their fiscal plan."
This time last year, the state announced a $689 million shortfall for fiscal 1992. In mid-fiscal 1991, an $824 million gap was projected; in mid-fiscal 1990, a $277 million gap was projected; and in mid-fiscal 1989, a $994 million gap was forecast. The last projected midyear surplus was a $24 million surplus in fiscal 1988.
State budget officials attributed the fiscal 1993 surplus to a conservative budget analysis that takes into account a state economy that will lag an overall U.S. economic recovery.
Claudia Hutton, a spokeswoman for state Budget Director Patrick J. Bulgaro, said the state expects to see continued job losses until the end of fiscal 1993. The state's fiscal year begins April 1.
Bulgaro, in a statement released Monday, also said timely passage of the fiscal 1993 spending plan helped keep the budget in balance. The fiscal 1993 budget, for example, was the first one in several years that was passed virtually on time and within the state's spending plans.
"We're still going to be conservative," Hutton said. "We think the state's economy will lag the rest of the country. As a result, we've accounted for increases in public assistance."
A surplus in the state's $30.9 billion general fund would mean that for the first time in five years, the state would not have to sell deficit notes in the municipal bond market to plug a budget gap. The state sold $531 million in deficit notes last March to help close a fiscal 1992 budget gap.
However, risks still exist for the state budget.
Analysts say the state and national economy could take a sudden turn for the worse. This would force budget officials to make spending cuts outside those already called for in the present budget.
In addition, the state may lose a $200 million Medicated reimbursement from the federal government, which is contesting the payment. The state is negotiating with federal officials to receive this money.
Analysts were also hesitant to say if the surplus would lead to a rating upgrade from Standard & Poor's Corp., Moody's Investor's Service, or Fitch Investors Service Inc.
Standard & Poor's rates the state's general obligation bonds A-minus, while Moody's and Fitch rate the securities A and A-plus respectively.
Vladimir Stadnyk, a managing director at Standard & Poor's, said the state must show a history of balanced budgets before a rating upgrade will occur.
"If [the state] can hold the line on the budget, the rating goes on lower," Stadnyk said. "But they have to show historical evidence that they can balance a budget and execute the budget that's been passed on time."
Officials from Fitch and Moody's could not be reached for comment.