ALBANY -- The inability of Congress to come up with a deficit-reduction strategy will come at a high price for New York, Gov. Andrew Cuomo said Monday, as he activated his top economic advisers to develop an "expedited job creation and fiscal stabilization plan" to deal with fallout from lawmakers' most recent impasse.
The failure of the congressional supercommittee to reach an agreement, Cuomo noted, could trigger automatic "sequestered cuts" that will cost the state an estimated $5 billion in federal funding over the next decade. Administration sources also estimated the loss of 155,000 jobs in New York, largely because of shortfalls for public sector jobs.
"While Washington has yet to make up its mind about what cuts it will make, this state government is analyzing potential impacts on the budget and the economy," Cuomo said in a statement released Monday afternoon.
Later Monday, members of the supercommittee that was charged with cutting $1.2 trillion from the federal deficit said they would be unable to reach an agreement by the deadline. Their plan had to be submitted by then for House and Senate action on Wednesday.
"It will not be possible to make any bipartisan agreement available to the public before the committee's deadline," Texas Republican Congressman Jeb Hensarling and Washington Democratic Sen. Patty Murray said in a joint statement.
The $5 billion figure represents the first solid estimate by the Cuomo administration of what the congressional failure will cost the state.
Late last week, Cuomo wrote a letter to the state's Congressional delegation noting that cuts to federal programs such as education, Medicaid and transportation would fall particularly hard on the Empire State, which spends more than most states in those sectors.
Under the supercommittee system, a bipartisan 12-member panel had until Wednesday to come up with a plan. But due to partisan differences between the Democrats and Republicans, they couldn't.
Democrats didn't want to give ground on social and entitlement programs, while Republicans refused to raise any significant taxes.
Without a supercommittee plan, what's known as "sequestration," or automatic across-the-board budget reductions, are set to be triggered in 2013.
Announcement of the failure came before the stock markets closed, but analysts as well as Cuomo suggested this development could cause the market to drop as confidence in Congress' ability to resolve the federal deficit continues to wane.
New York is highly dependent on the fortunes of Wall Street, which funds a substantial portion of state government through the income tax revenue generated there.
On Monday, Cuomo didn't hold back in his criticism of Congress.
"Washington's inability to get its fiscal house in order and work in a bipartisan fashion to create jobs represents a fundamental failure of government that has bred frustration and anger among the people and prolonged the worst economic conditions since the Great Depression," the governor said.
Cuomo said his Council of Economic and Fiscal Advisors' job creation and stabilization plan "would be based on the reality that the best way to generate revenue for the state and revitalize our economy is to create jobs." He held an initial conference call on Monday.
The council is made up of business and union leaders across the state, including American Express Chairman and CEO Kenneth Chenault, M&T Bank CEO Robert Wilmers, Home Depot founder Kenneth Langone and AFL-CIO President Denis Hughes.
Monday's congressional announcement is the latest bit of bad news regarding state finances.
Earlier this month, Cuomo's budget division projected the state will have to close a $350 million shortfall by the end of the current fiscal year on March 31. Much of that stems from the poor state of financial markets. That shortfall is in addition to a looming 2012-13 budget gap that could run as high as $3.5 billion.
Unlike the federal government, which can print more money to make up for shortfalls, New York state is constitutionally required to balance its budget each year.
The looming shortfalls also come as the governor comes under continued pressure to put forth a "millionaires' tax" to help balance the state's upcoming 2012-13 budget, which starts April 1, 2012.
Currently, a surcharge on incomes above $200,000 is scheduled to expire at the end of December. Cuomo has vowed not to extend it or to impose another tax, saying he believes it would make New York uncompetitive compared to other states.
But proponents, including Assembly Democrats and public sector unions, are pushing what they've termed a "true millionaires tax" for those who earn more than $1 million per year.
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