ALBANY -- The political fight in Washington over whether to again extend or finally limit federal borrowing has New York and its biggest taxpayer -- Wall Street -- facing another grim fiscal prospect.
"We are in such uncharted territory," state Comptroller Thomas DiNapoli told The Associated Press. "There are all these contingencies we haven't prepared for."
He said credit rating agencies are already telling him the federal government's credit could be downgraded even if there is a political agreement before Tuesday's deadline to raise the debt limit.
That could quickly affect the credit rating of the state, which depends on federal money, including $7 billion due in August and September.
The largest portion of that funding is designated for the Medicaid health programs for the poor and working poor; others are earmarked for schools and environmental protection.
A credit crunch and downgrade of federal credit worthiness could also send Wall Street into another decline. That would again cut revenues from New York state's biggest taxpayer segment.
If Social Security checks, veterans benefits and other aid is suspended or delayed to New Yorkers, there would be less spending and a hit on state and local tax revenue.
The Cuomo administration is meeting behind closed doors over the potential cost to the state if its credit rating is downgraded and if Wall Street's rebound, which is driving the state's recovery, sputters.
"I don't believe it's going to happen and there will be an agreement to resolve the matter," Gov. Andrew Cuomo said Thursday of the impasse. "I believe it will be worked out ... because the deadline forces resolution."
There remains no plan for cutting or suspending specific programs or services in New York, which won't be done unless President Barack Obama orders specific federal cuts.
U.S. Sen. Charles Schumer estimated that the cost of federal default to an average New York family, including higher credit card, car loans and adjustable rate mortgages, would be more than $1,000 a year.
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