BLOG FOR 8/25/08

Everywhere I go these days people are talking about the economy. Over the past year the cost of everything has increased and it has become very hard for people at every economic level to make ends meet. As I listen to experts it seems that our current situation is unique because so many things have gone wrong at once. Price inflation is at an all time high, not seen since the 1970’s. Nationally, almost half a million jobs have been lost so far just this year and several banks have been closed by the Federal Deposit Insurance Corporation (FDIC). We all know from the unrelenting news coverage that hundreds of thousands of home owners are caught in the sub-prime mortgage crisis and are facing foreclosure on their homes. Millions of other homeowners are watching the value of their homes slide downward.

Recently, Governor David Patterson warned that New York State is facing a 6 billion dollar budget shortfall in the state budget. He is calling for a 7% cut in State spending for this year on top of the 3.35% reduction already included in the 2008-09 budget. I don’t know whether most of us are paying attention, but we should be. Such cuts will be devastating to the quality of life in our State and in our City. Government funded programs are already looking at cuts in their contracts that range from changes in their services delivery to actually closing their doors.

Of course, the New York State legislature will weigh in on this issue and so far, it appears that the leaders of the Senate and Assembly are reluctant to embrace such stark cuts and may be more inclined to promote tax increases.

We should remember that we are already facing a 2% budget cut in New York City spending. Additional federal cuts are projected for the federal fiscal year beginning October 1, 2008.

The current budget submitted by the Bush Administration is recommending up to a 30% cut in the social services block grant aid to New York State.

As Governor Patterson rendered his dire warnings about the NYS budget he also said that this downturn in the economy is shaping up to possibly be the worst recession since the great depression of 1929. Let’s hope that he’s wrong. Most of us have not faced such economic devastation in our lifetimes. But forewarned should allow us to be forearmed. We all need to pay very close attention to what’s happening with our economy and handle our planning and our finances accordingly.