Elmont Online

ALBANY -- The population of Greece is less than New York's. Its national economy is smaller, too.

But the debt drama playing out 5,000 miles away in the Mediterranean is resounding in the Empire State.

This week, the Cuomo administration delayed the annual budget hearings which allow a close-up look at state agency spending. The midyear financial forecast has also been postponed.

The hearing delay came without fanfare, just a note on the Budget Division's website. The midyear projections were technically due on Monday, the halfway point of the 2011-2012 fiscal year.

"There's a lot of volatility still in the national economy," said Budget Division spokesman Morris Peters, explaining why the midyear report is running late.

Part of the unpredictability also relates to how the domestic economy, as well as Wall Street, might be affected by the European debt drama.

Also this week, state Budget Director Robert Megna sent a letter to state agencies telling them to cut 2.5 percent from their projected 2102-13 budgets -- that's on top of the 10 percent reduction this year.

"The 2012-13 budget will require agencies to continue to find efficiencies and make smart management decisions that reduce costs by an additional 2.5 percent," stated the letter, dated Monday.

Why all the sudden caution and fiscal tentativeness?

One of the reasons is the uncertainty over whether Greece will accept a plan devised along with other European nations to bail out its debt-ridden economy. On Tuesday, Greek Prime Minister George Papandreou unexpectedly announced a national referendum on the plan, which had previously been seen as a done deal.

If the tough Greek austerity package is rejected, the European economy could go into a tailspin that would drag down every global financial center -- including the one in Lower Manhattan that feeds state coffers like no other sector.

"It's kind of a daily crapshoot right now," said Elizabeth Lynam, deputy research director of the Citizens Budget Commission, referring to the volatility of financial markets due to the European crisis.

The overseas debt crisis isn't the only X factor in the annual state budget-building process.

Peters said the total cost to the state of tropical storms Irene and Lee have yet to be tallied. While Gov. Andrew Cuomo previously put an estimated $1 billion price tag on Irene, that was before Lee swept through the state, wreaking even more havoc.

To be sure, the mid-year report and budget hearings are only being delayed, not canceled. And Lynam said she expects the mid-year numbers to be out in time for the "Quick Start" process in mid-November.

The product of reforms aimed at streamlining the budget process, Quick Start allows representatives of the governor's office, the comptroller and all four legislative conferences to meet for an early glimpse of what they think the coming year's budget will look like.

For now, planners are continuing to assume that the $2.4 billion gap predicted for the 2012-13 fiscal year will likely grow.

Cuomo conceded that during a press availability on Tuesday. "The signs are not good thus far," he said.

That follows a warning last month by Comptroller Tom DiNapoli that tax collections for the first half of the fiscal year were $391.9 million short of projections.

Despite the shortfalls, spending is set to go up in some areas, namely Medicaid and education.

Peters noted the overall expenditures in those areas are each set to rise by 4 percent.

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