Pop quiz: How big, really, is the state’s budget deficit?  The state budget office, along with the finance staff at the State Senate and Assembly, puts the number at north of $9 billion, give or take a few hundred million.  State Comptroller Thomas P. DiNapoli has an even more disturbing answer: Nobody really knows.  “The state’s real fiscal condition,” Mr. DiNapoli said in a report issued this week, ”is impossible to pin down.”  The reasons go to the heart of New York’s severe fiscal problems, which are so bad that Gov. David A. Paterson and the Legislature have blown nearly a week past the state’s March 31 budget deadline in their efforts to negotiate a new budget.  For years, governors and legislators used a grab bag of fiscal gimmicks to cover up the growing gaps between revenue and expenditures. Those gimmicks are now so widespread and so embedded in Albany budgeting, Mr. DiNapoli said, that they have essentially rendered the state’s balance sheet immaterial.  One common device is the “sweep,” where the state grabs a surplus from an another entity — say, the Battery Park City Authority — to cover recurring expenses in the general fund, the state’s main bank account and the one that is required to be kept in balance.  Officials have also moved many day-to-day operating expenses out of the general fund and into other funds, hiding spending growth and hiding the true cost of running the government. For example, Governor Paterson’s proposed budget uses $40 million from the state’s Environmental Protection Fund, which is supposed to pay for parkland acquisitions, to pay salaries and other expenses of the state’s environmental and parks agencies.  One of the biggest special funds, known as the Dedicated Highway and Bridge Trust Fund, has been raided by state officials so many times over the years that it is now nearly bankrupt and must be subsidized by the general fund, Mr. DiNapoli found.  “The operating expenses of the state Department of Motor Vehicles and the state Department of Transportation’s costs for snow and ice removal, bus inspections and engineering and administrative services are funded through the trust fund,” the report said. “Only $11.6 billion (34.9 percent) of the total amount of the fund has been spent to improve New York’s roads and bridges.”  State officials have also often borrowed from a fund known as the short-term investment pool — a kind of state savings account — to cover shortfalls in the general fund. Such loans, intended to cover temporary shortfalls in the state’s cash flow, are now being planned to cover ordinary state spending, according to Mr. DiNapoli. During the fiscal year that began April 1, budget officials now project, the general fund will have to borrow money from other funds for four months in a row, starting in May.  Finally, state officials have obscured shortfalls by delaying bills due in one fiscal year into the next, rolling one year’s deficit into the following year.  All told, Mr. DiNapoli’s office calculated, the state used $6.4 billion in sweeps, shifts and temporary loans, along with $3 billion in delayed payments, to balance the budget last year — meaning that in a certain sense, the budget was not really balanced at all. (The comptroller’s office declined to attempt a current estimate for this structural imbalance, however.)  “These complex shuffles between accounts distort the state’s bottom line,” Mr. DiNapoli said.  Officials have taken some steps to limit these accounts. Under Gov. Eliot Spitzer, the state budget office ceased using the general fund as a measure of state fiscal health and created a new accounting known as State Operating Funds, a figure that includes most of the state’s dedicate fund accounts and thus provides a better picture of actual spending.  The lieutenant governor, Richard Ravitch, has also issued a proposal that would shift the state to a new account system, common in the business world, known as Generally Accepted Accounting Principles. Among other things, “GAAP accounting” would require the state to book revenues and expenses when they actually occur, ruling out many of the dodges of years past. Lawmakers in the Senate and the Assembly appear interested in adopting those rules.  And Mr. Paterson’s proposed budget, by most accounts, has fewer such gimmicks than some past budgets. It uses relatively few “sweeps” and raises revenue chiefly through new taxes and fees, accompanied by billions in spending cuts.  “We agree with his overall point — we should limit the use of nonrecurring spending,” said Matt Anderson, a spokesman for Mr. Paterson. “There’s going to be some nonrecurring spending, but we should limit it and focus on recurring spending reductions.”
A brief guide to sweeps, shifts, temporary loans, deferred payments, and the other accounting tricks that make it impossible to know how big the state's deficit really is.