The city and state are facing a serious economic downturn that could lead to higher taxes and spending cuts, Mayor Bloomberg and Gov. Paterson warned yesterday.
“We’ve begun a new fiscal year amid much uncertainty about the national economy,” Bloomberg told the state Financial Control Board.
“Our financial sector, the backbone of our local economy and the engine of our nation’s, is clearly struggling.”
Paterson echoed grave concern over the state economy.
The governor will deliver a grim economic address at 5:10 p.m. today in the state Capitol. The speech will be broadcast live and aired locally on NY1.
“It’s no secret that this is serious enough that I would like to address the public directly on this,” Paterson said at the hearing, which he chaired in his Manhattan office.
“My concern is that people sitting in their homes already know what the pain is.”
Paterson is considering calling the state Legislature into a special session to address the worsening fiscal problems. Deep spending cuts and downsizing the state government workforce are options to weigh.
For his part, Bloomberg cited Wall Street losses of $22.8 billion during the first quarter of 2008, a projected city budget deficit of $2.3 billion for 2010, and a loss of $1 billion in city revenues due to a new police contract.
“We still have enormous problems down the road. I don’t think any of us know how severe the economic downturn is going to be nationwide and how much it’s going to hurt our city, but what is clear is every indicator says that we have a problem,” he said.
He also indicated New Yorkers should not cling to hopes of maintaining a 7 percent property-tax cut, and he slammed the state for approving escalating pensions amid economic turmoil.
“Unfortunately, every time we negotiate a contract with the unions, the unions then go around us to Albany, and Albany gives away the store,” Bloomberg said.
“We all know there’s a train coming down the road, and it’s headed straight towards us, and we have to address these issues no matter how difficult they are.”
Meanwhile, city Comptroller William Thompson, a likely 2009 mayoral candidate, and state Comptroller Thomas DiNapoli issued equally dire reports about the city’s budgetary future during the hearing.
DiNapoli predicted steady losses for Wall Street in the second half of this year and deficits well beyond Bloomberg’s earlier predictions.
DiNapoli said the city faces a $4 billion shortfall next fiscal year – a sharp increase over Bloomberg’s predicted $2.3 billion hole. He also predicted $7.4 billion gaps each for fiscal years 2011 and 2012.
sgoldenberg@nypost.com