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Economic view shaky as Cuomo prepares budget

ALBANY — As Gov. Andrew Cuomo plans to present his budget proposal for the coming fiscal year, a state financial report shows the boomlet that appeared briefly in the spring has fizzled.

State Comptroller Thomas DiNapoli said in his quarterly “cash report” that state tax revenues were up 8.6 percent. But that’s compared to a low 2010 figure, deeper in the recession, and revenues were much stronger earlier in the year compared to December.

In the first fiscal quarter, revenues were more than $700 million ahead of the same period in 2010, but DiNpaoli and Cuomo warned to expect a bumpy ride the rest of 2011.

“A stronger recovery has slowed. It hasn’t stopped, but it’s slower than we’d like,” DiNapoli said in an interview. “We are still in a very sluggish period of recovery.”

Cuomo will present his 2012-13 budget Tuesday. Although the Democrat isn’t hinting much at what it will include, he notes the fiscal times are vastly improved after action by him and the Legislature.

“We are in much better shape than we were last year,” Cuomo said Monday. “The good work we did last year will pay dividends this year … we have a much better budget.”

He said his budget proposal a year ago came amid “a true crisis … chaos” but he and the Legislature addressed a $10 billion deficit and made a rare cut in spending while keeping their campaign promises to avoid raising taxes. In December, however, Cuomo and the Senate’s Republican majority reversed themselves and adopted higher taxes on the state’s top earners, which will provide more revenue for spending this year as well as a $200 to $400 income tax break for most middle-class families.

Cuomo wouldn’t detail elements of his presentation Tuesday. But he said cutting the taxpayer burden to pay for what he called “unsustainable” state and local government costs for public pensions is essential.

“It’s hard to reform a pension system,” he said. “It affects many public employees, very powerful public employee unions and, politically, it’s hard to get the Legislature to do.”

Cuomo also said he will push his proposal for a bipartisan commission to improve public school instruction and make schools more efficient.

He said his budget proposal to the Legislature won’t mention the controversial and potentially lucrative proposal to extract natural gas from a vast upstate reserve by injecting water and chemicals into shale. Environmental groups fear hydraulic fracturing threatens wells and watersheds. Cuomo says he won’t include the added cost of environmental staff needed to regulate the process known as “fracking” until and unless a decision is made to allow the technology in New York.

Longtime Albany budget analyzer Frank Mauro sees some bright spots in the state’s economic numbers. He notes that DiNapoli’s report shows revenue, overall, is up, but not as much as projected. He also said that when federal funding factors are accounted for, Medicaid spending is flat, after years of huge increases that drove holes in county budgets.

But the report also shows the pain of cuts in state spending during the recession. School aid is down $134 million for the first nine months of the fiscal year compared to the year before.

“I think this presents a very uncertain future,” said Mauro, of the labor-backed Fiscal Policy Institute. “I would say we’re still in a very uncertain period. There have been other signs of recovery, that the economy is picking up, but we don’t get that from this financial report.”

But DiNapoli said the “millionaire tax” adopted by Cuomo and the Legislature in December will boost income tax figures during the last quarter of this fiscal year.

“I think there’s reason to have confidence that although we have been below estimates, we are likely to end the year in balance because of the December action,” DiNapoli said.